Tag Archives: supply chain

Alcohol and auto parts: Canada’s warehouses fill up as floods stop flow of goods

By Julie Gordon, Rod Nickel and Nichola Saminather

OTTAWA (Reuters) – Canada’s warehouses are filling up with everything from furniture to alcohol, after floods in British Columbia washed out critical rail and road lines, disrupting already strained supply chains.

A week after a phenomenon known as an atmospheric river brought a month’s worth of rain in two days to the Pacific coast province, road traffic between Vancouver’s port, Canada’s busiest, and the rest of the country remains largely suspended.

Canadian Pacific Railway is set to restart service on Tuesday, while Canadian National Railway plans to reopen to limited traffic on Wednesday.

Shippers, meanwhile, are seeking extra storage space and eyeing alternative routes to move key manufacturing components. The disruptions come ahead of the busy holiday shopping season, with the Retail Council of Canada estimating a “significant” hit to companies. Still, Christmas won’t be totally ruined.

“People will be able to get gifts for holiday season,” said Greg Wilson, director of B.C. government relations for the Retail Council of Canada, adding consumers may need to make compromises on their wish lists.

From forest fires to floods, natural disasters are exposing Canada’s supply chain vulnerabilities, piling pressure on retailers and manufacturers already grappling with global supply chain clogs.

In Vancouver, warehousing and trucking firm 18 Wheels Logistics has filled every inch of its existing storage space with alcohol, auto parts and other goods. It signed a lease for another 180,000 square feet, the equivalent of two city blocks, to deal with excess demand.

“It’s quite a bit of space to take on,” said Chief Executive Adrian Wen.

Wen’s firm is also re-routing trucks laden with perishable goods and high-demand auto parts across the border into Washington state on a more circuitous route to destinations in Alberta and further east in Ontario and Quebec.

He said the trip takes two extra days for a firm relying on 350 drivers.

The infrastructure and emergency cost of the flood alone has been pegged at more than C$1 billion ($787 million), according to local officials. That does not include the hit to farmers, retailers and other businesses.

Logistics firm Volume Freight said it has secured storage in Vancouver for trapped goods from tires to furniture and is arranging for trucks to haul product from the city to provinces further east, via the United States, a costly endeavor.

“Right now, everyone is sitting and waiting… Everyone’s just in limbo,” said Chief Operating Officer Danica Sabourin, adding even when rail lines reopen, delays will last weeks due to the backlog.

The Port of Vancouver, which moves about C$240 billion of goods a year, said anchorage demand is “high and nearing capacity across all vessel types.”

On the other side of the disaster, a driver for Lipsett Cartage was forced to leave his truck loaded down with 94,000 pounds of steel in Kamloops, a city in British Columbia that is north of some of the worst flooding.

The company flew the driver back to Regina, but was unable to make a single shipment to or from Vancouver last week, whereas it usually does 10.

“It’s a mess,” said office manager Zoe Lipsett. “We’re absolutely to the wall, having companies call us, asking ‘How are we going to do this?'”

For Toronto-based shopping bag seller Progress Luv2Pak, the floods are the latest hurdle cutting them off from two long-delayed containers stuck at the Vancouver port.

Even when the shipments are released, Progress will have to find an alternative route to get them east, President Ben Hertzman said.

“I’m pretty numb to it by this point. I wake up everyday kind of expecting there to be another piece of chaos in the supply chain,” he said.

($1 = 1.2700 Canadian dollars)

(Reporting by Rod Nickel in Winnipeg, Julie Gordon in Ottawa and Nichola Saminather in Toronto; additional reporting by Allison Lampert in Montreal; Writing by Julie Gordon; Editing by Lisa Shumaker)

California ports, key to U.S. supply chain, among world’s least efficient

By Lisa Baertlein

LOS ANGELES (Reuters) – Southern California’s Los Angeles and Long Beach ports handle the most ocean cargo of any ports in the United States, but are some of the least efficient in the world, according to a ranking by the World Bank and IHS Markit.

