Singapore firms face supply delays as factories remain closed in China

Manufacturers in Singapore had been waiting for factories in China to reopen yesterday after the extended Chinese New Year shutdown due to the coronavirus outbreak which originated in Wuhan.

But many facilities remained shuttered yesterday, with production lines ground to a halt. Materials that were completed before the shutdown sat waiting to be delivered.

Even factories that opened were understaffed, with workers under quarantine or lockdown.

Indeed, the bleak winter is not over for manufacturers, who expect further delays to their orders with no certainty as to when supplies can be delivered.

Mr Ernie Koh, executive director of marketing at furniture manufacturer Koda, said his suppliers told him yesterday that most of the factories are still closed and will open next Monday at the earliest.

Mr Koh has a sourcing department in Dongguan, in central Guangdong province. He gets some of his materials from China and sends them to Vietnam, where his factories are located.

"The biggest concern as a manufacturer is the upstream supply, whether there is any disruption and whether we have enough materials to last us and for how long," he said.

He anticipates there will be some delay in order fulfilment, but the impact in the short term is not critical. His 50 stores in China, under Koda's retail arm Commune, also remain shut this week, as malls stay closed and empty.

Mr David Low, chairman and chief executive of Futuristic Store Fixtures, said his factory in Kunshan, in eastern Jiangsu province, remains closed as well.

The local government might be allowing some essential sectors, such as the medical and food segments, to start operations first, he said.

"We can get our factory in Malaysia to pick up some of the load, but it cannot be too much or there will be no capacity there as well," he noted.

Mr Willy Koh, CEO of medtech firm Racer Technology, has a factory in Ningbo, in eastern Zhejiang province, with about 15 workers that also has not fully re-opened. But he has eight other factories in Asia, in places such as Singapore and Malaysia, to help out.

He has seen orders fall by about 35 per cent in the China market.

"We are manufacturing devices for cancer diagnostics but now the focus is all on the virus, so we have much fewer orders," he said.

"Once the weather is warmer, it should be better. We can still have hope for this quarter."

Even when factories eventually open, manufacturers expect further delays as workers might be unable to come to work. Mr Low has about 300 staff at his Kunshan factory, with fewer than 10 from Hubei, which is still under lockdown.

Mr Ernie Koh said: "Workers who come back might also face quarantine for 14 days. We anticipate that the end of February is the earliest that factories can really start running."

Manufacturers also said there might be logistical issues due to demand outstripping supply.

Mr Koh said: "If the floodgates are opened when factories start again, it might be too much for border officials and transport to handle. When this happens, costs will increase. We cannot commit to spaces on cargo ships now because we do not know how long the shutdown will last."

Mr Ang Wee Seng, executive director of the Singapore Semiconductor Industry Association, said companies have reported that their customers are also getting nervous.

"We will need to wait to see the situation in the coming weeks. Most companies know that their business will be affected, but the question is to what degree."