Coronavirus Affecting Chinese Operations
There are no known cases of the novel coronavirus in Chautauqua County, but the virus is affecting one of Chautauqua County’s largest employers.
The new virus causes fever, cough and shortness of breath. Some people have had only mild illness. In serious cases, the virus can cause pneumonia. Some patients have needed oxygen. The U.S. Centers for Disease Control and Prevention has said travelers returning from Hubei Province will be quarantined, and travelers from other parts of China will be actively monitored with help from state health departments.
During a conference call with analysts earlier this week, Cummins Inc. officials discussed the novel coronavirus’ impact on its operations in China. Tom Linebarger, Cummins Inc. chairman and chief executive officer, said the company is expecting domestic revenues in China, including joint ventures, to decrease 7% in 2020, with a 10% reduction in heavy and medium-duty truck demand and flat demand in the light-duty truck market. There are existing industry challenges that are causing some of the decreases in the company’s operations in China, but the novel coronavirus is having an impact as well.
“It is expected that our industry, as well as others, will experience supply chain disruptions and loss of revenues in the first quarter due to the coronavirus outbreak,” Linebarger said. “We have significant operations in Hubei province, where Wuhan is located including manufacturing and technical facilities that have been impacted by extended closures. We are monitoring the situation in China very closely to ensure the safety of our employees and their families and to minimize any impact on our operations and our customers. We are also monitoring any impact on our global supply chain by Chinese suppliers and taking precautionary actions wherever possible.”
Linebarger said there are always disruptions in the company’s business when Cummins closes its Chinese factories during the Chinese New Year. Shutdowns due to the coronavirus have recently extended beyond what company officials had included in previous financial guidance to analysts. Linebarger said the company isn’t sure how long shutdowns will continue due to the virus.
Company officials are trying to make sure its workers in China have the support and resources they need. The company is also trying to make sure there is as little impact on customers as possible by making sure inventories are tracked so orders can be shipped on time or how to work with customers in case of a longer-than-expected delay. Cummins is planning to reopen facilities between Feb. 10 and Feb. 14 in China. There could be what Linebarger termed a relatively modest impact on revenues if the factories reopen on schedule.
“If those were to extended further because the outbreak extends further and the government has to take further actions, then of course, we don’t know yet, but we’ll have to figure out then what will happen,” he said. “But we worry about both shipments in China as well as shipments to markets outside of China because, we do have a number of parts in China that supply plants outside.”