In a review of 351 container ports around the globe, Los Angeles was ranked 328, behind Tanzania’s Dar es Salaam and Alaska’s Dutch Harbor. The adjacent port of Long Beach came in even lower, at 333, behind Turkey’s Nemrut Bay and Kenya’s Mombasa, the groups said in their inaugural Container Port Performance Index published in May.

The total number of ships waiting to unload outside the two adjacent ports hit a new all-time record of 100 on Monday. Americans’ purchases of imported goods have jumped to levels the U.S. supply chain infrastructure can’t handle, causing delivery delays and snarls.

Top port honors went to Japan’s Yokohama and Saudi Arabia’s King Abdullah on the ranking. Finishing out the top five were Chiwan, part of Shenzhen’s port in Guangdong Province; South China’s Guangzhou port; and Taiwan’s Kaoshiung port.

Ports in Asia, the Middle East and North Africa dominated the top 50 spots, while just four U.S. ports cracked the top 100 – Philadelphia (83), the Port of Virginia (85), New York & New Jersey (89) and Charleston, South Carolina (95).

The COVID-19 pandemic has disrupted trade around the globe, snarling trade and exposing the frailty of a supply chain built for predictable, just-in-time movement of goods.

The United States is the world’s biggest consumer, importing goods valued at roughly $2.5 trillion a year. President Joe Biden is fighting for massive federal funding to modernize crumbling infrastructure – including seaports. Government control, 24/7 operations and automation help make many non-U.S. ports more efficient.

Biden is pushing port executives, labor union leaders and major retailers like Walmart to attack shipping hurdles that are driving up the price of goods and raising the risk of product shortages during the all-important holiday season.

Southern California port executives are coaxing terminal operators, importers, truckers, railroads, dock workers and warehouse owners to adopt 24/7 operations in a bid to clear clogs that have backed up dozens of ships offshore and delayed deliveries to stores and e-commerce fulfillment centers.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Heather Timmons and Diane Craft)

Ford redesigning parts to use more accessible chips, weighing direct deals with chip foundries

By Ben Klayman

DETROIT (Reuters) -Ford Motor Co, in response to the global semiconductor shortage, is redesigning automotive components to use more accessible chips, the No. 2 U.S. automaker’s chief executive said on Thursday.

Jim Farley, speaking at Ford’s online annual shareholder meeting, also said the company is weighing other strategies for the future, including building a buffer supply of chips and signing supply deals directly with the foundries that make the wafers used in semiconductors.

Automakers typically get their chips through their largest suppliers, not dealing directly with chip makers and the foundries that make the wafers used to assemble the semiconductors.

The chip shortage has caused automakers globally to curtail production. Last month, Ford said the issue would cost it $2.5 billion this year and halve its vehicle production in the second quarter, when the shortage will be at its worst. The shortage has forced Ford at times to idle production of its highly profitable F-150 pickup trucks.

Farley said on Thursday that about 60% of the chips used in Ford’s vehicles are 55-nanometer or larger, what he called “mature nodes.” He said supply of those chips was constrained.

Longer-term changes about how Ford approaches chips are being considered, he said.

“Not only are we redesigning a lot of our components to work with chips that are more accessible … but we think we need to look at buffer stocks, actual direct contracts with some of the foundries,” Farley said. “We think that’s going to be a really critical approach to our supply chain as we get more electronic components.”

Ford Executive Chairman Bill Ford also said on Thursday the automaker will look to reinstate the company’s dividend “as soon as possible.”

Ford’s dividend was suspended in March 2020 after the COVID-19 coronavirus pandemic hit in a move to conserve cash. That saved the company $2.4 billion at an annual rate.

Ford shares were up 3% in morning trading.

