How is the Coronavirus Crisis Impacting the Hardware Industry?
The news these days is dominated by the latest developments as the novel coronavirus (COVID-19) outbreak continues to spread rapidly around the world. As the Center for Disease Control and Prevention (CDC), the World Health Organization, and state and federal agencies work frantically to contain the virus while drug companies work on a vaccine, the hardware industry finds itself on the front lines of the action.
Panicked consumers are rushing to hardware stores in search of masks, hand sanitizer and cleaning wipes, only to discover supplies are short or non-existent. Since the vast majority (about 80 percent) of the coronavirus cases are in China, that creates a high risk for major disruptions in the global supply chain.
As of press time, the coronavirus outbreak had surpassed 108,000 cases worldwide and spread to 100 countries, with more than 3,800 deaths. In the United States, there were more than 550 confirmed cases and 24 deaths as of March 9.
The immediate impact of this health crisis has been the cancellation of key trade events. Ace Hardware’s Spring Convention, scheduled for March 12-14 in Chicago, was canceled on March 5 with the following statement: “The health and safety of our Ace employees, retailers and vendors is and has always been our top priority. Due to growing concerns around the coronavirus (COVID-19), we have made the difficult decision to cancel the Ace Spring Convention next week in Chicago.”
Jessica Rau, Ace’s director-PR, social and corporate media relations, said, “We are working diligently to provide a digital convention experience for our retailers.”
The International Hardware Show in Cologne, Germany, originally scheduled to begin March 1, has been moved to February 21-24 in 2021. About 3,000 exhibitors (1,200 from China), were expected to attend that event. The International Home & Housewares Show, scheduled for March 14-17 in Chicago, has also been canceled. The National Hardware Show, which typically attracts a significant number of exhibitors from China and other countries, was still scheduled for May 5-7 in Las Vegas.
At the Orgill show in Orlando at the end of February, several vendors said they were worried about future production capability. Companies that have the majority of their production in China said they are currently scrambling for a backup plan, and it’s not as if they can travel to China to address the issue. One plumbing manufacturer said they rely on China for one component for their product line, which looms as a growing challenge for the company.
Ironically, the tariff situation last year had caused some U.S. manufacturers to shift all or some production from China to other countries like Vietnam. Such fortuitous initiatives have mitigated the disruption in the supply chain, but the biggest problem is a shortage of N95 respirator masks. Hardware stores, big boxes, mass merchants and even online sellers like Amazon have few if any in stock.
Ron Beal, chairman of Orgill Inc., which has an extensive Worldwide Sourcing program, said that they haven’t seen much impact yet from the coronavirus outbreak. “Manufacturing companies in China are just returning after the Chinese New Year, but we’re seeing workers return to production in China. We think we’re in good shape, but we’re like everyone else in that we have to be reactive to the situation. It can eventually start to impact the global supply chain,” Beal said.
Demand for respirators is so high that it’s becoming difficult to order them on e-commerce platforms like Amazon, let alone find them in stores. To fill the surge in demand for the devices, particularly the N95 respirator, 3M is ramping up production. In Aberdeen, S.D., more than 650 employees at one of 3M’s largest manufacturing facilities are working overtime to increase face mask production, according to a report on CNBC.
On March 5, Ace Hardware of Clarkston (Michigan), posted on its Facebook page: “We just received a couple hundred N95 masks. We have been flooded with phone calls and people coming in looking. We are fully loaded now, but everything is first come, first serve.”
“The dust masks are gone. Any hand sanitizer is gone, it doesn’t matter what kind it is. And we can’t get more anywhere,” said Jill Saunders, co-owner of Ace Hardware stores in Southern Pines and Seven Lakes, N.C., in an interview with a local newspaper.
Several retailers said they have been told orders for respirator masks will not be fulfilled until April or in some cases, early May, as vendors prioritize making sure health-care and government workers are given first priority.
The CDC does not recommend people wear masks to protect themselves from the virus, although people who have the virus should wear them to avoid spreading it.
For the most updated and accurate information on the coronavirus outbreak and how to prevent its spread, go to www.cdc.gov.
