British manufacturing giant JCB has announced that it will be cutting production and working hours as it faces a shortage of components from China due to the coronavirus.
This is the first leading British brand to make such an announcement since the outbreak was announced.
JCB revealed there will be reduced working hours for more than 4,000 staff from Monday and an immediate suspension of overtime. Most of those employees will be at the firm’s Staffordshire headquarters.
JCB CEO Mark Turner said: “The disruption to the component supply chain in the UK comes at a time when demand for JCB products is very strong, so while this course of action is very unfortunate, it is absolutely necessary to protect the business and our skill base. We are keeping the situation under review and we anticipate a surge in production levels once this period of supply disruption has passed.”
Although JCB is the first firm taking such measures, further disruption for UK businesses is ‘on the horizon’ according to a logistics expert.
Slimane Allab is EMEA General Manager at LLamasoft, a global AI and logistics solutions provider which works with many manufacturing firms with facilities in China.
He said: “As JCB becomes the first known UK business hit by supply chain disruption as a result of coronavirus, it’s a reminder that longer-term impacts are likely to show through the cracks in just a matter of weeks.
“No failure in shipments arriving is impacting operations right now, but this is likely only around the corner. The likelihood of a wider-scale UK impact is on the horizon.
“As well as preparing for reduced capacity as partners in China replenish stocks, there’s going to be a focus on preparing for surges to production after these periods of disruption have passed. With a greater level of risk for manufacturers as these demands change, the risk of critical individual component availability stopping production increases.
“With JCB cutting staff hours to protect its skill-base and business, it’s a warning sign that the impact of the disruption will be widespread.
“This is yet another reminder for the need to factor risk and resiliency into designing the supply networks, asking the right questions to quantify risk exposure so that proactive action can be taken.”