(Reporting by Ben Klayman in Detroit;Editing by Elaine Hardcastle)

Drugmakers say Biden misguided over vaccine patent waiver

By Stephanie Nebehay and Ludwig Burger

GENEVA/FRANKFURT (Reuters) -Drugmakers on Thursday said U.S. President Joe Biden’s support for waiving patents of COVID-19 vaccines could disrupt a fragile supply chain and that rich countries should instead share more generously with the developing world.

Biden on Wednesday threw his support behind waiving intellectual property rights for COVID-19 vaccines, angering research-based pharmaceutical companies.

If adopted by the World Trade Organization, the proposal would invite new manufacturers that lack essential know-how and oversight from the inventors to crowd out established contractors, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) said.

“I have heard many (vaccine makers) talking about ‘our resources are stretched, our technicians are stretched’,” IFPMA Director General Thomas Cueni told Reuters. He warned of a possible free for all if “sort of rogue companies” were allowed to become involved.

Vaccine developers echoed his comments that waiving intellectual property rights was not a solution.

“Patents are not the limiting factor for the production or supply of our vaccine. They would not increase the global production and supply of vaccine doses in the short and middle term,” said Germany’s BioNTech, which aims to supply up 3 billion doses together with Pfizer this year.

BioNTech said it took more than a decade to develop its vaccines manufacturing process and replicating it required experienced personnel and a meticulous technology transfer, among several other factors beyond patents.

Another German company CureVac, which hopes to release trial results on its messenger ribonucleic acid (mRNA) vaccine as early as this month, said patents were not to blame for supply bottlenecks.

“Since mRNA technology has emerged as the key technology in the fight against COVID-19, the world now needs the same raw materials in unfathomable amounts. The biggest problem is how to coordinate this,” a spokeswoman said.

IFPMA’s Cueni said the real bottlenecks were trade barriers, in particular the U.S. Defense Production Act (DPA).

The DPA is a decades-old U.S. law that prioritized procurement orders related to U.S. national defense, but it has been widely used in non-military crises, such as natural disasters.

Cueni said the way to kickstart low-income countries’ vaccination campaigns was for rich countries to donate vaccine, rather than widen eligibility to young and healthy people at home.

Moderna, which on Thursday reported quarterly results, said waiving intellectual property rights would not help to increase supply of its vaccines in 2021 and 2022.

The U.S. drugmaker said last year it would not enforce its vaccine patents. CureVac said on Thursday it would also not enforce its patents during the pandemic and that it knew of no other developer that would.

Italy’s ReiThera which is in late-stage tests on an experimental COVID-19 vaccine, was also critical of patent waivers.

“There is proprietary know-how that has to be transferred by the owner. And then there is the problem with process materials, which at the moment have delivery times of almost a year,” ReiThera’s chief of technology Stefano Colloca said.

In contrast to the industry reaction, the GAVI vaccine alliance, which co-leads the COVAX dose-sharing program with the WHO and faces major supply constraints, welcomed Biden’s support for waiving intellectual property rights.

(Writing by Ludwig BurgerAdditional Reporting by Emilio Parodi in Milan; editing by Barbara Lewis and Jane Merriman)

U.S. factory activity races to more than 13-1/2-year high in early January: IHS Markit

WASHINGTON (Reuters) – U.S. manufacturing activity surged to its highest level in more than 13-1/2-years in early January amid strong growth in new orders, but bottlenecks in the supply chain caused by the COVID-19 pandemic are driving up prices and signaling a rise in inflation in the months ahead.

Data firm IHS Markit said on Friday its flash U.S. manufacturing PMI accelerated to a reading of 59.1 in the first half of this month, the highest since May 2007, from 57.1 in December. Economists had forecast the index slipping to 56.5 in early January.

A reading above 50 indicates growth in manufacturing, which accounts for 11.9% of the U.S. economy. Manufacturing is being supported by businesses rebuilding inventories and a shift in demand towards goods from services because of the coronavirus crisis. Factories and the housing market are anchoring the economy as it battles a resurgence in the virus.

