Impact of coronavirus on the ceramic industry

The newest coronavirus (also known as COVID-19) continues to spread, reaching further around the globe. With an upsurge in cases in South Korea, Iran and the first confirmed case in the U.S. that is not related to global travel, markets are experiencing volatility, leaving the flooring industry to wonder what the long-term impact could be.

According to The New York Times, as of Friday February 28, 2020, the stock market has taken a significant hit as uncertainty surrounding the virus’ ultimate impact continues. The Times reported the market took more than a 3 point hit on Friday. The S&P index had already plummeted 12 percent over the week, the Times said, potentially making this the worst week since 2008.

Explained Jamann Stepp, vice president of hard surface for The Dixie Group, “Wall Street has taken a hit this week based on COVID-19’s spread into other countries in Europe, the Middle East and even newly confirmed cases in the United States. The short and possible long-term ramifications are within the supply chain of not only flooring, but all consumer products, including agricultural, pharmaceutical, electronics and automotive to name a few.”

Stepp predicted the ripple effect of the disruption to the supply chain from China “basically being closed for business the last 30 plus days” will undoubtfully lead to challenges in the supply chain. He added, “We hope the effects are short-lived and that the global spread of the virus is contained ASAP.”

The situation in China is improving, however. “The situation in China seems to be improving now every day. The amount of people coming out of [the coronavirus] are now more than new cases,” said Thomas Baert, president of CFL Flooring. However, Baert cautioned we are not out of the woods yet, saying, “Expect the issue to continue a few more weeks. Supply issues will likely be apparent in the U.S.A. in the month of May when the delay of shipments become visible.”

Harlan Stone, CEO of HMTX Industries, agreed the situation in China is improving at a rapid pace and noted the spread outside of China is of the greatest concern currently. “The increased exposure and spread of COVID-19 outside of China is a real concern, but it is too early to say how it may affect the flooring industry or overall global economy. One thing we do know it that the effects will not be good,” he stated.

Stone shared there is no true industry-wide response to the outbreak so far. “We do see banks and outer lending institutions providing flexibility to help manufacturers take the necessary time to build up their output and re-establish normalized cash flow,” he said. The biggest safeguards against economic impact will be consumer demand, followed closely by business investment, Stone added.

The industry is still working diligently to continue to keep its people safe. “Our greatest concern is for the health and safety of our people. Shaw has manufacturing facilities, contract manufacturing partners, and supply chain, sales and marketing associates around the world, including in Asia. As the situation in China began to unfold, Shaw teams quickly formed to ensure our people have access to needed supplies, information and support. We have restricted business travel to countries impacted by the virus, per CDC recommendations, to protect our associates and others. We have also implemented self-quarantine and remote work plans for associates who have been or have potential to be exposed to the virus,” explained president of Shaw Industries, Tim Baucom.

Some industry shows and those related to the industry have already been rescheduled or postponed. Domotex Asia/Chinafloor officially announced a reschedule. Instead of March, the 2020 show will be held from Aug. 31 to Sept. 2. And, a top design show in Italy, Salone del Milano, announced on Twitter it would reschedule to June.

Predicting long-term impacts is difficult right now, Baucom added, but he said Shaw is monitoring and adjusting its response in real time. He asserted, “We remain optimistic about 2020 industry performance.”