Coronavirus impacts products from China

Published: Feb. 19, 2020 at 6:04 PM CST
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NEW ORLEANS, La. (WVUE) - The coronavirus’ grip on China has everyone from the local construction industry to makers of digital devices concerned about the impact on products they rely on from the Asian country.

Jon Luther, CEO of the Homebuilders Association of Greater New Orleans, says many products used in the construction industry come to the U.S. from China.

"Absolutely it concerns us, I mean we have a myriad of products that flow from China anything from our millwork to stone, to plumbing fixtures, to electrical fixtures, you know, so of course a lot of our product that goes into the home originates from China or components for some of that product originates in China,” he said.

He said there is a lot of uncertainty. "Now the key is to understand to the best of our ability what that supply chain disruption is truly going to look like, or what it looks like now, look at what we have in inventory and use it to the best of our ability,” said Luther.

Over 70,000 coronavirus cases have been reported in mainland China and that has affected manufacturing.

China is a huge trading partner with the United States.

Tulane University economist Prof. Douglas Nelson discussed why that is the case.

"Part of it is they make things inexpensively well that we like to consume,” he said.

Apple announced recently that it is cutting its sales expectations for this quarter because its supply of smartphones is hampered due to the virus’ impact on Chinese factories.

"China assembles iPhones, if they can't assemble them because there are people who are sick or dying, or there are inputs from China that can't get to the factories then that chain, that sort of combination of things that produces an iPhone breaks down and so they just aren't there,” said Nelson.

He said what happens in China affects the global economy.

"Because of the way the world economies work now that kind of breakdown will affect us,” said Nelson. "The value chains that run through China are being broken up right now and that means firms that use inputs from China, as well as firms in China to which we sell inputs are buying less or selling less and that means that’s going to affect our economy to some extent.”

Luther says if building supplies trickle in from China that could affect costs.

"Short-term price increases, longer term projects starting to get delayed if built at all and that, we'll call it worse case scenario and we're certainly not there by any means now, but again if it persists and they're not able to stabilize the outbreak,” he said.

Nelson said the virus could also affect the U.S. Trade agreement with China.

"A big part of that Phase 1 agreement was a commitment by China to meet certain targets for importing and exporting for that matter, and there is just no way they will be able to meet those targets at this point,” he said.

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