Tire industry keeping eye on spread of COVID-19

WASHINGTON — It's now a matter of how and when and not if.

As countries around the world work, to varying degrees, to contain COVID-19, aka "coronavirus disease 2019," the spread of the illness will impact how the world conducts business.

"The impact on all of this is probably not going to hit the market in the next couple of months. It's not going to be immediate," said Aaron Lowe, vice president of regulatory and government affairs for the Auto Care Association (ACA), who represents businesses that provide aftermarket products and services, including tires and installation, to motor vehicles.

Businesses around the world, each year, prepare for the annual closure of Chinese manufacturing for a week in celebration of that's country's new year. But COVID-19 further disrupted business as the government ordered shutdowns and quarantines to limit spread of the virus.

This unexpected extension of supply chain disruption, Mr. Lowe said, will start to be felt in the U.S. as time passes.

"Eventually, down the road, there's going to be an impact. Because once the factories do start putting out products again, the shipping is going to be an issue," he said, adding there is only so much capacity to move goods.

"That will take time to play itself out," Mr. Lowe said. "It will eventually filter through the system."

"A lot of companies had stocked up for the Chinese New Year knowing there was going to be a downtime. There was a plan at that point. But, of course, it's a much longer and much more intensive impact," he said.

And while the initial concern about the virus centered in China, the illness is starting to have major impacts elsewhere around the world. That's particularly true in Italy where the northern portion of the country, including millions of people, now is under quarantine.

That area includes Milan, in the Lombardy region, where tire maker Pirelli & C. S.p.A. is headquartered. The company has scaled back production at its tire plant in Settimo Torinese, Italy, as it works to disinfect the facility after a confirmed case of COVID-19 at the site.

It's now been months since the health crisis emerged from Wuhan, China, first gripping a large swath of that country, before moving overseas and creating what the World Health Organization has deemed a pandemic. Although, the U.S. Centers for Disease Control and Prevention said, the risk is still low in the U.S., despite the report of cases in several states.

Doing business is this atmosphere of uncertainty is fraught with uncertainty as managers try to strike a balance between being prudent and too cautious. Many in the U.S. still live far from the limited outbreaks in this country, but health experts warn the virus certainly is going to spread.

At Triangle Tire USA in Franklin, Tenn., CEO Manny Cicero said his company's four plants in China are back up and running after a three-week shutdown earlier this year. The first week was planned for the Chinese New Year, followed by two additional weeks of forced closure due to the virus outbreak.

Each reason served to put a crimp on supply.

"There is an effect. First you have Chinese New Year followed by the coronavirus outbreak," he said. "At the very least, three weeks of product was taken out of the industry."

The company's manufacturing sites are in Weihai, far from Wuhan — about the distance between Dallas and Boston, Mr. Cicero said while providing some perspective. "Triangle was fairly lucky. … Our plant is back up. We're building, and we're shipping. I consider ourselves one of the fortunate ones."

Even for a company like Triangle in the U.S., getting a clear, big picture out of China can be difficult.

Mr. Cicero did say that his U.S.-based sales staff has received a handful of inquiries from competitors' customers asking about supply in the light of global uncertainty. "It's out there. There's a thread out there of concern about supply.

"It's more or less just that there may be some shortages out there. Yes, we are in pretty good shape. You order, we'll ship," he said.

Triangle Tire has received three or four such calls regarding tire availability, the CEO said.

Over at the Tire Industry Association (TIA), CEO Roy Littlefield III said his trade group is keeping a close eye on corona virus developments as they could have an impact on his organization's event scheduling. TIA members meet around the country and around the world, so any virus outbreaks or travel restrictions could impact the organization.

"We're very concerned about it. All we can do right now is monitor it and be safe and careful. We haven't canceled anything yet, but we certainly are developing plans in case something like that happens," Mr. Littlefield said.

TIA recently held its Off-the-Road Tire Conference in Indian Wells, Calif., and fears of the virus did not dampen attendance, the CEO said, as people from 40 states and 14 countries attended.

"Of all the people who registered, only one did not come, and that person was from China and could not get out," Mr. Littlefield said.

