PARMA HEIGHTS, Ohio — First, it was the Great Depression in the 1930s. Then, the Great Recession of 2008. Now, the ‘Great Uncertainty’ of 2020 has taken hold as Wall Street suffered its worst week in more than a decade amid fears of the coronavirus. From Wall Street to Main Street, the impact of the contagious virus has been far-reaching on the global economy and some small businesses in Northeast Ohio have already felt the pinch.
Stocks plummeted again on Friday, capping off the worst week for trading since October 2008. Although the stock market is not the economy at large, it does provide a glimpse into the staggering amount of uncertainty amongst investors.
The coronavirus has halted production at a number of factories in several industrialized counties, particularly China, which produces a bevy of consumer goods from apparel to electronics. Amr Taweel, the owner of Buycellcleveland, a Parma Heights smartphone repair store, is already grappling with supply shortages for iPhone screens.
“What I am seeing is [my vendors’] quantity and ability to purchase their [inventory] has gone down significantly,” Taweel said. “They went down from having 1,000 pieces of an iPhone 7 screen to now having less than 200. It’s selling out within hours of them posting that stock. It puts a lot of pressure on stores, especially me where I am having to buy screens in advance. They said the factories for those companies aren’t going to be open until maybe April and they have postponed that three times already.”
Because Taweel’s business model is also predicated on the ability to scale, the unstable supply of screens makes it even more difficult. The coronavirus has also impacted the availability of certain phone batteries, cameras and other components, Taweel said. Unfortunately, it appears it is going to get worse before it gets better.
“Supply and demand then becomes a factor. That could raise the price of screens,” Taweel said. “My concern is I’m not going to be able to keep my prices as low as they are now. With low supply and high demand, you’re going to have to raise your prices because the company is going to have to charge me more for their screens.”
Juscelino Colares, the associate dean for global legal studies at Case Western Reserve University, said Friday that consumers can expect widespread supply issues for certain products. The supply chains for those products are often clustered in either one country or multiple neighboring counties like China, Japan and South Korea. Once one cog in that supply chain is disrupted, the problem snowballs.
“Globalization is not set up for redundancy. Globalization is set up for efficiency,” Colares said. “Any system (of government) in the world, you will face this shortage. Any time you have disruptions in supply with an upsurge in demand you will have shortages. That’s what we have right now. No government could have necessarily predicted that.”
The threat of scarcity is likely to further exacerbate supply shortages, Colares said, although certain manufacturing sectors will likely feel the brunt of the coronavirus more than others.
“Because people are already expecting supply reductions or potential disruptions, you are going to have demand increase very rapidly,” Colares said. “That always creates an imbalance that no market can balance out.”
Taweel started his phone repair business less than a year ago after quitting his job in the mortgage and banking industry. He knew starting his own business was a risk but he wasn’t anticipating that risk to be brought on by a virus.
“You can never plan for these things. You can only prepare the best that you can,” Taweel said.
