ASKO, Electrolux, Smeg, Miele & Bosch All Face Major COVID-19 Supply Issues

Struggling Chinese TV and appliance maker Hisense who are also owner the former Swedish brand ASKO has moved to cut about 2,200 jobs due to a coronavirus-related demand slump, Smeg, Bosh and Electrolux are also facing major supply problems because of COVID-19.

Hisense who appears to have been hit hard by the downturn said their March orders in Europe alone were down by a third year on year, by almost two thirds in April and are expected to be down by a quarter in May and June, their problems stem from their European operation from where ASKO branded products and some Hisense Australia appliances are manufactured.

The Company is forecasting a loss of “several tens of millions of euros” in the first half of 2020, compared with a previously forecast profit of only A$1.5 million before the COVID-19 epidemic that has been blamed on China broke out.

“The number of employees will be reduced in all units of Hisense” the company said in a statement, adding that the process will include outsourcing, voluntary redundancy, and retirement.

In the TV market TCL is gaining share at the expense of Hisense who have struggled to supply retailers with stock.

Another Company facing problems is Miele who this week issued a statement claiming that the German Company had only just been able to resume production at all its German plants. The Company said that the three week shutdown was now over however the Company faces new problems along with other European manufacturers in getting manufactured products on to boats with insiders claiming it could be late July August before retailers seen new Miele appliances available in Australia.

The Company said that supply chains and a sharp drop in sales due to store closures in the retail sector had impacted the business.

“The situation has eased somewhat for vendor parts but is by no means stable. We are producing for the foreseeable future, with a maximum of ten days to plan. Short time work therefore cannot be ruled out in the coming weeks in individual plants or production areas. We are confronted with a very dynamic situation worldwide, characterised by many uncertainties”, says Dr. Stefan Breit, Executive Director Technology of the Miele Group.

Swedish home appliance maker Electrolux (ELUXb.ST) said on it now saw a considerable risk of a “material” financial hit in the first six months of 2020 due to the rapid global spread of the new coronavirus and that they are struggling to deliver goods to retailers from plants in the USA and Europe.

The company, warned as far back as January 31 of a possible substantial hit to results should the effects from the virus outbreak linger long enough, now that it is they claim that the risk to the Company was substantially worse adding its previously given outlook was no longer valid.

“Given the rapid spread of the coronavirus, impacting markets where Electrolux has a significant presence in terms of production and sales, the company believes the risks related to this have increased materially,” it said in a statement.

Another Company facing serious supply problems is Italian appliance Company Smeg who last year cut a deal with Coles to give away Smeg appliances.

The design and manufacture of Smeg appliances is concentrated in three factories based in Northern Italy, each specialising in a specific type of appliance these factories are located in some of the worst hit areas of Italy where thousands have died from the Coronavirus.

The company is headquartered in Guastalla between Milan and Bologna.

On February 21st, the outbreak in Northern Italy led to a shutdown of “red zones” one day later many of these red zones are still in place which is a problem for most Italian appliance brands.

European Research group GFK said that the COVID-19 impact on production in Europe has dragged down global distribution market by –5% in the last 4 weeks.

“The consequences of the Italian shutdowns and further spread across multiple countries already affect supply chains and distribution markets heavily,” says Tatjana Wismeth, GfK expert on Global Distribution.

Italy, as one of the most affected countries in Europe, is currently showing one of the highest declines in volumes. In the last 4 weeks, distribution markets in Italy decreased by –9% on average which results in over 828,600 sales less compared to the previous year period. Other European countries like Great Britain and France are following this trend – however, at a weaker pace with –4%, respectively –2%. Sector-wise, the IT industry is currently contributing most to this picture.

Other Italian brands set to face supply problems are Alessi, Omegna, and Bertazzoni.