Virus Impact: Toyota halts production, Cargill works from home
INTERNATIONAL - Toyota Motor Corp. is halting production in China and other companies suspended operations or asked employees to work from home as they grapple with a SARS-like coronavirus that has killed more than 130 people and is threatening a key growth market.
Wuhan, the epicenter of the coronavirus that has infected almost 6,000, is a manufacturing, shipping and business hub. Apple Inc. is working with its suppliers in the city to mitigate any production loss, but the impact outside of the region is less clear, Chief Executive Officer Tim Cook said Jan. 28. Toyota said Wednesday it is suspending operations in its China plants until Feb. 9.
As the virus has spread in China and beyond despite travel restrictions and other worldwide efforts to contain the disease, airlines suspended flights and chains including McDonald’s Corp. and KFC have shut locations. Volkswagen AG, Canadian insurer Sun Life Financial Inc. and banks from Credit Suisse Group to Morgan Stanley are telling staff to work from home.
LVMH, the world’s largest luxury-goods maker, signaled it expects the crisis may already start easing near the end of the first quarter. Chairman Bernard Arnault said that information from his advisers suggests that the peak should be reached over the coming weeks and the crisis may be partially resolved by the end of March. He cautioned that that outlook may be inaccurate.
Here is a summary of how some of the biggest companies are responding to a crisis that is disrupting supply chains around the world:
Work From Home, Travel Restrictions
- Cargill Inc., America’s biggest privately owned company and top agricultural commodities trader, asked employees in its Chinese offices to work from home from Feb. 3 to Feb. 9.
- United Airlines Holdings Inc. is paring service to China due to “a significant decline in demand for travel.” Two dozen flights to Beijing, Hong Kong and Shanghai will be suspended starting Feb. 1, United said in an email on Jan. 28. The plan includes flights from United’s hubs in Chicago, San Francisco, Washington and Newark, New Jersey, although some service to China will continue.
- Nvidia Corp., the biggest maker of computer graphics chips, told its workers in China to stay home and any others returning from the country to work from home for two weeks, people with knowledge of the matter said. Travel to China should be postponed, Nvidia told employees. Facebook Inc. has also implemented similar policies.
- UBS Group AG and Goldman Sachs Group Inc. are among financial firms that have imposed travel restrictions to the mainland. HSBC Holdings Plc suspended business travel to Hong Kong until Feb. 11. Some including Standard Chartered Plc are providing staff with face masks and hand sanitizers, along with guidance on hygiene and how to avoid getting sick.
- PricewaterhouseCoopers LLP: The accounting firm has suspended all business travel to Wuhan and employees returning from the city are required to work at home for two weeks before coming to the office, a spokeswoman said. The company extended Chinese New Year holidays for staff in Hong Kong and Macau to Jan. 31 and asked employees to work remotely where feasible following the holiday.
- Starbucks Corp. has closed more than half of its coffee shops in mainland China -- about 2,000 of them. The company maintained its 2020 forecast but said it doesn’t include the impact of closing half of the mainland stores because it can’t yet calculate it. Compared with McDonald’s and Domino’s Pizza Inc., Starbucks is the most exposed to the outbreak, as measured by percentage of worldwide revenue and operating income, according to Guggenheim analyst Matthew DiFrisco.
- Nissan Motor Co.: The automaker planned to evacuate most of its expatriates and their family members from Wuhan using chartered plane dispatched by the Japanese government, a company spokeswoman wrote in an email. Honda Motor Co. also organized evacuations. A handful of staff needed to maintain local operations will remain in the city.
3M Co., a top maker of protective face masks, is cranking up production. “We are focused on ramping up 24/7, not only in our China operations but in Asia, Europe and the U.S. to meet that demand,” 3M Chief Executive Officer Michael Roman said in a phone interview Jan. 28.
Yum China Holdings Inc. temporarily closed most of its KFC and Pizza Hut stores in Hubei province until further notice.
Fast Retailing Co.: The operator of the Uniqlo casual clothing chain has temporarily shut 130 of its China stores, a spokeswoman said. That’s equal to about a fifth of its mainland locations.
Ryohin Keikaku Co.: Owner of the Muji clothing and housewares brand has closed some stores in Wuhan, according to a spokesman.
Wuhan, the epicenter, has more than 500 factories and other facilities, placing it 13th among 2,000 Chinese cities in Bloomberg’s supply chain database. It’s the capital of Hubei province, which has 1,016 facilities, making it seventh of 32 such jurisdictions. Many plants are in the auto and transportation industries.