JCB – how the coronavirus can bring the UK supply chain to its knees

JCB is being forced to halt its production line and slash the working hours of around 4,000 of its UK workforce, owing to a shortage of components being imported from China.

The construction company has announced to create 600 new jobs - image courtesy of JCB.
JCB has reduced the working hours of some 4,000 staff from 39 to 34 hours a week and pulled back on its production – image courtesy of JCB

The Staffordshire-based company, renowned for its distinctive yellow machines typically used in construction projects, announced the disruption to its UK factories after many of its Chinese suppliers were closed due to the impact of the coronavirus.

JCB has reduced the working hours of some 4,000 staff from 39 to 34 hours a week and pulled back on its production, because it is not receiving from China the “required” number of parts necessary to meet its forecast demands.

It has also suspended all overtime at its UK factories.

The announcement, thought to be the first tangible impact of the outbreak felt by a British manufacturer, will redound on other UK firms from various sectors who also source their materials from China and as the risk to global supply chains from the coronavirus is laid bare.

It is understood that more than 25% of JCB’s suppliers in China have been forced to shut down as a result of the outbreak.

The Staffordshire company relies on China for hundreds of electronic parts, castings and other components, to build its vehicles which invariably end up in the construction and agricultural sectors.

The virus, which has dramatically reduced capacity at the factories of JCB’s suppliers that still remain open, is believed to have originated in the city of Wuhan in Hubei province.

To date, the virus has claimed the lives of more than 2,000 people the world over.

JCB has not indicated when routine production at its UK factories will resume.


The coronavirus’ impact on other manufacturers

This is not the first time a manufacturer has warned of disruption to its supply chain as a result of the coronavirus.

Fiat Chrysler said at least one of its European manufacturing plants could be forced to stop production, as it too sources parts from China.

While another carmarker, Hyundai, closed down all of its car manufacturing sites in South Korea when components from China stopped arriving.

There are also reports in various media about global tech companies’ supply chains being disrupted by the outbreak.

“Major disruption to the global supply chain because of the Covid-19 continues, affecting industries from automotive to toys – and the issue continues to escalate,” said Richard Wilding, Professor of Supply Chain Strategy at Cranfield University. “In China, smaller companies may find it easier to get back up and running. But larger factories may have to go through a cleaning and disinfectant process before staff can fully return and implement appropriate procedures to identify potential infections in the workforce, similar to what we have seen at airports. For larger sites implementing such procedures could take weeks.”