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Coronavirus threatens U.S. companies that produce goods in China

Posted at 5:22 PM, Feb 05, 2020

With travel restrictions and parts of the country in quarantine, NYU Professor of Economics Nicholas Economides says the coronavirus outbreak has ceased production of many goods made in China.

“There is a major disruption of the supply of these goods because right now everything is at a standstill in China,” Economides said. "How long the disruption will last, we have no idea.”

That includes products like car parts, laptops and iPhones and some U.S. companies are facing an economic hit. This past weekend, Apple announced it had closed all of its corporate offices and retail stores in China.

“Out of the total production of the world, which is 80 trillion, China is only 12. So, there are substitutions, but there are certain areas in which almost everything is produced in China, and that’s where you’ll see the biggest impacts,” Economides said.

One company that heavily relies on China is Phantom Fireworks. It’s one of the largest suppliers of fireworks for Independence Day.

“We’ve had shipping and production issues, but nothing at this level. Nothing at this level,” said Phantom Fireworks Executive Vice President Alan Zoldan.

Zoldan says this time of year is critical for the production and shipping of their fireworks, but all operations are currently shut down. That means there could be a shortage of supplies once the Fourth of July rolls around.

“As these weeks go by, and we get into the end of February – beginning or middle part of March – we are only sitting with about 30-some percent of our orders shipped, maybe another 10 percent sitting on the docks in China. So, that means there will be a pretty serious shortage if this continues,” Zoldan said.

Big decisions will need to be made and it’s possible the high demand for fireworks could impact the price for consumers. Zoldan says the entire world relies on China for fireworks and few producers exist outside of the country.

“It would take years for any other country to even get to the level that China does because they have been doing it for twelve-hundred years.”

Even though Zoldan says this situation is unprecedented for the company, he’s holding onto hope that the virus will be contained and production will begin again soon.

“If we can get over this coronavirus and the factories can reopen in a fairly quick manner, then we still have a window of opportunity here. Keeping my fingers crossed that we’ll be able to thread the needle, I guess,” Zoldan said.