Mass. Companies Under Pressure As Coronavirus Weighs On Global Supply Chain

As the novel coronavirus outbreak continues to roil the stock market and disrupt global supply chains, some local companies are feeling the pressure.

"It's nerve-wracking," said Jeff Greenstein, president of Delta Cycle, a maker of bike racks and bike accessories based in Randolph.

Delta does about 80% of its manufacturing at a factory in China's Guangdong province, which is located in the Southeastern part of the country. Delta, which has been in business for more than 35 years, moved production from Taiwan to China a little over a decade ago because it's a "well-oiled export machine," Greenstein said.

But the coronavirus outbreak, which hit China during the Lunar New Year, has thrown a wrench in that machine. Following the holiday, Delta's factory was supposed to open back up during the first week of February, but travel restrictions within China made it extremely difficult for many workers to return to their jobs, Greenstein said.

Now that the factory is up and running again, the company has a lot of catching up to do.

"Right now there are shipments that need to be leaving," Greenstein said, "so obviously, we're telling them they need to move faster than they usually do."

But many other companies in China are in the same situation, which creates another problem. If Greenstein wants to book a spot on a container ship for his bike racks, stands, and handlebar phone mounts, he's going to have to pony up more money than usual.

"There's going to be a back log of shipping that needs to get filled, and there's only a fixed number of containers and vessels that are going to be able to ship them," Greenstein said.

Another company getting squeezed right now is Vibram, which makes footwear and rubber soles for hundreds of other shoe brands. Vibram has factories in North Brookfield; Guangzhou, China; and in Milan, Italy, the latest hotpot for coronavirus infections.

"That's actually where, over the past 72 hours, things kind of exploded," said Fabrizio Gamberini, president of Vibram Corp. "[Milan] is pretty much shut down at this point. Colleges are closed. Sports events are canceled. It's a little bit concerning."

The company has issued guidance to employees at its Italian facility to help them stay safe, and production will continue for now, Gamberini said. But that could change.

Gamberini said that even before the COVID-2019 outbreak in Italy, the company estimated that the outbreak in China would cost around $10 million in lost revenue. That's why, in recent weeks, the company has been working on a sort of Plan B: to move some of the production from China to the facilities in Massachusetts and Italy.

"But it may become a C or D plan based on how the situation in Milan develops," he said.