- Companies that rely on manufacturing from facilities in Wuhan, China, are considering alternative suppliers as facilities in the region face potential production delays. The number of coronavirus cases has exceeded 4,500 and the region has implemented a quarantine limiting travel in and out of the industrial hub.
- "We do have some suppliers in the Wuhan area," Apple CEO Tim Cook said Tuesday on the company's first quarter earnings call. "All of the suppliers there are alternate sources and we’re obviously working on mitigation plans to make up any expected production loss ... With respect to supply sources that are outside the Wuhan area, the impact is less clear at this time."
- Many factories were already closed in observance of the Lunar New Year holidays, however the break was extended as a result of the disease outbreak. Ford told Reuters Wednesday it plans to resume production at its Chinese facilities on Feb. 10. Wuhan is home to nine auto manufacturing plants, according to Business Insider.
Shippers looking to transport products out of mainland China will see a reduction in airfreight capacity as Cathay Pacific, a major passenger and cargo airline for the region, will cut its capacity "50% or more" starting Jan. 30 until the end of March 2020, the airline announced Tuesday.
One Apple supplier, Foxconn Technology Group, told media Tuesday it is monitoring the situation and has "measures in place to ensure that we can continue to meet all global manufacturing obligations."
Wuhan is also home to a number of drug manufacturers, but the U.S. Food and Drug Administration said those manufacturers have not reported an impact on supply as a result of the outbreak, according to Wired.
"A prolonged outbreak in the area could prevent workers from going to work or even cause temporary factory closures, which would weigh on Chinese production," Wells Fargo analysts wrote in a research note Tuesday. "China’s more integral part in the global supply chain today means a decline in its output has the potential to disrupt U.S. production."
Wells Fargo analysts noted that industrial production slowed during the time of the 2003 SARS outbreak, though it coincided with the start of the U.S.-Iraq war, so it can be hard to know how much of the drop resulted from the disease outbreak.
The computer and electrical equipment industry and the machinery industry could take the biggest hits, according to Wells Fargo.
"But, the U.S. economy has become less reliant on manufacturing, so even if the sector were to fall under pressure, it would be unlikely to cause a U.S. recession," the analysts concluded.
In a press conference Tuesday, top U.S. health officials said the outbreak was serious but Americans do not need to worry about their safety.