America catches a cold

John Denslinger is a former executive VP Murata, president SyChip Wireless, and president/CEO ECIA, the industry’s trade association. His career spans
40 years in electronics

John Denslinger guides readers to trusted sources of data, information and advice in the face of Coronavirus concern.

America catches a cold or more accurately, a virus. Never did I imagine a pathogen would threaten the health of the electronics industry. Just last month, I cited the enormous progress in trade negotiations with the signing of USMCA and the certainty it brought to our industry. Well, the certainty I spoke of was short lived. In less than three months, fear has spread faster than the virus itself. COVID-19 better known as Coronavirus has unnerved governments, financial markets and economies around the world.

I don’t wish to understate the toll on humanity the coronavirus may cause. The potential global impact could be staggering. The origin is suspect. The contagion is uncertain. Screening is limited if not inadequate. There is no known inoculation or vaccine for prevention. Quarantine and containment appear to be the only defense at this stage.

Fortunately, companies responded quickly with caution and concern. Paramount was the health and safety of their employees. Accordingly, travel was halted to hot zones in China and elsewhere, manufacturing plants in the affected areas closed, and supply chains temporarily disbanded.

Much has been written already about COVID-19’s impact on the supply chain. It’s an assessment best communicated by experts. My interest is tackling that next question: where do I go for information and guidance that best protects my business and my employees going forward?

Governments are involved. China instituted massive quarantines and restrictive travel within its borders. Other overseas countries stepped up their own border controls, restricted citizen travel to/from China, and instituted scanning of international passengers. In the US, our Federal Government leads on several fronts: the CDC is providing timely updates and resources; the President formed a Coronavirus Task Force; the CDC and Customs & Border Protection implemented enhanced screenings on arriving travelers; DHS issued supplemental instructions for inbound flights and individuals who have been in China; and USCG issued guidance for marine vessels, people and materials entering US ports. The National Association of Manufacturers’ website is an excellent resource for keeping up to date on these matters.

Specific to the electronics industry, I suggest ECIA’s website for relevant information. An initial survey in early February revealed most companies struggled mightily with visibility. By the end of February nearly all could describe the coronavirus impact on: on-time delivery and the likely disruption recovery period. If you are looking for more detail, Dale Ford, chief analyst, compiled the data by semi, passives and electro-mechanical. Similarly, the February 2020 TPC Semi Industry survey confirmed the weak outlook for Q1 largely due to product availability but did note the positive bookings outlook for Q2 that somewhat supports a production recovery. Lastly, it’s worth listening to a podcast hosted by ECIA featuring Chad Moutray, chief economist at NAM. Basically, he says it may be several more weeks before we clearly know if this was just a Q1 disruptor or a calendar year issue. This comment became more understandable in my recent conversation with Dave Doherty, president & CEO, Digi Key. Dave pointed out unforeseen delays for a number of companies wanting to resume full production. He cites up-stream raw material supply problems as the root cause. In general, it’s far from clear when supply lines will actually normalize.

Bottom line, verify your suppliers’ resumption plans with a critical eye, keep abreast of governmental actions, stay alert to CDC directives, and above all, know it will be certainty that restores the industry to good health.