STOCK MARKET
Companies with ties to China feeling impact
Bay State companies are taking a hit from the coronavirus outbreak that’s threatening the world economy, industry watchers say.
Massachusetts companies with facilities in China are facing a supplychain shortage as plants shut down because of the highly contagious disease that has infected more than 77,000 people in China.
“One of our members making electronic components has two plants in China that are both closed down,” Christopher Geehern of the Associated Industries of Massachusetts told the Herald on Monday, declining to name the companies.
“There are other companies in the machinery industry being affected,” Geehern said. “A virus doesn’t affect a particular industry. It cuts across geography, and all sorts of companies are being affected in some way.”
Local companies should have a
“wait-and-see” attitude, Geehern said, noting that no one knows how widespread coronavirus will become over the next year. The rapid spread to other countries is raising anxiety about the threat the coronavirus poses to the global economy.
“If in fact the footprint continues to expand, employers will be more concerned,” he said. “But right now it’s wait and see, and we hope that this spread gets contained.”
Area businesses must start to research other options for suppliers, particularly if they have a lot of inventory from China, said Jon Hurst of the Retailers Association of Massachusetts.
“They have to keep a close eye on this, no question,” Hurst said. “How long this goes on and how many industries are affected still remains to be seen, but some delays are bound to occur.”
Now’s the time for companies to look for alternative sources of supply, said Nada Sanders, a professor at
D’Amore-McKim School of Business at Northeastern University. Company leaders should be “pulling out crisis management plans,” she said.
“You can’t be doing business as usual,” Sanders said. “Especially companies that are relying on international global sourcing, you should be thinking about tapping into more local sources.”
When it comes to personal investments such as 401k accounts, Jurrien Timmer of Fidelity’s Global Asset Allocation Division said, “The best response is to take no action” when considering the effects of market plunges like Monday’s on long-term investments.
“For most investors with a longterm investment plan, these kinds of market pullbacks should be viewed as bumps in the road,” Timmer said in a statement.
Timmer said history has shown “epidemics and other natural disasters take away growth in the nearterm, only to give it back later.”