Current China Situation
All of GCP’s factory partners are now operational and orders produced prior to the Chinese New Year shutdown have begun to ship. Containers began leaving the Shanghai port on Friday, February 28th.
However, only the National Silicone factories are at, or near full production. Solid silicone is running at full capacity while the sponge facility is operating at around 90%. The remainder of the factories are operating between 50 and 60%. The reports from the factories themselves indicated that over the next two weeks they feel they will be able to build up to full production.
The information for manufacturing in China as a whole is that GCP’s factory partners are in better shape than most other suppliers. The manufacturing survey we received (Dated February 28, 2020), shows that 40% of manufacturers expect to be fully operational by mid-March and 80% will be running at capacity by the end of March. The report goes on to state, “If you and your business partners are in China, better start trying to lock in their capacity now, as there is likely a huge backlog.”
North American Situation
Prior to the latest shipments on 02/28 and 03/02, the last ship date was January 20th. This means that it will be a minimum of 40+ days without product to replenish your inventory. For most of you the outage will be longer, likely 60 days or more.
For Premlene, any sheet rubber orders placed today have an estimated ship date for the end of April. We are currently forecasting up to 60 days in production. When you add the ocean transit time of 25 to 30 days, we are looking at 90 days, from order to delivery. Although it is expected that production lead times will shorten over the next month, we would like to have your orders in, so that they will be ahead of the anticipated backlog for transportation and ocean shipping.
The Opportunity
There is one additional piece of information that I would like to add in. Currently, Chinese suppliers account for more than 70% of sheet rubber imports into North America. It is forecasted that it will take until the end of March for 80% of Chinese manufacturers to get into full production. This means that GCP’s factory partners could be operating 2 to 4 weeks ahead of other rubber factories.
Product stock-outs and shortages could be occurring with your competitors over the next few months. No one anticipated the impact of the Coronavirus on manufacturing in China. As a result, companies did not prepare for a prolonged period of time with no shipments.
But now you have an opportunity to secure your product supply ahead of the competition, as long as you place your sheet rubber and silicone orders by March 13th. The sooner the better of course! We have reports that the factories’ European customers placed several orders just before the Chinese New Year. I do not want us to lose our well earned priority.
If you have urgent items, please let Melanie or Sarah know, and we will have the factory partner focus on these items to reduce production time.
Our main concern is that you have the products you need on your shelves. Or at the very least, be able to communicate when it is arriving, when your customer asks for it.
We appreciate your support and ongoing confidence in GCP and our factory partners.
I believe that we can still make 2020 a record year!
Until next time,
Gary Mottershead – President, GCP Industrial Products