The IHS Markit survey’s measure of new orders received by factories raced to its highest level since September 2014. The surge in demand reflected both existing and new customers, “with some clients reportedly committing to orders previously placed on hold.”

But the pandemic is gumming up the supply chain, leading to higher prices for materials.

Manufacturers are also raising prices for their products. The survey’s gauge of prices received by factories vaulted to its highest level since July 2008. This mirrored other manufacturing surveys, suggesting inflation could pick up and remain elevated beyond the anticipated boost from the drop of weak readings in March and April from the calculation.

With orders soaring, manufacturers hired more workers early this month. The survey’s factory employment index increased to 54.8 from 52.2 in December.

The strength in manufacturing helped to lift business activity. The survey’s flash composite PMI Output Index, which tracks the manufacturing and services sectors, rose to a reading of 58.0 early this month from 55.3 in December. While its flash services sector PMI increased to 57.5 from 54.8 in December, the pace of new business growth softened at the start of 2021.

The services sector, which accounts for more than two-thirds of U.S. economic activity, has borne the brunt of the pandemic, with severe disruptions to restaurants, bars and other businesses that attract crowds. COVID-19 has infected more than 24 million people, with the death toll exceeding 400,000 since the pandemic started in the United States.

The survey’s measure of services industry employment fell to a six-month low in early January.

(Reporting By Lucia Mutikani; Editing by Chizu Nomiyama)

Britain tells shoppers food is plentiful but supermarkets fret about next week

By James Davey

LONDON (Reuters) – Britain said there was plenty of food in the shops on Tuesday but industry groups repeated warnings of shortages of some fresh produce from next week unless freight routes to mainland Europe are swiftly restored.

Interior minister Priti Patel said Britons should not be concerned despite Tesco and Sainsbury’s, Britain’s two biggest supermarket groups, raising the alarm on Monday that gaps could start to appear on fruit and vegetable shelves within days.

Freight from France is being disrupted as part of a wider suspension of travel links with Britain to try to curb a new faster-spreading strain of COVID-19.

“I don’t think anybody should be worried – there is plenty of food in our shops,” Patel told LBC radio.

British supermarkets are facing record Christmas demand due to COVID-19 restrictions on the hospitality industry and on travel and there are fears of panic buying.

“UK shoppers need have no concerns about food supplies over Christmas, but impacts on local on-shelf availability of certain fresh foods look likely from next week unless we can swiftly restore this link,” said Ian Wright, CEO of the Food and Drink Federation, which represents over 300 food and drink businesses.

The British Retail Consortium (BRC), which represents more than 170 major retailers including the big supermarkets, is also concerned about supplies shortly after Christmas, highlighting possible shortages of salad, vegetables and fruit, including raspberries and strawberries.

“The borders really need to be running pretty much freely from tomorrow to assure us that there won’t be any disruption,” Andrew Opie, the BRC’s director of food and sustainability, told BBC radio.

He noted that 90% of the lettuces consumed by Britons and about 70% of soft fruit comes through the Channel ports at this time of year.

TESTING

The BBC cited France’s Europe Minister Clément Beaune as saying that Britain and France would announce a deal to restart freight by Wednesday. One option is to roll out mass testing for truck drivers.

“Whatever is agreed, we need to be careful it doesn’t add too much friction to the supply chain which in itself causes disruption by causing delays to the drivers whilst they’re being tested,” said Opie.

Though large queues again snaked around supermarkets across Britain on Tuesday and some shelves were stripped bare, food retailers said they had not seen any major changes in customer buying behavior.

Opie said supermarkets had expected and planned for Christmas queues.

“You need to remember these are the busiest days for shopping…and remember all the stores are still operating all of their COVID protocols, which means you can’t get as many people into a supermarket as you would do normally,” Opie said.

“We’re not seeing the sort of excessive buying in any kind of volumes that we saw around that period in sort of mid-March,” he added.

