With fears of coronavirus upending travel around the globe, the rental industry is facing its own tough challenge: the breakdown of the supply chain from manufacturing powerhouse China.
To control coronavirus in China, the government there shut down factories in many provinces right after the Lunar New Year holiday in January. Although the government ordered factories to re-open Feb. 10, many still have not done so.
With some rental companies sourcing virtually all their chairs, tables and other rental essentials from China, the industry is closing watching as the issue unfolds.
GOOD TIMING Dan Hooks, CERP, head of big party rental group Party Reflections, says his company “dodged a bullet” with lucky timing.
The Charlotte, N.C.-based company ordered some tables, chairs and other items from China back in November, “and our shipments have already started arriving,” he says. “We only have a few left that were already on the water before any of this broke out.”
Timing was not so kind to London-based Thorns Group, which sources 85 percent of its inventory from China, reports group sales director Jon Noonan. With China’s manufacturing shut down for weeks, the Thorns team could not develop reliable quotes for potential jobs. “Waiting a month to give some exact pricing wasn't viable, so we had to cost up our tenders [bids] with a contingency built in to cover ourselves,” he says. “We also had to keep an eye out on the port authority’s notifications to get a clear picture on where particular provinces were back online.”
ACT FAST Noonan notes that the hectic pace of the rental world is a complicating factor. “As we deal in the fast-paced world of events, we haven't got the luxury of time,” he says. “Clients want answers immediately, whether it is stock lines that are available, prices, quantities, timelines for deliveries, and samples to make decisions, to name a few.”
The team at Arlington, Va.-based DC Rental gets from 60 percent to 75 percent of its inventory from China, says general manager Mark Tempel. And while the business slowdown in China hasn’t affected his supply line yet, “It will,” he says.
To stay on top of the situation, Tempel and team are looking to other inventory sources besides China. He has been purchasing more from U.S vendors—“and in larger amounts to get all the inventory I may need before others do,” he explains. He is also looking to other countries: Mexico for glassware, Turkey for glassware and china, and India for metal goods.
But the problem with trying to develop new vendor counties is the time it will take to establish fruitful relationships.
“Mexico will help create what we need, but they just don’t have the knowledge that we have a market that needs the items they can create,” he explains. This process “will take years—and China will be back online by then.”
CAN WE WAIT? Temple pegs the recovery time for China to return to its previous production levels at 18 months. And that could be just too long for some rental companies.
“Many suppliers in the U.S. will have issues getting inventory,” he warns. “Many are 100 percent supplied from China. The questions is, will they survive? And what will many rental companies that don’t direct-import larger quantities do for inventory?”