Multinationals that lay off and close Asian factories, others that withdraw to their country of origin, international fairs canceled by 90%, even those in Africa with distant dates, in the autumn, and, perhaps the most worrying news, the Furniture Fair is skip the 2020 edition, already postponed to June, to return in 2021 but with damages that will exceed one billion euros and which will cause many factories to close. AND Amazon which closes indefinitely its largest collection center, the one in Kentucky, after the protests of the workers for the lack of protection against the risks of contagion of the coronavirus.
And above all a worldwide death of small shops with a parallel downsizing of the points of sale of large chains with continuous closures. Other companies, on the other hand, are making money with the epidemic, like Walmart, the No. 1 employer in the US and the first retail group in the world, which has hired 25 new employees to be able to have its shelves always stocked. While the behavior of families appears to be influenced by fear with a frenzied rush to purchases everywhere but which is already beginning to feel the effects of the lack of economic resources.
Shopping fever is down
GFK has decided to give, through a series of weekly web conferences, an overview of how much COVID 19 is affecting our lifestyle. And after the first few weeks when spending had soared, in the last week it has recorded a notable decrease of 27,8 percent. But compared to the past… happy, the trolleys of the week of March 9–reports GFK- have an average receipt 26 per cent higher compared to the previous weeks but with a 17 percent lower spending frequency because, apparently, the consumer, after having crammed the fridge, pantries, freezers and supply cabinets, is slowing down. However, March was a golden month for food retail and, for the first time, for those who sell freezers.
Freezer purchases are on the rise
The race to buy an appliance that is now more precious than a safe is sensational all over the world because, compared to the fridge and the freezer section of the fridge, the freezer has a considerable capacity, especially the horizontal one, consumes little and, in the absence of electricity, it keeps the contents intact for up to 55-60 hours. A survey that covered the entire American territory - as reported by the authoritative Twice - found that just under 90% of retailers stated that they have sold more in this period than in all of 2019. But the sale of washing machines, dryers and refrigerators has also made significant leaps forward. American dealers, especially in New York, claim to receive continuous calls but by now the devices are out of stock and since they are made in China, there will hardly be a supply.
The defeat of just-in-time
A terrible blow for those who have relocated counting on that disaster which is now proving to be the exasperation of “just-in.time”. which, by eliminating warehouses and deposits, causes and will cause more and more ruinous stock-outs. In England and Iceland freezer sales increased by 300 percent in a few days. In Italy there were peaks of 10-20 per cent of purchases - especially in view of the warmer season - but since freezers are considered commodity - we have entrusted the production of it to countries that are now completely blocked.
Unfortunately, there is something even more worrying: the entire world Majap industry is gradually downsizing because – the Italian one in particular – made three historic mistakes decades ago: it sold technologies, platforms and plants to countries with low-cost labor to create advanced factories, then it ceded the strategic manufacturing of components (we were the suppliers of Western countries with world firsts). And, third mistake, it has relocated not to produce for local markets but almost only to compete for the poorest and therefore lowest-cost workforce. So today, due to the coronavirus, the supply of the supplly chian from Asia is cut off. And the factories of the multinationals are closing down, a very serious historical nemesis.
And of relocation
And, as revealed the Massachusetts Institute of Technology, the collapse of the sector is accelerating almost daily worldwide. “But the worst is yet to come. The most vulnerable companies - MIT experts confirm - are those that depend heavily or exclusively on factories in China for parts and materials. Activity at Chinese manufacturing plants has declined over the past month and is expected to remain depressed for months. And since the demand of the Chinese domestic market is very strong and will grow a lot, it will be hard to receive components and finished products.
Apple, Whirlpool, BSH, Electrolux without supplies
In high technology there is now talk of a halving of sales at the end of the year. And the profits of course. China is the leading exporter of electronic components, with nearly 30% of the global export market. Japan, for example, bought hi-tech products worth over 45 billion dollars worth of Chinese electrical and electronic goods. February 17th, Apple announced that it expects a sharp fall in its quarterly earnings due to a limited global supply of iPhones (made in China) and a significant drop in demand in Chinese markets. Whirlpool has reduced capacity production at US manufacturing plants, those in Europe (particularly Italy), Latin America and India, while Chinese production returned to near full capacity.
And also Honey is preparing substantial reductions in production activity while BSH has suspended production at plants in North America, Europe and Türkiye due to the drop in demand, for three weeks, for now. Dixons Carphone bucked the trend with the group's 8% increase in electrical equipment in the 11 weeks from January 5 to March 21, including a sharp increase in the 23% in the last three weeks thanks to the increase in online tradingEd has closed appliance stores across the UK and Ireland from 24 March, a move that followed the closure of stores in Greece from 18 March.
Electrolux cancels the dividend due to the impact of the coronavirus for the 2019 fiscal year and there will be a substantial risk of a material financial impact related to the first half of 2020 supply chain disruptions, government countermeasures and changing consumer behavior. A company statement said that “Electrolux is continuously adjusting production in all regions to align with projected sales volumes and will temporarily close affected factories if necessary or mandated. Electrolux generally has good product availability, whereas expected consumer demand will be lower in the short term.