(Reporting by James Davey; Editing by Guy Faulconbridge, Alexander Smith and Louise Heavens)

Fast take: U.S. consumer inflation muted, just don’t buy a used car

By Dan Burns

(Reuters) – U.S. consumers on balance paid only a little bit more for goods and services last month as supply chain disruptions that contributed to a bump up in inflation over the summer began to ease, a welcome respite for the millions who remain unemployed.

While that easing pressure on pinched consumers might offer a benefit to Republican President Donald Trump’s reelection prospects against Democratic challenger Joe Biden, it does come with a big “on the other hand” caveat: It is the latest sign of fading momentum in the rebound from this spring’s record-setting economic slump.

A bit of inflation typically is an indication of strengthening demand, an encouraging signal that consumers have reliable sources of income allowing them to contribute to growing an economy that hinges extensively on their spending. But with roughly 11 million still out of work and desperate for a new round of COVID-19 relief from Washington, September’s modest uptick in prices is no such signal.

Here’s Jefferies chief financial economist Aneta Markowska’s take: “After several months of above-trend gains, price pressures are finally normalizing. Both headline and core CPI increased by just 0.2% (month-to-month) in September, with the underlying details painting an even weaker picture.”

In fact, she notes prices would have been unchanged but for one thing: The largest monthly increase in used car and truck prices since 1969. And with cash-strapped consumers increasingly reliant on their own transport to get to an on-site job, that’s no welcome development.

Food price increases, too, are moderating after a big run up in the spring, but where you eat makes a big difference.

If eating at home, as millions without work have no choice but to do, then food prices were lower for a third straight month.

If eating out, though, as more consumers are doing as restaurants continue to reopen around the country, prices shot up by the most in 12 years last month.

(Reporting by Dan Burns; Editing by Andrea Ricci)

Trump administration pushing to rip global supply chains from China: officials

By Humeyra Pamuk and Andrea Shalal

WASHINGTON (Reuters) – The Trump administration is “turbocharging” an initiative to remove global industrial supply chains from China as it weighs new tariffs to punish Beijing for its handling of the coronavirus outbreak, according to officials familiar with U.S. planning.

President Donald Trump, who has stepped up recent attacks on China ahead of the Nov. 3 U.S. presidential election, has long pledged to bring manufacturing back from overseas.

Now, economic destruction and the massive U.S. coronavirus death toll are driving a government-wide push to move U.S. production and supply chain dependency away from China, even if it goes to other more friendly nations instead, current and former senior U.S. administration officials said.

“We’ve been working on [reducing the reliance of our supply chains in China] over the last few years but we are now turbo-charging that initiative,” Keith Krach, undersecretary for Economic Growth, Energy and the Environment at the U.S. State Department told Reuters.

“I think it is essential to understand where the critical areas are and where critical bottlenecks exist,” Krach said, adding that the matter was key to U.S. security and one the government could announce new action on soon.

The U.S. Commerce Department, State and other agencies are looking for ways to push companies to move both sourcing and manufacturing out of China. Tax incentives and potential re-shoring subsidies are among measures being considered to spur changes, the current and former officials told Reuters.

“There is a whole of government push on this,” said one. Agencies are probing which manufacturing should be deemed “essential” and how to produce these goods outside of China.

Trump’s China policy has been defined by behind-the-scenes tussles between pro-trade advisers and China hawks; now the latter say their time has come.

“This moment is a perfect storm; the pandemic has crystallized all the worries that people have had about doing business with China,” said another senior U.S. official.

“All the money that people think they made by making deals with China before, now they’ve been eclipsed many fold by the economic damage” from the coronavirus, the official said.

ECONOMIC PROSPERITY NETWORK

Trump has said repeatedly that he could put new tariffs on top of the up to 25% tax on $370 billion in Chinese goods currently in place.

