China Ramp-Up, Facility Diversity Easing Manufacturing Impact in Office Hardware Market

Vendors Speak out on the Ongoing Pandemic

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04/01/2020

George Mikolay

 

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The virus known as COVID-19 continues to wreak havoc in the United States and drag the economy to a screeching halt. I talked with several of the major OEMs in the office hardware space about the impact the coronavirus has had on their manufacturing to this point, here in the US.

 

While China was put on strict quarantine measures for nearly a month beginning at the end of January, that lockdown has since subsided and manufacturing facilities have been ramping up to full capacity. Safety precautions are being taken, including masks and gloves for workers. Some organizations are even buying out entire hotels to house quarantined staff.  By the end of February, Apple CEO Tim Cook declared that the company was reopening factories in China and would gradually accelerate manufacturing as the country was getting the virus under control.

 

Similar to Apple, Konica Minolta closed development, production, and sales sites in China—except Hong Kong and medical-related businesses in Xiamen—for a short time, but all facilities reopened on February 10. For KYOCERA, the initial impact was to reduce production in its production plant in Dongguan, China, 621 miles from Wuhan. However, this plant is now recovering its production levels as well. All the OEMs also scrambled to move production out of China into other locations when the tariffs were imposed, which looking back may have helped offset some of the downtime that would have been experienced in plants throughout China.

 

In terms of manufacturing diversity, Konica Minolta’s plant in Malacca, Malaysia, provides full-scale operation including the production of MFPs and consumables. KYOCERA has production levels at plants in Vietnam and Japan; equally, temporary factory shutdowns in China did not affect KYOCERA’s provision of toner, which is not produced in China. It’s pretty common for OEMs to produce toner at multiple locations. KYOCERA also has shipment centers in Memphis and Dallas that are working in shifts in order to guarantee continuity of service and send priority orders out while minimizing the risk to our workforce. Sharp and Ricoh are also managing their supply chain closely and, most importantly, have not yet experienced any major pandemic-related supply impacts for anything that they provide to their customers.

 

Xerox noted that their consumables (e.g., toner and ink) are produced close to North American and EMEA clients, and the pandemic response in China has not impacted the supply of these items. Factories are currently operating at typical output levels. And while many of the parts used by Xerox technicians to maintain Xerox equipment come from areas in China where factories experienced extended Lunar New Year shutdowns, most of those suppliers have now resumed operation near their expected levels of production output. Xerox is also activating mitigation strategies to make up for the extended Lunar New Year shutdown as needed, including premium airfreight, alternate sourcing, asset recovery, and reverse logistics.

 

A recent survey of bliQ dealers, vendors, and salespeople shows a mixed bag as far as how the virus has affected business. While some have concern over a soft market, others have not seen any hardware orders delayed. Others express optimism for pent-up business once virus concerns subside. Regardless of where your company falls on the spectrum, the major office hardware vendors are yet to experience any major delays in meeting manufacturing needs.

 

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