I went to a farm machinery show this week and saw the JCB guys. If I make it back out there and remember I’ll ask them about deliverables and what their production time might look like. That’s 20,000 man hours a week slashed and component shortages inbound.
https://www.theguardian.com/business/live/2020/feb/13/euro-low-recession-fears-coronavirus-growth-ec-business-liveAlibaba and JCB hit by coronavirus problems as oil demand slashed - as it happened
JCB is planning to cut working hours for around 4,000 employees from 39 hours to just 34 from next Monday. Overtime has also been suspended. Staff won’t take a pay cut, though - they’ll have to work the hours back later this year.
The problem is that a quarter of JCB’s suppliers in China are still closed, due to virus-related restrictions, so they can’t ship enough components to Britain.
I think this makes JCB the first major UK manufacturer to cut output because of Covid-19 -- airlines such as British Airways have already cut flights to China.
JCB chief operating officer Mark Turner explains:
“The disruption to the component supply chain in the UK comes at a time when demand for JCB products is very strong, so while this course of action is very unfortunate, it is absolutely necessary to protect the business and our skill base.
“Production in the UK has so far been unaffected by the situation in China. However, more than 25% of JCB’s suppliers in China remain closed and those that have reopened are working at reduced capacity and are struggling to make shipments.
“It is therefore clear that the inbound supply of certain components from Chinese partners will be disrupted in the coming weeks as they seek to replenish their stocks.
“This inevitably means we will not have the required amount of parts needed to build our forecast number of machines in the short-term.
“These measures will ensure that, while we will produce machines in lower than anticipated numbers, we will do so with the same number of employees, whose skills we will need to fulfil customers’ orders when the situation returns to normal.”