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COVID-19 can impact American manufacturing: Report

27
Feb '20
Pic: Shutterstock
Pic: Shutterstock
The current factory shutdowns and transport issues in China due to the outbreak of novel coronavirus, named COVID-19, can adversely affect the American manufacturing sector, if the situation persists for long, according to a recent report. The outbreak of the virus has already claimed more than 2,500 lives in China alone.

American industries that appear most immediately at risk are those that rely on inputs from China and have low inputs in inventory. “Chemical products account for the largest individual share of US manufacturing production, at nearly 18 per cent, and a disruption to production in this sector could significantly curtail total US manufacturing output. American chemicals industry imports about 20 per cent of its inputs form China. Consequently, if the virus were to continue to spread and cause production disruptions on a global scale, then the US chemical products industry could be more at risk of a production disruption,” warns the Wells Fargo Securities report.

The report states that the estimated input inventory ratio in the US has trended steadily higher and currently stands at all-time high. “High levels of input inventories gives production in most American industries some cushion against supply chain disruptions from China. That does not mean the current virus outbreak, however, will not have a bearing on overall GDP growth. As Chinese production and shipments are delayed, US inventories will be pared down more quickly than they otherwise would be,” the report concludes.

Fibre2Fashion News Desk (DD)


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