March 12, 2020
The shadow of the coronavirus was very much in evidence at kbb Birmingham – from the closure of the Chinese Pavilion to the proliferation of hand sanitisers. But how was what has now been declared a global pandemic by the WHO affecting brands at this year’s show?
Caple’s managing director Danny Lay was in no doubt. He told kbbreview: “I don’t think anybody will be unaffected by the coronavirus and while factories are closed in China, it means the whole supply chain around the world will be affected.”
He added: “And I don’t think we have seen the effects yet. I think we will see it as we go into the second quarter and the middle of the year and we will start seeing shortages on all sorts of things from pharmaceuticals to finished products in our industry – certainly appliances, sinks and taps.”
But Lay was quick to reassure kbbreview that Caple had not been caught out by the coronavirus situation and that, like others we spoke to at the show, the fact that it coincided with the Chinese New Year had helped, as they had already increased stock levels as Chinese factories close around that time anyway.
Lay told kbbreview: “We are in a very favourable position because we tend to hold a lot of stock. We are not just the brand, we are the distributor of that brand as well, so we tend to hold three months’ stock. We did plan ahead and because the coronavirus happened around the Chinese New Year, we had allowed for that anyway.”
He added that although it obviously will affect appliance makers, furniture will not be immune either.
He said: “On kitchen furniture, it’s also a matter of hinge components and drawer components – anything that has a minor component made in China will be affected, because there are not any factories making these components in Europe now and it takes years to put a factory together. So I am hoping it will blow over and will see it subside. We are seeing factories in China starting to open and maybe working at 60% to 70% capacity.”
SycamoreLED buys finished lighting products from China. How has it been affected? On its stand, commercial director Gary Wilson pointed out that it too had been lucky because of ordering extra stock to cover the Chinese New year period.
He told kbbreview: “We have not been affected as yet. We work on historical forecast, customer forecast and a buffer stock as well. Luckily, the timing of it, around Chinese New Year, means that we had inflated our stocks anyway, so we had stock that was on the water, that is coming in and we schedule that in on a weekly basis. That’s still coming in now over a 12-week period so we see our stocks being fine until at least the end of June maybe a bit later. We are monitoring it, as it is an every-evolving situation. We are in daily contact with our suppliers in China.”
Wilson also mentioned that the Chinese were finding some clever workarounds to keep production going. He explained: “They are starting to go back to work now. They are also using some unskilled labour from the area around the factories. They usually work in a different industry and their own guys who can’t get into work are working in other factories near where they live. But they are still 30% down on capacity.”
But there were other consequences of the coronavirus outbreak, as Bora’s UK and Ireland sales manager Andy Cummings pointed out. Bora may not be hugely affected by component supply issues, although some of its sub-suppliers do source components from the Far East, the postponement of the Eurocucina show in Milan caused the company to do a rethink and use kbb Birmingham for the official launch of its new X Pure downdraft extractor hob. It was originally slated for launch at the Italian show.
In general, Cummings reflected: “I think that eventually it might affect us all. We have very long deep supplies chains that wrap all over. So I think that not only in the kitchen industry, but also in the car industry and TV industry, if this coronavirus is a prolonged episode. I think it will affect many things.”
Of course coronavirus has spread outside China and is marching across Europe. At Italian extractor hob and hood specialist Air Uno, sales manager Jonathan Gledhill said that plans were in place to cope with the effects of the outbreak. He told kbbreview: “We speak to our suppliers on a weekly basis and they have put certain systems in place to try to counteract the effects. Our manufacturing is based in Italy and they have parts they buy from across the world, and so that is something that they have had to look at to make sure it will not hinder the delivery of stock. A lot of their motors tend to come from Germany, but some of the lighting may come from China.”
Striking a more optimistic note, Bill Miller, managing director of buying group Der Kreis/KBBG, said: “If the coronavirus was to really start reaching pandemic proportions and really became a big issue in the UK, would that potentially stop people going out onto the high street, and the answer is, possibly. So just when the market is beginning to recover after what was, let’s be frank, a very tough year for independents, that’s now on the horizon. Being the optimist that I am, I personally think the signs are that 2020 has had a good, positive start, but we have to go week by week on that one. The message from our buying group in the UK is a positive one.”
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