COVID-19 Bulletin: March 16
March 16, 2020 • Posted in COVID-19
Not since the devastating hurricane season of 2017 has the plastics industry experienced such a profound and rapid disruption. As M. Holland did then, we will endeavor to provide intelligence on emerging developments based on our more than 4,000 client touchpoints to the markets, our relationships with most major resin suppliers, and our international supply channel to more than 50 countries. We will attempt to make the information insightful and not redundant to the news flooding the media.
M. Holland’s Executive Leadership Team (ELT) is meeting frequently to assess and respond to COVID-19 with the twin goals of protecting Mployees and ensuring a functioning supply chain for clients and suppliers. To date, we have taken the following actions:
- Effective today, we have transitioned to remote work for most Mployees. Skeletal crews will staff our office locations, and outside visitors are curtailed. We will endeavor to make the transition transparent to clients and suppliers.
- We have prohibited all international travel. Domestic travel requiring air transport or hotel stays has been curtailed to only essential matters and requires ELT review and approval.
- Our Technical Innovation Center in Easton, PA, will remain operative with a reduced on-site crew to provide testing and analytical services. Arriving samples are being sanitized. A contingency plan is in place to utilize contract labs should our Easton site be forced to close.
- Our 3D Printing lab in Northbrook, IL, will remain operative with a reduced on-site crew. A contingency plan is in place to utilize service partners should the Northbrook facility be forced to close.
- We are cancelling or rescheduling all group events and meetings.
- We have initiated a commercial mobilization team to assess the changing market dynamics, both at the market segment level and at the account level. Sales, Market and Product managers are providing daily updates, which will be used to ensure we have the right products in the right places at the right time. We will pass along our market insights to you through these update bulletins.
- We have formed a Rapid Response Team of key management that meets daily to assess COVID-19 developments and adjust our response accordingly.
- We have tightened cybersecurity protocols and reminded Mployees of the heightened risks of cyber fraud during times of emergency.
- To date, no Mployees have contracted COVID-19.
- There is uncertainty in PE and PP markets fueled by both COVID-19 and the collapse of crude prices in the wake of the Saudi-Russia price war. Domestic order rates remain healthy as of last week.
- Our domestic and international suppliers are reporting no plant outages or COVID-19-related production disruptions.
- We have been assured by our strategic 3PL partners that they remain fully operational and have business continuity plans in place.
- Container shortages and space availability continue to cause ocean shipping delivery delays, which are more prominent in latitudinal routes than longitudinal routes.
- Ocean freight rates are dynamic; rates on some routes have doubled from pre-COVID-19 levels, while the more recent collapse of oil prices has provided an immediate rate relief of 5- 10% due to lower fuel surcharges.
- The Federal Motor Carrier Safety Administration issued an emergency declaration that exempts drivers involved in the COVID-19 response from restrictions relative to hours of service, vehicle maintenance and inspection, and general driver qualifications.
- Our Health Care team anticipates increased demand in the Labware and Medical Disposables segments as a result of increased COVID-19 testing and patient care. We expect delays in surgeries and capital spending, which could have a detrimental impact on the Medical Electronics and Orthopedic segments.
- In contrast to Asia and Europe, where Automotive plants have closed, North American manufacturers remain operational, with some business-critical employees working remotely. OEMs and the UAW are collaborating in their response; plants exposed to an infected person are closed for a 24-hour clean down.
- We are seeing a slowdown in sales to the oil and gas sector following the collapse of oil prices. Order patterns otherwise remain steady in most markets.
- In Electrical and Electronics, electrical device manufacturers have suffered from disruptions in the supply chain since COVID-19’s emergence in China. One international OEM anticipates a massive expansion of healthcare facilities in China, which will prompt demand in the Power and Lighting segments.
- Puerto Rico, where we manage much of our international trading, has imposed a curfew. After adapting to Hurricane Maria, our team at M. Holland Export Services is well practiced in working remotely.
- Some LATAM clients are reporting a spike in orders for packaging materials because citizens are stockpiling consumer goods.
- Some export customers are concerned about potential port closures and the risk of demurrage charges for stranded containers that cannot be unloaded.
- There is growing concern in some developing countries about the strengthening of the U.S. dollar and the pressure it is placing on local working capital.
- Clients are advised to add two weeks to order lead times to protect against logistics delays.
We will provide further COVID-19 bulletins as circumstances dictate. For all COVID-19 updates and notices, please refer to the M. Holland website.