Corona crisis: This is how the industry is preparing itself
Published on 12.03.2020
The corona pandemic is here. It originated in China which is struggling with the enormous impact of the crisis on people, the society and the economy. The economic consequences are now being felt worldwide, and fear is also widespread here. What are the implications of the corona crisis for the promotional product industry which is connected in many ways to its most important sourcing country, China? How are importers reacting to the current situation?
Marcus Sperber, elasto: “We are currently supplying from stock.”
First a few facts: People are slowly returning to the offices after the extended Chinese New Year holidays. Production is running at around 20 percent, and normal worktime is planned for the end of the month. WHO and the Robert Koch Institute agree that products are generally not virus carriers. I don’t know of anyone who is travelling to China at the moment. New products will not be shown in China until two to three months later. The contamination wave seems to be subsiding in China. Almost half of those infected are at home again. We are currently supplying from stock, but there will be delays in the supply chain. If things change for the better in China, the problems will remain quite manageable. Plastics production at our site here is experiencing a significant increase in demand. So there are positive aspects too. One of them is that I currently have a lot more time for customers and internal business because all trips to China have been cancelled for the next two months.
Armin Halfar, Halfar System GmbH: “Our capability of supplying is very good as we have high levels of stocks.”
We generally ensure that we have high stock levels and are currently registering sales increases in stock items. Quite a few orders that would normally have gone to Asia as special productions are now being realised with stock items. We work closely with our plants. We are aware of the uncertainty of employees and customers. Customers and end customers request statements on the supply chain, plant reliability and replacement procurement – this entails additional effort. The supply chains were interrupted by the New Year anyway so we are routinely prepared for this with high levels of standard stock items. One or more special transports will certainly be unavoidable. We are certain that we will continue to feel the effects of the crisis for a long time to come. But at least China is now reporting fewer new infections and more and more people are recovering. The bottom line is that our capability of supplying is still very good with more than four million bags in stock. Until a few days ago, goods that had been despatched by sea before the New Year festivities were still arriving every day. We are certain that we will be able to maintain our good supply capability thanks to our good stock levels and gradual start of production in mid-March. We also pay great attention to hygiene and the avoidance of risk factors at our sites. We hope that we will be spared having to take restrictive measures.
Ralf Oster, PF Concept: “We are delivering according to schedule but are prepared for bottlenecks.”
At PF Concept, business is as usual and there is no panic, but we are carefully monitoring and analysing the situation. The order situation is still good and we are delivering on schedule. Nevertheless, we assume that we will have to manage bottlenecks in the next two to three months. Our inventory is sufficient and through our on-site organisation we are trying to ensure supply of our top sellers. But even if some of our key products are sold out, we can fall back on attractive alternatives due to our high stock levels and extensive range. That is enough for a long transition period and therefore we can successfully manage a possible shortage in the customer’s interest. Our advantage is our long-standing personal presence in China and other Asian countries. After the reopening of the factories, we enjoy privileged treatment due to long-standing, close relations with suppliers. So far, there have been no delivery delays with suppliers outside of China. Here we benefit from the fact that our parent company Polyconcept has been successfully establishing supply chains outside of China for several years in order to be able to ensure the usual quality and service. In order to protect our employees, we have created internal national emergency plans for each country. We are guided by the hygiene recommendations of the Robert Koch Institute and national official institutes. We recommend that employees do not travel, but do not prohibit them. If the situation remains unchanged for three to four months, we will have to reassess the situation based on the latest findings.
Karin Pfrommer, nestler-matho: “Intact supply chain, well-stocked warehouse, hesitant customers.”
At the very beginning of the Corona outbreak, worried customers wanted to know whether Chinese products pose a risk. According to unanimous expert opinion, we were able to give the all-clear. Our supply chains have so far been intact, especially as we have no suppliers in the crisis region, with one exception. However, in the case of this supplier there is a delay in delivery. As usual, this year we also made sure that goods were despatched before the New Year to ensure that our warehouse is well stocked. So there are no restrictions. Most workers are back and production has started up again in many places. We are in daily contact with our suppliers and pass on information to our customers. We have cancelled our trips and assume that we will not be visiting any trade shows again until October. Our sales department and sales reps have noticed a rather hesitant buying behaviour: Some sectors such as tourism, transport and catering are anxiously waiting to see how the situation develops. Everyone in our company is cautious, but we remain relaxed.
Meinhard Mombauer, reflects: “We are reacting with expertise and prudent action.”
In the case of our customers, you can clearly see that the initial uncertainty is increasingly giving way to prudence. I am glad that the momentum of reliability is obviously still firmly anchored in the market. Where only the price has ruled, the climate is certainly worse. It is the job of an entrepreneur to look for opportunities even in times of crisis. We are doing that and moving even closer to our customers. We are also checking suppliers and supply chains. Basically, however, we feel that we are well positioned to deal with this issue because we have been well connected locally in Asia for many years and also in this country. That is why our delivery routes are also running smoothly, albeit somewhat slower with more effort and with small volume reductions here and there. We certainly have to deal with the issue of the corona virus carefully and with the utmost caution. We also do that in the company. But the way various media, especially in Germany, treat the topic is irresponsible. There is no factual information, but rather fear is raised to ensure that clicks, ratings and circulations increase. We have to counter this with expertise and prudent action – and that is exactly what our customers can count on.
Dolf Blomhert, Giving Europe: “We are well positioned through our network”
Even though the corona virus dominates the headlines in the international media, we cannot see any crisis or noteworthy changes compared to previous months in terms of business operations. Our large stocks are also designed for deliveries at short notice. We are in close contact with our customers regarding their obligations in order to be able to supply them as well as possible in the medium term. Our stocks are also sufficient for this. We are currently not feeling any major changes in the supply chain, apart from the fact that day-to-day business with China is affected. We very much hope that our operational business with China will be up and running again in the coming weeks. However, it is impossible to estimate how long the current situation will last. We are in daily contact with our suppliers to keep an eye on possible developments. Over the past 55 years, we have created an extensive network of suppliers and production sites around the world. If we feel that the pressure on products from China is growing, we can immediately fall back on other sites that are less affected by this crisis. In any case, we will do everything we can to serve our customers as best we can.
Sascha Thielen, TLN Trade Company GmbH: “Entire impact is not foreseeable”
For the most part, our production facilities have been running again since 28 February 2020, but minor restrictions still exist. We currently have a large number of USB sticks, power banks and RFID cards in stock or have increased our inventory. Although we assume that production will normalise from mid-March to the end of March, we also cannot rule out the possibility of long-term delivery bottlenecks. It is difficult to predict the further course of the year, but we anticipate a rather difficult situation overall, with declines and a weakening economy. The complete impact of the corona virus on the entire economy will probably not be seen until May/June.