from China and will reduce first-quarter revenue
by up to $60 million.
The consequences are severe in part because
so many companies depend on “just-in-time’’
deliveries to limit the cost of stockpiling
supplies. David Closs, an auto industry expert
at Michigan State University, noted that many
auto parts coming out of China – especially
electronics — are flown to the United States.
And American plants don’t have inventory
on hand.
“It’s much cheaper to air freight them than it
is to have two months of inventory sitting in
a container (on a cargo ship) on the water, so
there’s not much in the pipeline,” Closs said.
“Once they shut the factories (in China) down,
the U.S. industry starts feeling it pretty quickly.”
Still, some shut-down companies with
operations in China are showing tentative signs
that they are beginning to stir back to life.
Toyota spokesman Eric Booth said the
company’s plants there are preparing to resume
operations as early as next week. And General
Motors said its joint-venture partners in China
plan to restart production Feb. 15.
“Things are at least stabilizing,” GM spokesman
Jim Cain said.
Beijing is trying to limit the economic damage
from the coronavirus, which is expected to
savage economic growth in the January-March
quarter and leave 2020 growth well below the
6% — already the lowest figure since 1990 —
that economists had expected.
Chinese authorities face “a difficult balancing
act between containing the virus and resuming