Construction Companies Report Experiencing Supply Chain Disruptions Due to Coronavirus
As of the time of this writing, the World Health Organization (WHO’s) has just declared the novel coronavirus (COVID-19) a global pandemic. “This is not just a public health crisis, it is a crisis that will touch every sector,” said WHO director-general Dr. Tedros Adhanom Ghebreyesus. The construction industry is one of those sectors.
China, a crucial component of the global supply chain, has been hit hardest by the spread of the virus, and attempts by the country to stem the spread of the virus have resulted in their manufacturing sector slowing to a crawl. Although it’s too early to tell what the full impact of the coronavirus will be on the global supply chain, construction companies are already experiencing disruptions.
Below, our construction lawyers will discuss the coronavirus and its impact on the global supply chain. The team at Cotney Construction Law continues to monitor the impact of the coronavirus on the construction industry, and as the situation changes, we’ll provide contractors with the knowledge they need to make informed decisions regarding their businesses.
A Break in the Chain
As revealed in a survey conducted by the Institute of Supply Management (ISM), “nearly 75 percent of companies report supply chain disruptions in some capacity due to coronavirus-related transportation restrictions.” Even more concerning, over 40 percent of respondents reported not having a plan to address supply chain disruptions from China. Although it’s good to hope for the best, construction companies must prepare for the worst.
Other Findings
Other findings include a doubling of average lead times, manufacturers in China operating at 50 percent capacity, and difficulties even getting supply chain information from China. Six in 10 respondents reported experiencing delays in receiving orders from China. Although respondents were a mix of manufacturing and non-manufacturing, the majority consisted of professionals in supply chain management roles.
Have a Team Behind You
This is only a first-round survey, and it remains to be seen how the supply chain is impacted once China’s manufacturing sector recovers and other countries become affected. As this situation develops, our law firm will be providing legal advice to help see your business through this difficult time.
In addition to diversifying your supplier base, we recommend working with a construction lawyer who can review your contracts to ensure that you are protected from rising material costs, project delays, and unforeseen circumstances like the spread of the coronavirus. Consult the experienced attorneys from Cotney Construction Law with any legal questions you may have concerning the coronavirus and its impact on your job site.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.
Cotney Construction Law is an advocate for the roofing industry, General Counsel of National Roofing Contractors Association (NRCA) and several other industry associations throughout the U.S. For more information, contact the author at 866.303.5868 or go to www.cotneycl.com.
