P&G has 387 suppliers across China © SOPA Images/ Getty Images
P&G has 387 suppliers across China © SOPA Images/ Getty Images

P&G warns 17,600 products possibly hit by coronavirus

21 February 2020

Consumer goods giant Procter & Gamble has warned around 17,600 products could be affected by the coronavirus.

P&G’s CFO Jon Moeller, speaking at the Consumer Analyst Group of New York conference in the US, said P&G used 387 suppliers across China, shipping more than 9,000 materials.

“Each of these suppliers faces their own challenges in resuming operations,” he said.

Smartphones and cars are among the consumer products most affected by the outbreak, according to TrendForce.

TrendForce said forecasts for product shipments from China for the first quarter of 2020 had been slashed, by 16% for smartwatches (to 12.1m units), 12.3% for notebooks (30.7m units) and 10.4% for smartphones (275m units). Cars have dropped 8.1% (19.3m units).

“The outbreak has made a relatively high impact on the smartphone industry because the smartphone supply chain is highly labour intensive,” said a report.

It added: “Although automakers can compensate for material shortage through overseas factories, the process of capacity expansion and shipping of goods is still expected to create gaps in the overall manufacturing process.”

TrendForce expects the global auto market to suffer a 14% decline year-on-year in the first quarter of 2020, which it described as the “largest decline in recent years”.

Analysts Mintec said the virus was “swamping” markets with uncertainty. 

In a report, it predicted coronavirus would have a worse impact on the global economy than the SARS outbreak in 2003.

It predicts Chinese demand for copper (it has hitherto been responsible for consuming half the world’s output), will fall by 500,000 tonnes this year, and falls in demand have already impacted prices. From December to January the price of copper fell 9.6%.

Chinese demand for crude oil is already down by 20%. Before the outbreak China consumed 13% of global oil output. 

Mintec said: “Millions of people have been affected by the travel lockdown in Hubei province, the centre of the outbreak. This has been responsible for a glut of jet fuel and diesel on global markets at a time when petroleum supplies were already abundant.” 

Mintec said the price of crude oil fell 15% month-on-month at the end of January, hitting its lowest level since December 2018.

Other products affected include pork – the price has rocketed 167% year-on-year and 11% month-on-month to the first week of February – and chicken, where ships carrying it from the US to mainland China are being diverted to ports in Hong Kong, South Korea, Taiwan and Vietnam.  

Supplies of garlic are also under threat (China commands 80% of the export market), along with dried ginger – prices delivered to the US have grown by 26% quarter-on-quarter. 

Not surprisingly, investors are flocking to the safe-haven commodity, gold. By mid-February, prices were already 7% higher compared to December.

Additional reporting by Peter Crush

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