Factory closures in China during the early part of the year have raised fears that refrigeration manufacturers may find it difficult to get hold of certain vital components. FEJ asks if it will have implications for product availability further down the line.
The world has become so accustomed to the conveyor belt-like supply of parts and goods from China that few in the catering equipment industry ever pondered what would happen if factories and plants were to suddenly close.
But with the Covid-19 outbreak bringing chaos to finely-tuned production operations at the start of the year, manufacturers and assemblers in sectors such as refrigeration had to quickly draw up contingency plans to cope with imminent and anticipated supply issues.
Several China-based component suppliers for refrigeration motors remained closed for a period of time, while restrictions on factory openings, the movement of people and port and logistics facility openings halted the flow of goods coming out of the country for a number of weeks.
The question now is what it all means for the rest of the year, with some onlookers fearing that Chinese efforts to catch up with production schedules could lead to shortages in supply later in the year.
Roz Scourfield, national sales manager at Hoshizaki UK, is among those that thinks the industry needs to prepare itself for such eventualities.
“Stock sourcing issues are to be expected as a result of the recent coronavirus outbreak, both for manufacturers who rely on supply from China, but also from those that claim they don’t. In fact, manufacturers who view themselves as isolated from the problem may be the ones to experience bigger issues, as the demand for components outside of China increases pressure on other suppliers.”
Damian Slater, general manager of Filta, agrees there could be some problems with Chinese supply later down the line. The refrigeration seal replacement specialist extrudes plastic in the UK and Holland so it does not expect to be caught up in the disruption, but he is aware of issues facing those sourcing from China.
“For people ordering parts and seals from China there is a problem and we believe there will be a problem later on in the year as well. But then we are here to solve that problem! If people can come to us, we can fit Chinese seals because we have our own seal profiles.”
Slater says it can offer solutions for any company that is reliant upon China and can’t get hold of what they need: “We are here and we can supply.”
UK refrigeration manufacturer Precision has had a business in China for almost eight years. Based in Shenzhen, the joint venture partnership with Chinese kitchen equipment manufacturer Xinbaoying makes versions of Precision’s standard models, modified for the Asian market.
But in the UK, the company aims to source materials as close as possible to its British factory to reduce the company’s carbon footprint and support the UK economy.
“Manufacturers who view themselves as isolated from the problem may be the ones to experience bigger issues”
“Precision sources 90% of the number of its supplier components and raw materials from UK businesses,” reveals marketing manager Christine Hartshorne.
“It also helps to keep as much of the Precision product as possible British. This is important to many of our customers, who are looking to buy local equipment, and work with a British company.
“With the outbreak of the coronavirus, the UK factory has also taken on further work from our Precision international sales and factory locations so that we can help to provide the products they need to their customers globally.”
Another manufacturer with a sourcing strategy that doesn’t depend entirely on China is Liebherr. Steve Ongley, GB national sales manager for business and industry at the company’s refrigeration division, says: “Fortunately, we are not reliant on Chinese components and our manufacturing should face little disruption from the current global challenges that may last several months. It could lead to a more limited choice of refrigeration options for end-users and potentially increased prices from other manufacturers.”
Ongley says that Liebherr manufactures a number of key components for its commercial refrigeration equipment in-house, plus it sources from local European suppliers to increase sustainability.
“Good examples of this are using German steel, door handles coming from Italy and other components from long-held business relationships as close to our Austrian manufacturing base as possible. This has been part of Liebherr’s strategy of reducing environmental impact for a long time.”
Components such as LEDs, switches and motors were cited as some of the items most affected by the initial shortages earlier this year and Hoshizaki saw that firsthand.
“Most of our LEDs, switches and micro-switches for the Gram compact range have come from China,” comments Roz Sourfield. “However, after news of the Coronavirus, we put plans in place with an alternative supplier, to give us stock from a large warehouse in the US.”
On the ice machine side, meanwhile, Scourfield says the company is well-positioned due to its policy of building up inventory on a long-term basis.
“We have committed to stockpiling all of our imported ice machine components at our Telford manufacturing facility for a number of years. By committing to stockpiling, we are virtually able to guarantee that our production schedule will run smoothly with no delays, no matter the external scenario,” she says.
Supply chains certainly face a test of resilience over the coming months. If there is any good to come out of the slowdown in China, it is the reminder that agility is an asset that will spare manufacturers from disruption.