U.S. companies, which pay the tariffs, are already groaning https://www.reuters.com/article/us-health-coronavirus-tariffs/trumps-tariffs-add-to-pandemic-induced-turmoil-of-u-s-manufacturers-idUSKBN22C1MY under the existing ones, especially as sales plummet during coronavirus lockdowns.

But that does not mean Trump will balk at new ones, officials say. Other ways to punish China may include sanctions on officials or companies, and closer relations with Taiwan, the self-governing island China considers a province.

But discussions about moving supply chains are concrete, robust, and, unusually for the Trump administration, multi-lateral.

The United States is pushing to create an alliance of “trusted partners” dubbed the “Economic Prosperity Network,” one official said. It would include companies and civil society groups operating under the same set of standards on everything from digital business, energy and infrastructure to research, trade, education and commerce, he said.

The U.S. government is working with Australia, India, Japan, New Zealand, South Korea and Vietnam to “move the global economy forward,” Secretary of State Mike Pompeo said April 29.

These discussions include “how we restructure … supply chains to prevent something like this from ever happening again,” Pompeo said.

Latin America may play a role, too.

Colombian Ambassador Francisco Santos last month said he was in discussions with the White House, National Security Council, U.S. Treasury Department and U.S. Chamber of Commerce about a drive to encourage U.S. companies to move some supply chains out of China and bring them closer to home.

China overtook the United States as the world’s top manufacturing country in 2010, and was responsible for 28% of global output in 2018, according to United Nations data.

The pandemic has highlighted China’s key role in the supply chain for generic drugs https://www.reuters.com/article/us-health-coronavirus-pharmaceuticals-ap/chinas-coronavirus-induced-supply-chain-woes-fan-concerns-of-possible-drug-shortages-idUSKBN20Y1C7 that account for the majority of prescriptions in the United States. It has also shown China’s dominance in goods like https://www.reuters.com/article/us-health-coronavirus-amazon-com-cameras/exclusive-amazon-turns-to-chinese-firm-on-u-s-blacklist-to-meet-thermal-camera-needs-idUSKBN22B1AL the thermal cameras needed to test workers for fevers, and its importance in food supplies.

HARD SELL FOR COMPANIES

Many U.S. companies have invested heavily in Chinese manufacturing and rely on China’s 1.4 billion people for a big chunk of their sales.

“Diversification and some redundancy in supply chains will make sense given the level of risk that the pandemic has uncovered,” said Doug Barry, spokesman for the U.S.-China Business Council. “But we don’t see a wholesale rush for the exits by companies doing business in China.”

John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce, said that U.S. manufacturers already meet 70% of current pharmaceutical demand.

Building new facilities in the United States could take five to eight years, he said. “We’re concerned that officials need to get the right fact sets before they start looking at alternatives,” Murphy said.

Trump White House pledges to punish China have not always been followed by action.

A move to block global exports of chips to blacklisted Chinese telecoms giant Huawei, for example, favored by hawks in the administration and under consideration since November, has not yet been finalized.

(Additional reporting by Alex Alper, David Lawder, Matt Spetalnick and David Brunnstrom; Writing by Heather Timmons; Editing by Tom Brown)

Virus fight at risk as world’s medical glove capital struggles with lockdown

By Liz Lee and Krishna N. Das

KUALA LUMPUR (Reuters) – Disposable rubber gloves are indispensable in the global fight against the new coronavirus, yet a month’s lockdown in stricken Malaysia where three of every five gloves are made has upended the supply chain and threatens to hamstring hospitals worldwide.

The world’s biggest maker of medical gloves by volume, Top Glove Corp Bhd, has the capacity to make 200 million gloves a day, but a supplier shutdown has left it with only two weeks’ worth of boxes to ship them in, its founder told Reuters.

“We can’t get our gloves to hospitals without cartons,” Executive Chairman Lim Wee Chai said in an interview. “Hospitals need our gloves. We can’t just supply 50% of their requirement.”

