A$ Tanks CE & Appliance Suppliers Now Facing Double Whammy
Australian consumer electronics and appliance suppliers are facing having to significantly lift prices if they have not hedged against the Australian dollar which fell to $0.65 cents this morning.
Fears coronavirus could lead to widespread disruption around the world has seen the Aussie dollar fall to 11 year lows with CE and appliance suppliers now facing two dilemma’s spanning the supply of goods due to limited factory supply and the price of the goods due to the falling dollar.
Some brands that ChannelNews has spoken to claim that the delay could last more than two months will stock scheduled for February now not being available till May 2020.
“The Aussie dollar remains the favourite whipping boy, both as a China and a global growth proxy,” said NAB market economist Tapas Strickland.
The latest rout started as European traders rolled it overnight resulting in the Aussie falling below the previous low of 65.80 US cents within a matter of seconds.
It eventually bottomed at 65.40 US cents, near it was trading at 10.30am this morning.
The problem for many brands is that factories in China are struggling to get their supply chain back due to a lack of staff.
They are now increasingly worried that disruptions linked to the COVID-19 coronavirus could delay production for weeks, causing pain for both distributors and retailers.
ChannelNews understands that some retailers have called for financials of several small appliance and consumer electronics retailers fearing that they don’t have the cashflow or borrowing capacity to take a hit due to the downturn.
According to IPC, a trade group that represents contract manufacturers and other suppliers of electronic parts the supply chain is “seriously fractured”.
On average, manufacturers surveyed by IPC have been told to expect three-week delays from their suppliers, but privately expect longer delays, the trade group said. The average expectation was five weeks, and some companies expect delays longer than nine weeks. Overall, 84% are concerned about delays related to the outbreak.
CNBC said recently that electronics are complicated products, often with hundreds of different components and sub-suppliers, and one missing part or slowed factory often ripples and causes issues and delays, which causes shortages of the finished product.
Even if manufacturing is done in regions that haven’t been affected by the coronavirus, those products often use parts or sub-assemblies made in China.
“Manufacturers have been concerned, and while they’re looking at all the other alternatives, they do worry about and see delays,” said Shawn DuBravac, chief economist at IPC. “They see any disruption as concerning, or anything that leads to downtime.”
Yesterday we exclusively revealed that hundreds of Australian appliance industry executives who had pre booked accommodation and discount special airline fares face losing their money after EuroCucina the European kitchen expo, was cancelled due to the Coronavirus.
The week prior MWC The Mobile World Congress show in Barcelona was cancelled.