In the highly connected global economy, not even the oysters in the clear, cold waters off British Columbia are safe from the impact of the fast-spreading coronavirus.
“It started a week ago,” said Brian Yip, general manager at Fanny Bay Oysters, which operates a series of shellfish farms in the bays off Vancouver Island. “They started reducing their orders and some companies actually cancelled their orders.”
Up to 20 per cent of Fanny Bay’s annual sales are derived from customers in China, Yip said. That includes hotels, many of which have shut down as travel to and within China slowed to a crawl.
As the number of those killed and infected on the Chinese mainland and abroad increases, everything from oyster sales to air travel to the production of the superalloys used in jet engines has been affected.
On Wednesday, for example, Air Canada suspended all flights to mainland China until late February, citing a government advisory to avoid non-essential travel.
The impact on Canadian seafood producers has been exacerbated by the fact that exports to China typically surge at this time of year while the country celebrates the Lunar New Year, said Christine Burridge, executive director of the B.C. Seafood Alliance.
Orders of B.C. oysters are being cancelled in fallout from the coronavirus.Getty Images/iStockphoto
Burridge estimated that B.C. sends about $300 million annually in seafood to China, which is the main market for specialty items such as the geoduck (pronounced Gooey-duck), a large clam with a protruding body.
“What we’re hearing from our exporters is that cities over there are just ghost towns,” she said. “So they’re not going out to restaurants.”
Meanwhile, the virus is also affecting a vast array of Canadian companies with operations in China.
What we’re hearing from our exporters is that cities over there are just ghost towns
Christine Burridge, executive director of the B.C. Seafood Alliance
Sun Life Financial Inc., the Toronto-headquartered life insurance and asset manager, said it cancelled all non-essential travel to and from China, and asked all its Hong Kong-based employees to work from home for at least the next two weeks.
In China, authorities have advised companies with potential exposure to extend the lunar new year holiday for an additional week until about Feb. 10.
Neo Performance Materials Inc. said it suspended operations at several plants in China where it processes rare earths and other obscure metals into superalloys and materials for use in magnets, jet engines and other industrial products.
Jim Webb, a spokesman for the Toronto-based company, said he doesn’t expect a material impact, but noted that chief executive Geoff Bedford, like the rest of the company’s employees, will avoid travel to China for now.
“He goes over there a lot,” said Webb. “The fact is [Bedford] doesn’t have any travel planned, but if he had travel planned, my guess is to the extent you can conduct meetings digitally, that’s what we’re trying for.”
Even as executives say they plan to use technology in lieu of face-to-face meetings, there is a fear that the coronavirus has already slowed global economic growth.
Don Lindsay, chief executive of Teck Resources Ltd., said the situation has added a new layer of uncertainty to metals markets, which have already been contending with geopolitical tensions arising from the trade war between U.S. and China.
There is a fear that the coronavirus has already slowed global economic growth
“Things on a supply-and-demand fundamental basis were starting to build kind of nicely in copper and met coal and so on,” Lindsay said, “and then coronavirus hits.”
Copper prices, for instance, often used as a proxy for the global economy, have dropped 10 per cent since Jan. 16 after starting the year on an upward trajectory. He said the SARS outbreak in 2003 roiled commodities markets for “an intense two months.”
That’s why many executives are struggling to re-arrange their travel schedules to China for later in the year.
Dan Blondal, chief executive of Burnaby, B.C.-based Nano One Materials Corp., which is licensing proprietary technology for a next-generation lithium-ion cathode battery to a Chinese-based company, said he’s now debating whether to attend a conference in Shanghai this spring.
“I’m just kind of thinking, well, is that far enough out?” said Blondal. “Of course, there’s a lot of hype, when you look at the statistics, these things tend to get overblown, but people worry and their fear is very tangible and real, and you have to think about that.”
With files from Barbara Shecter and Geoffrey Morgan
Financial Post
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