A shortage of catering parts and components in the wake of the coronavirus outbreak has left manufacturers fearing a sourcing crisis that could threaten product availability in the UK market if the situation worsens.
Temporary factory closures and a reduction in the labour force across China have severely impacted production schedules and halted the regular flow of goods that are used to build catering and refrigeration products.
The crisis has even led catering equipment brands to consider ringing competitors for core parts to prevent their own assembly lines grinding to a halt.
Hoshizaki-owned Gram Commercial confirmed that it has been forced to source stocks of a key refrigeration component from North America as consignments from its usual supplier in China dried up.
Questioned on the situation by FEJ yesterday, Anders Sjøgaard, director of sales and marketing at the company, confirmed it faced an “emergency” this week when it discovered it could not get hold of micro-switches for doors used in its Compact refrigeration range.
“Most of those kinds of parts – LEDs, switches and micro-switches – come from China. This particular micro-switch was a huge problem and we didn’t know when we would be able to get it, so we searched and found some in a warehouse in the US. We bought them immediately and have enough stock until mid-April now.”
Mr Sjøgaard said Gram Commercial’s Danish factory makes around 70 Compact fridges a day, but the shipment of 2,800 switches it is expecting to receive from North America today would alleviate any pressure on its Just In Time production model.
Asked if he thought the sourcing issue was an industry-wide problem, he replied: “Yes, for sure, but who has the stock is the question. We were actually that close to calling competitors to ask [for stock].”
The situation is exacerbated by the fact that some plants were already operating at reduced levels for the Chinese New Year when the virus began to take hold, resulting in factory bosses telling workers to stay away for fear of it spreading.
Mr Sjøgaard said Gram Commercial was in direct communication with its main components supplier in Taiwan, which operates multiple factories in mainland China, and was waiting to hear whether the disruption would continue into a third successive week.
“It is not a massive supply from China, but making a refrigerator that doesn’t stop the fan when you open the door just doesn’t work,” he said.
Andy Piggin, managing director of Pro Foodservice Reps, which represents a number of leading US and European brands in the UK market, said he was hearing that three Chinese factories which his supplier partners rely on for goods were returning to work this week following a period of quarantine.
“Fortunately there was already a sufficient level of stock available on the ground, so it has not adversely impacted anything. But because there has been a gap in the production there is the possibility that we could see the impact of it later in the year,” he warned.
Keith Warren, chief executive of the Foodservice Equipment Association, said he expects manufacturers which rely on components from China to have made provisions.
“Given the global sourcing of components for foodservice appliances, the coronavirus epidemic is bound to have an impact on equipment manufacturers and importers eventually. However, they are well-used to managing complex supply chains and will be able to source alternative suppliers of product or components when there is disruption. They will do their best to ensure that any disruption is kept to the minimum so that customers are not affected.”
Mr Warren added: “In addition, the availability of alternative component suppliers and the stockholding of finished product in the UK market means that there is a buffer that will cover any supply issues, certainly in the short term. However, it will be increasingly important that orders are placed as early as possible to ensure that the expected product is available.”
Some experts have raised the prospect that components shortages could make it more expensive for manufacturers to procure the parts they need.
However, at this stage it appears very unlikely that any price increases would be passed onto end-users unless there is no improvement in the situation over the coming months.
Nick McDonald, the former managing director of Lincat, says manufacturers will have an element of flexibility built into their production operations, but agrees it does pose a challenge.
“As with all goods, whether product is manufactured or imported, there is always likely to be an element of component that originates in China so any disruption is not good news. An LED or a switch might be a simple component, but if all of a sudden you have to get the next best fit you are going to have to rely on what is available off the shelf. So now what do you do if every hole in every facia has to be half a millimetre wider? You can deal with that in manufacture, but then the issue of spare parts comes into play as well.”
There have been 44,730 cases of COVID-19 – the official name for this type of coronavirus – in China with 1,114 deaths. Outside China there have been 441 cases from 24 countries and one death, according to the World Health Organization.