Let’s start by noting that, here at Avela Corporation, our prayers go out to the victims of the coronavirus disease around the world. Known more precisely as Coronavirus Disease 2019 (COVID-19), it was first detected in China’s Wuhan City in Hubei Province. If you want to know more about the medical and scientific details, we suggest visiting the Center for Disease Control website (http://www.cdc.gov/coronavirus/2019-ncov/index.html).

Some can debate the threat posed by the virus and how to deal with it, but there is a growing number of people personally affected and for them it is an undeniable tragedy. This is an epidemic that generates a lot of collateral damage beyond the victims and their families. At the time of this writing, travel is being restricted, businesses have been shuttered, factories have been closed, supply lines disrupted across international boundaries. The interruption of commerce has negatively impacted the income of untold multitudes. Healthcare professionals around the world are hard at work caring for the afflicted and developing a cure.

Against this background, it may seem inappropriate or disrespectful to talk about the coronavirus impact on business,  but that is undeniable collateral damage as well. There will be long term ramifications to the business response to coronavirus, whatever it is, and executives may rethink their manufacturing sources and supply chain options.

The global supply chain has undeniably been disrupted. We feel it here at Avela, although our staff at our Shanghai office has not been directly impacted. Factories in China have been closed as their government copes with the coronavirus outbreak. We are seeing them reopen, but ramping back up to full production is a slow process as workers, some who have been quarantined for safety, are cleared through health screenings to return to their jobs. This process has to be repeated throughout their supply chain before production returns to normal.

But it does not end there. International port closures have disrupted the transportation of goods around the world. Transportation hubs that have not closed are operating with reduced staffs and skeleton crews, slowing the movement of goods around the world.

Is there a 100%, sure way to ever guarantee against supply chain disruption? Not really. Perhaps the closest that ever came to happening was when Henry Ford built his sprawling River Rouge Automobile Plant in the 1920s. His goal was to have all manufacturing “within the fence” surrounding his property. The raw materials, however, came from around the world, so the Ford Motor Company always relied on a global supply chain. It managed risk by having alternate sources and routes for getting materials to the plant. But business, particularly manufacturing, is a fluid environment. At one point the company outsourced manufacturing of its brake shoe assemblies to a company that was targeted by the UAW. Despite all of Ford’s meticulous planning for a worldwide supply chain, the Kelsey Hayes Wheel Manufacturing Company strike of 1936, practically in his backyard in Detroit, threatened to completely shut down his production.