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Coronavirus Is Shuttering Chinese Factories — And Affecting Global Manufacturing

Feb 14, 2020
Originally published on February 14, 2020 4:29 pm
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MARY LOUISE KELLY, HOST:

The coronavirus disease, now called COVID-19, has killed more than 1,300 people. It has also locked down one of the world's biggest economies, an economy at the heart of global supply chains. NPR's Emily Feng went to an electronics-making hub in southern China to see why it has been so hard to get back to business.

EMILY FENG, BYLINE: Outside the gate of a vast factory in Kunshan, a city of mostly migrant workers near Shanghai, the hum of production continues, but just barely.

UNIDENTIFIED PERSON #1: (Through interpreter) We have some real conflicts with labor supply right now. The problem is, we don't want to come to work, but our bosses haven't given us a choice.

FENG: This 34-year-old worker from Henan province is part of the factory's so-called winter break crew, a skeleton team hired to work over the January Lunar New Year. Like all the factory employees in this piece, he declined to provide his name for fear of retribution at work.

Since the holiday, local governments began sealing off villages and mandating 14-day quarantines for anyone who travels, meaning many of China's 300 million migrant workers now cannot return to work. Even if they did, apartments are keeping out recent travelers.

UNIDENTIFIED PERSON #1: (Through interpreter) My apartment is guarded by police now because of the virus. Mine has a curfew so strict that if you get back too late after your shift, they won't even let you in. I've had to sleep in a park before.

FENG: And so the skeleton crew has extended their shifts indefinitely to staff factories that normally account for more than half of the world's electronics manufacturing. In Kunshan, the workers NPR spoke to work for Pegatron and Foxconn. They're the titans of global electronics manufacturing. Your smartphone? They helped to make that. Collectively, the two firms normally employ more than 1 million people across China. Most of them have not returned, according to Foxconn workers.

UNIDENTIFIED PERSON #2: (Through interpreter) One production line used to have 4,000 people. Now there are about a dozen.

FENG: Foxconn is trying to get workers from uninfected areas back to its factories. But as this worker explains, that won't solve the labor shortage immediately.

UNIDENTIFIED PERSON #2: (Through interpreter) Even if you came back to the factory, you have to spend 14 days in quarantine. We have some longtime workers that haven't even returned.

FENG: These labor shortages have global implications. Louis Kuijs, Asia economics head at consultancy Oxford Economics, sees the effects of Corvid-19 (ph) as far more long-term and more global than that of the 2003 SARS epidemic, when China's role in the world's economy was much smaller.

LOUIS KUIJS: There seems to be in financial markets the understanding that yes, it's very serious, but it's going to be short-lived. And soon, we'll be back to normal.

FENG: This month, China announced policies to help smaller firms from going bankrupt. But...

KUIJS: As long as firms cannot or are told not to open up, and as long as people simply stay at home, expansionary macroeconomic policies I don't think will have a lot of impact.

FENG: Foxconn and Pegatron’s Kunshan factories have managed to make do because of another source of temporary labor - student workers drawn from China's thousands of vocational colleges who intern as poorly paid assembly workers during holidays. But most student workers are heading back home. This student worker from Gansu province explains why he is not staying longer at Pegatron.

UNIDENTIFIED PERSON #3: (Through interpreter) Yes, we have to do two weeks quarantine at home. It ends just in time for us to begin the delayed start of the spring semester, early March.

FENG: Production did shut down briefly, but Foxconn and Pegatron run some of the largest factories in the world, and local governments had an interest in getting them running again, at least in stages. Smaller manufacturers have a harder time.

JEN AMBROSE: There's paperwork that has to be submitted to the local government, and that includes guaranteeing, you know, masks, some other protective gear that employees can wear, a disinfecting schedule.

FENG: Jen Ambrose is one of the few Americans who works at a rare earths battery-maker in China, a few hours south of Kunshan. They spent thousands buying a large disinfectant machine as mandated, but some of their other Chinese suppliers are closed.

AMBROSE: It's one of those crazy webs that's like one of those spiders that makes those webs that makes no sense.

FENG: That crazy web of supply chains made it possible for tiny parts made in Chinese factories to power our phones and cars halfway across the world. Now, that delicate balance has been broken. Emily Feng, NPR News, Kunshan, China. Transcript provided by NPR, Copyright NPR.