By Mike Calder
Anyone who’s visited a social media platform or news outlet in the last couple weeks knows of the recent outbreak known as the Coronavirus. Most people know of the virus from its devastating physical harm it has caused, killing over 800 people in China, and infecting tens of thousands more. However, the Coronavirus has done much more than this. In fact, the impact the virus has had has been so significant that it has started to hurt the U.S. economy and big businesses’ wallets.
The main reason why big businesses in the U.S. are hurting from the Coronavirus is because many have outsourced manufacturing factories, offices, and retail stores located in China. Many companies temporarily shut down these locations due to the outbreak including big names such as Apple, Microsoft, Google, Nike, and Disney to name a few.
Big media conglomerate Disney has recently revealed that due to the closings of its theme parks in Shanghai and Hong Kong over the past week, they are projecting a $175 million reduction in operating income for the upcoming quarter. Additionally, multi-business enterprise Apple, who assembles the majority of its products in China, is running into iPhone delays, as iPhone shipment forecasts were cut, likely affecting the company’s upcoming quarterly revenues as well.
Perhaps one of the biggest industrial sectors economically affected by the Coronavirus is the airlines industry. Airlines such as Delta, American, and United have suspended flights to China for what is expected to last through the end of March and April. In addition to this, several U.S. airlines have offered to give customers additional time to change flights to China without fees for a limited time period. In comparison to what SARS (Severe Acute Respiratory Syndrome) has done in the past to China, the Coronavirus death toll has surpassed this number. While SARS cost airlines roughly $7 billion, it is expected the Coronavirus will cost them even more as flights are expected to be suspended for longer than they were during SARS.
Another industry taking a huge hit from the recent outbreak has been the automobile industry. As China is the world’s biggest market for cars, it isn’t hard to see how companies such as Tesla and Ford who outsource to China for numerous parts are being affected. Production is being delayed in many factories in China causing a disruption in the supply of parts and consequently, a supply in cars. Regarding Tesla, shares have fallen nearly 20% already due to the Coronavirus delaying supply of Model 3 deliveries after it had recently reached a record high stock price of $968.99. Regarding Ford Motor, there has been a considerable decline in sales, and they are attempting to monitor the situation as best they can after seeing roughly a $1.7 billion loss during the fourth quarter.
As many U.S. businesses have taken a hit due to the recent Coronavirus outbreak in China, it is unclear to many of these businesses how it will affect them in the long run. Nobody knows for certain how long the outbreak will last or whether it will continue to worsen. These are key things to look for in the upcoming months as the virus has rippled through the U.S. economy and has been a huge topic for discussion among big businesses.