As Chinese-based manufacturers begin to restart factories Monday, no one knows for sure when they’ll be back at full-speed — or what sort of chaos may ensue.
Tech producers led by Foxconn, which makes the majority of the world’s iPhones from Zhengzhou a few hundred miles from the coronavirus outbreak’s epicenter, had begun preparing investors for the potential bedlam when hundreds of thousands make their way back to factories.
Apple Inc.’s most important partner warned investors of the daunting task of securing enough workers despite widespread transport blockades, quarantining thousands, and the “nightmare” scenario of an on-campus epidemic that could shut down production altogether.
Last week, it took the unprecedented step of warning workers to stay away from its Shenzhen headquarters till further notice as government inspectors vet its containment procedures, Bloomberg News reported.
“How we can make sure there will be no infection within our campuses will be the first priority, because if you put a lot of people together and one of them gets infected, that will be a nightmare,” Foxconn investor relations chief Alex Yang told investors on a Thursday call, according to a recording obtained by Bloomberg News. “We try very hard to make sure the possibility of any on-site infection will be as low as zero, although it will be challenging.”
The deadly virus has illustrated the increasingly central role China plays in global manufacturing, from clothing and chemicals to automobiles and especially technology. Just about every major piece of consumer electronics is made in China, from iPhones and gaming consoles to half the world’s liquid crystal display or LCD screens.
The contagion has already shuttered plants across China for a week longer than anticipated after the Lunar New Year break — a disruption that could get much worse if rolling quarantines and suspended rail and air links prevent the return of the millions of blue-collar laborers at the heart of electronics assembly.
When they do make it back, untold numbers will get funneled into a quarantine of up to two weeks — a sequester of unknown scale. Any disruptions at Chinese plants can, in a worst-case scenario, freeze parts of the supply chain by triggering cascading shortages.
Influential supply chain analyst Kuo Ming-chi of TF International estimates Foxconn’s main iPhone-making base will properly resume work only next week — and then at 40% to 60% capacity. Citigroup estimates just 30% of the entire Chinese semiconductor workforce is estimated to return to their workplaces as of Feb 11.
Foxconn said in a statement Saturday it’s working with local governments to prepare for the return of employees, without specifics.
Shenzhen’s Longhua district said in a WeChat post it was helping the Taiwanese company fine-tune its plans. “To safeguard everyone’s health and safety and comply with government virus prevention measures, we urge you not to return to Shenzhen,” Foxconn wrote in a Feb. 5 text message to employees based in the southern city. “As for the happy reunion date in Shenzhen, please wait for further notice.”