Three industry insiders gave Aftermarket Business World a hopeful take that the supply chains leading to the United States are holding their own. The same day the White House declared a national emergency on COVID-19, Steven Hughes, president of HCS International; Michael Rukov, senior executive for RepWorks Marketing; and Daniel Hanson II, director of Hanson Distributing Company grappled with the spreading virus that broke out in China six weeks ago.

On the same day that AMBW learned how California based Hanson Distributing was faring, President Trump cleared up to $50 billion in relief funding aid for the states. When Rukov wrote by e-mail about dealing with shipping uncertainties on behalf of his auto parts store accounts, shoppers from coast to coast were raiding the store shelves to stock up for the unknown. Looking afar at Asia, Hughes spoke about easing back to normalcy while the international stock markets capped off a week in messy trading.

Here’s what each expert said in their own words.

Rukov: At first, we did not know if coronavirus would impact us. We first realized that the impact will be significant when countries started quarantining their people. At that point, we realized that this would have a big impact on the industry.

Hanson: We were forced to delay a brake rotor line rollout for several weeks out of sensitivity for product pipeline fill for an order of its size hitting their local stock. But in the last few days the brake vendor alerted us and gave the project a “go” which is encouraging news.  

With that caveat in mind, I can’t speak for everyone, but I would think that our industry is suffering from very similar problems no matter which product category we consider. 

The biggest issue I am currently hearing from clients is that, not all, but quite a few of the factories in Asia are still struggling to get back up to full capacity.  Obviously, this is a huge constraint. With the easing of the epidemic in China, it appears this issue is very slowly starting to ebb.

Also consider the domino effect.  If a factory relies on sub-suppliers or even their suppliers for various components or processes, it could be doubly constrained for lack of components or processing.  Consequently, even if a factory is at full capacity with their labor force and if their sub-suppliers are constrained, it will have a knock-on effect on your vendor.

Rukov: For the moment we don't see a huge impact yet, but I see two trends. First, we know that most of our factories will have issues when they start running low on inventory. However, most have prepared for the Chinese New Year, so they had ample stock to supply a few extra months. Given the fact that some factories are already starting to work again, we might have a minimal impact. Second, we have seen a dramatic decrease in driving in China and now Italy is following its tracks. If we have a similar problem in the USA, we will all see an impact.

Hanson: Our axle supplier who makes their components in China said that their containers in port are awaiting to receive the green light from the authorities. As to how the transportation segment is coping, there’s no major delays to report.

Rukov: We did not panic for the reason which I stated before, which are to what extent the virus would affect the industry. I hear that production has resumed at 30 percent capacity. Our suppliers are continuing to assure us that we would have a slight impact on the shipment delays.

Hanson: We’ve been lucky in this regard, at least so far. Much of that has to do with the timing of the crisis on in China. Following so close on the heels of Chinese New Year and factories there idling leading up to holiday period was something that we build into our purchasing planning every year. A few weeks longer wasn’t as disruptive as it would have been if this crisis were to break out another time of the year.

Rukov: We haven’t seen any impact on sales yet that our customers have seen. We know that we might see something in the near future. We have not seen any price pressures. I cannot talk to a specific product category becoming more squeezed over another. Any product coming from China would most likely be impacted in some way soon.

Hanson: Our axle supplier notified us that they are back up and running at 80 to 90 percent capacity in their China facilities. They expect a temporary extension of lead times of 15 to 30 days that will resolve itself on orders placed in April. I’m impressed considering the circumstances. We just placed a significant order to them that they anticipate filling at 93 percent out of their domestic stock, which reflects well on their inventory management practices.

Rukov: All we know today is that some factories are resuming production at reduced capacity. However, the full impact of it is unknown.

From all the available data, this virus is nowhere near as severe as SARS.  I would guess— and hope—that everything will settle down substantially in the following 60 to 90 days.

Rukov: Some have already started designing plans to move out of China. However, the full impact is unknown as the changes are happening daily.

Hanson: Ever since I was in junior high school, I learned a lot from my dad about stocking up on inventory when China shuts down for the Chinese New Year. When the coronavirus broke, it happened to fall on the New Year.  We need to remain mindful of any unforeseen risk. We have the luxury that we stock multiple brands on similar product categories to buffer against shipping delays or item shortages.

Rukov: Expect the unexpected.