The virus, which emerged in China at the end of last year, has left Malaysia with the highest number of infections in Southeast Asia at nearly 1,800 cases, with 17 deaths. To halt transmission, the government has ordered people to stay home from March 18 to April 14.

Glove makers and others eligible for exemption can operate half-staffed provided they meet strict safety conditions. Still, the Malaysian Rubber Glove Manufacturers Association (MARGMA) said it was lobbying “almost every hour” to return the industry to full strength to minimize risk to the global fight.

“We’re shut down,” said Evonna Lim, managing director at packaging supplier Etheos Imprint Technology. “We fall under an exempted category but still need approval.”

Dr Celine Gounder, an infectious diseases specialist at the New York University School of Medicine, said she was using up to six times as many gloves as normal each day due to the number of patients with COVID-19, the illness caused by the virus.

“If we get to the point where there is a shortage of gloves, that’s going to be a huge problem because then we cannot draw blood safely, we cannot do many medical procedures safely.”

GLOBAL CALL

With glove supplies dwindling, the U.S. Food and Drug Administration on its website this month said some gloves could be used beyond their designated shelf life. On Tuesday, the United States lifted a ban on imports from Malaysian glove maker WRP Asia Pacific who it had previously accused of using forced labor.

Britain’s Department of Health & Social Care has urged Malaysian authorities to prioritize the production and shipment of gloves that are of “utmost criticality for fighting COVID-19,” showed a letter dated March 20 to glove maker Supermax Corp and shared with Reuters.

MARGMA is considering rationing due to the “extremely high demand,” its president Denis Low told Reuters. “You can produce as many gloves as you can but then there’s nothing to pack them into.”

Under normal circumstances, Top Glove can meet less than 40% of its own packaging needs. For the remainder, it said just 23% of suppliers have gained approval to operate at half strength.

“We are lobbying almost every hour, we are putting in a lot of letters to the ministry,” said Low. “We are lobbying hard for the chemical suppliers and we want to ensure that the printers are also being given approval and any other supporting services, even transportation.”

In a statement, MARGMA said that as they were having to rely on half of their staff to work overtime during the lockdown, costs would rise by up to 30% and that buyers had agreed to bear that.

Malaysia’s Ministry of International Trade and Industry on Tuesday said it had received masses of applications to operate through the lockdown, and that it was seeking cooperation from industries to give way to those producing essential goods.

AUTOMATION

Developed economies are home to only a fifth of the world’s population yet account for nearly 70% medical glove demand due to stringent medical standards. At 150, U.S. glove consumption per-capita is 20 times that of China, latest MARGMA data showed.

MARGMA expects demand to jump 16% to 345 billion gloves this year, with Malaysia’s market share rising two percentage points to 65%. Thailand usually follows at about 18% and China at 9%.

Top Glove said orders have doubled since February and it sees sales rising by a fifth in the next six months. Its stock, with a market value of about $3.5 billion, has risen by a third this year versus a fall of 16% in the wider market.

The company, with customers in 195 economies, registered the highest net money inflow last week among listed Malaysian firms, along with peer Hartalega Holdings Bhd, showed MIDF Research data. Other glove makers include Kossan Rubber Industries Bhd and Careplus Group Bhd.

“We are fortunate enough to be in essential goods,” said Lim. “These few months and at least the next six months will be an all-time high in terms of sales volume, revenue and profit.”

With more than 80% of its 44 factories worldwide automated, Top Glove itself is less impacted by the lockdown than its more labor-intensive domestic suppliers. Packaging woes aside, however, ramping up production could turn under-supply into over-supply when the coronavirus outbreak finally subsides.

“This outbreak will create awareness and make humankind healthier,” said Lim. “People will pay more attention, they will invest more, they will buy more so demand will be more.”

(Reporting by Liz Lee and Krishna N. Das; Additional reporting by Ebrahim Harris and Daveena Kaur; Editing by Christopher Cushing)