Some health experts last week began blaming overzealous media coverage for stoking fears over the Asian-born respiratory disease known as SARS. That may or may not be true, but for many businesses, public perception has become a frustrating reality.
Rhode Island manufacturers that do business in Asia and Canada increasingly are canceling trips to the regions, pulling the plug on training visits from foreign distributors and forgoing international trade shows.
If nothing else, the result has been lost or delayed opportunities for new sales – and just one more thing for manufacturing executives to worry about.
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“At the moment these have been moderately expensive annoyances,” said Albert W. Ondis, chief executive officer of Astro-Med Inc., a West Warwick manufacturer. “But if it continues for a few more months, it absolutely will have a financial impact.”
Astro-Med officials were set to attend a packaging-industry trade show this week in Toronto, but it was postponed because of the city’s SARS outbreak, which has infected more than 100 people. Astro-Med already had shipped demonstration equipment and its trade-show booth, which had to be shipped back at the company’s expense.
Astro-Med salespeople also make occasional trips to China and Taiwan, where the company sells label printers and medical instruments, and the company frequently hosts Asian distributors who come here for training, Ondis said.
“All that has come to a stop,” he said. “We’re not going there and we’re not welcoming anyone here.”
Avi Nevel, president of Lawson-Hemphill Inc., a Central Falls-based manufacturer of quality control equipment for the textile industry, said his company planned to attend a textile trade show in Beijing next month. But organizers postponed the show until December because of the SARS risk.
“At the very least, it’s a delay in sales,” Nevel said. Roughly 30 percent of Lawson-Hemphill’s business comes from Asia, he said. The World Health Organization last month advised travelers to avoid both Beijing and Toronto, although it lifted the Toronto advisory last week.
Lawson-Hemphill also had been expecting the arrival of a Chinese sales engineer who was to be trained on the company’s new instrumentation. The engineer’s flight had been booked and his visa stamped, but plans were canceled due to concerns over SARS, Nevel said.
It is a decision that many Rhode Island manufacturers have been forced to make in recent weeks, according to Raymond Fogarty, director of the Rhode Island Export Assistance Center at Bryant College.
“There are just a bunch of companies that are shutting down travel to Asia because of this,” Fogarty said.
Hasbro Inc., for example, has a hold on virtually all employee travel to Asia, according to spokesman Wayne Charness. Most of Hasbro’s toys are manufactured in the region.
None of the companies interviewed for this story reported having to cancel shipments because of the economic effect of the SARS outbreak. But as fears about the epidemic have spread, so has consternation about the economic fallout.
Economists have said that China’s economy is on pace to shrink 2 percent during the second quarter, after growing nearly 10 percent in the first quarter, according to the Financial Times. Canada’s economy could lose more than $2 billion from the outbreak, assuming the situation doesn’t get worse, according to Toronto-based TD Bank.
John Hazen White Jr., president and CEO of Taco Inc. in Cranston, said the maker of heating and air-conditioning systems has not yet felt any economic effects from the SARS scare. But White says he – like most manufacturing executives – has to be concerned about the long-range effects on economies in Asia.
“If the economy in China were to eventually crumble because of this, then the construction market crumbles,” White said. “I certainly wouldn’t be shipping pumps and valves to building projects in China. The peripheral effects of something like this could be very scary.”
Taco also has a subsidiary in Toronto that assembles systems for the Canadian market, which likely would feel any economic drag on the construction market that might stem from the SARS outbreak.
On a flight from Taiwan to Tokyo last month, Joel Urban, a sales executive at West Warwick-based Advanced Interconnections Corp., looked around to realize he was one of the only passengers not wearing a mask.
“It was a bit disconcerting,” said Urban, who is director of Asia-Pacific sales for Advanced Interconnections, which makes adapters and sockets for the electronics industry. He canceled a later flight from Tokyo to Hong Kong.
For now, Urban plans to rely more heavily on videoconferencing. The company uses videoconferencing services at the Export Assistance Center, which offers a menu of services 24 hours a day.
While a videoconference provides a convenient alternative for communication with international distributors and customers, it doesn’t always cut it – especially for Asian business, Urban said.
“From a cultural standpoint, sometimes you have to show up,” he said.
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