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Refrigeration supplier troubled by lack of visibility on Chinese factory recovery plans

Refrigeration part

A leading supplier of refrigeration parts to the global market has given a detailed account of the impact that coronavirus is having on the supply chain.

Wellington Drive Technologies supplies motors and IoT hardware built by its supply partners East West Vietnam and Match-Well China to refrigeration manufacturers around the world.

As a result of the COVID-19 emergency and measures put in place in China by local and central government, Wellington said product supply was being impacted by restrictions on factory openings, restrictions in movement of people, and port and logistics facility closures.

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Wellington’s East West Vietnam factory is open, however it expects production to be be impacted by China-sourced component supply shortages.

Its Match-Well factory, in China, only reopened partially with reduced staff last week.

Several China-based component suppliers for refrigeration motors remain closed with minimal visibility on opening dates and supply recovery plans, the company said, adding that it was getting “limited feedback” from Chinese ports and customs departments on incoming and outgoing deliveries or the release of shipments currently in transit.

Logistics generally across the Asia region are being delayed by related restrictions and there are significant constraints put on movement of people and goods between Chinese provinces and within cities.

Couriers and deliveries have been restricted, and in some cases cancelled, it said.

Wellington revealed it is in the process of switching more production to East West’s Vietnamese factory until products can resume shipment into and out of China.

In addition, the firm is working with alternate sources for some components to mitigate some of the supply risk.

It said there were some indications from authorities that factory production in China will restart towards the end of February and into March.

The company said it is preparing initial forecast scenarios that assume it is only able to supply product from existing inventory until such a time as the China component supply chain situation is resolved.

It predicts that resumption of normal production and shipping won’t resume until around the end of April 2020, potentially leaving it with a £2.75m revenue shortfall in the meantime.

Bosses said that not all of the delayed supply will be perishable, so some catch-up later in Q2 currently appears likely. However, it has been forced to revise its 2020 revenue guidance below the 15% growth it had forecast.

Wellington is a provider of IoT solutions, cloud-based fleet management platforms, electronic motors and connected refrigeration control solutions.

It serves some of the world’s leading food and beverage brands and refrigerator manufacturers.

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Tags : BusinesscoronavirusRefrigerationWellington Drive Technologies
Andrew Seymour

The author Andrew Seymour

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