But, TIA has postponed its Lobby Day and Environmental Summit, which were scheduled for May 6-7 in Washington, as a precautionary measure against the spread of the COVID-19.

TIA's office in Bowie, Md., is a busy place, the CEO said. "If you every come to our office. The phone rings off the hook on a daily basis. As an association we have not gotten one call yet on this from our membership. There's just under 14,000 members," he said.

Tires are still being shipped from all over the world, he said, as people watch the situation unfold. "I think, right now, people are fascinated by it, not in a positive way. They are watching it," Mr. Littlefield said.

 

COVID-19 symptoms can include cough, fever and trouble breathing. People typically develop mild symptoms and recover, but those with underlying medical problems can develop more severe issues such as pneumonia.

Meanwhile, the status of a big industry gathering scheduled for later this year is in the back of many people's minds right now as the uncertainty of COVID-19 continues to play out.

A total of 10 industry associations come together annually in Las Vegas to hold shows and meetings, anchored by the Specialty Equipment Market Association (SEMA) show at the city's well-known and massive convention center. TIA also holds its gathering at the same location.

This year's event is scheduled for the first week in November.

Stuart Gosswein of SEMA said his organization is keeping its ear to the ground but has not heard of any impact at this point.

"We're closely monitoring the situation, staying in close contact with government officials and industry," the senior director of federal government affairs said.

The past two years of trade wars and tariffs that have impacted commerce between China and the United States, in some ways, helped prepare the industry for the potential impact of the virus, Mr. Gosswein said.

"This is different but, in a funny way, related. It is an extension of supply chain disruption, or potential supply chain disruption," he said. "We're concerned about any potential impact that's out there."

Along with the big Las Vegas gathering, SEMA members are involved in many international activities.

"We're also doing export fairs. We have a number of SEMA members going over to China as a delegation or going to the Middle East (for example). So we are monitoring that as to how it impacts upcoming export fairs that we participate in," he said.

The U.S. Tire Manufactures Association (USTMA) represents 13 companies with 58 tire-related manufacturing locations spread across 17 states.

CEO Anne Forristall Luke was traveling when asked for comment about the COVID-19 situation, but the USMA released this statement:

"U.S. tire manufacturers' first priority is ensuring the safety and well-being of their employees. As such, our members are continuing to closely monitor information from local and federal officials including the Centers for Disease Control guidelines for preventing the spread of respiratory viruses and will continue to do so as the situation develops," she said.

Countless people around the world use face masks to help prevent spread of disease. But health officials have been advising people that those masks do not help protect people from becoming sick. They do help those who are already sick from spreading their germs, however.

This widespread misunderstanding is helping fuel a run on personal protective equipment, including masks, that's causing the World Health Organization (WHO) to ask both companies and governments to increase production.

The burgeoning shortage, in some cases, is impacting healthcare workers access to supplies including masks, respirators, goggles, face shields, gowns, aprons and gloves, the WHO said.

The WHO describes the situation as a "severe and mounting disruption of the global supply" of such products.

This increased demand, which includes "panic buying, hoarding and misuse – is putting lives at risk," the agency said.

"Without secure supply chains, the risk to healthcare workers around the world is real. Industry and governments must act quickly to boost supply, ease export restrictions and put measures in place to stop speculation and hoarding." WHO Director-General Tedros Adhanom Ghebreyesus said in a statement.

Prices in some markets have increased by six times for surgical masks, tripled for respirators and doubled for gowns, the WHO said.

"Supplies can take months to deliver and market manipulation is widespread, with stocks frequently sold to the highest bidder," the agency reported.

Mr. Lowe said his ACA is in engaged with its membership about the evolving situation.

"We're constantly trying to keep in touch with our members about it. And where we can provide information, we do. A lot of it is just information and sharing that, making people understand what's going on. Other than that, it's a difficult role. It's just making sure people prepare for the impact," Mr. Lowe said.

He said government must play a key role in helping combat the virus. "I think there's sufficient concern now in the government. They took a little longer than I probably would have liked. But the administration is pretty well aware it's going to have a major economic impact," he said.