Area companies take stock of coronavirus as CDC warns of potential spread in the U.S.

Last updated on February 26th, 2020 at 01:18 pm

Officials at the Centers for Disease Control and Prevention said Tuesday it is more a matter of when, not if, the coronavirus will spread widely in the United States.

“The data over the last week and the spread in other countries has certainty raised our level of our concern,” said Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases. “We don’t know exactly when it’s going to happen.”

Messonnier said the coronavirus or COVID-19 is the kind of outbreak experts have been concerned about. While public health officials have become more prepared in recent decades, she said officials are never completely ready.

“We always are going to find that diseases surprise us,” she said.

As of Tuesday, there are 14 confirmed cases of coronavirus in the U.S. along with another 43 individuals who tested positive after returning from China.

“We really want to prepare the American public for the possibility their lives will be disrupted,” she said.

Messonier noted the CDC’s prior exercises found there could be some challenges implementing non-pharmaceutical interventions along with having enough supplies, particularly for health care workers.

“Now is the time for businesses, hospitals, communities, schools and everyday people to begin preparing as well,” Messonnier said.

Messonier said businesses should be flexible in how they look to respond to the potential spread of the virus. The CDC’s recommendations for businesses to actively encourage sick employees to stay home, separating sick employees, encouraging good hygiene and developing a plan to respond to an outbreak. Potential responses could include telecommuting, flexible work hours or staggered shifts, and planning to operate with increased absenteeism.

She noted one hopeful model for how the virus will play out is that it will be seasonal and its spread will be slowed in the spring and summer. The only way to know for sure will be the passage of time and it is best to continue preparing.

“I don’t think in general that preparedness will ever go to waste,” Messonier said.

While the CDC is warning about the potential impact of coronavirus in the U.S., some area companies are already taking stock of its impact on their operations in China.

When A.O. Smith Corp. reported earnings in late January, executives said it was too early to know how the virus would impact its operations. At the time, the company’s president and chief executive officer, Kevin Wheeler, said employees were yet to come back from the Chinese New Year holiday and the scope of the virus remained unclear.

“We’re going to have to get a lot more data on how consumers are behaving before we enter into some further guidance and speculations,” he said.

The Milwaukee-based maker of water heaters and air and water purification systems excluded the potential impact of coronavirus from its initial guidance for the year.

However, A.O. Smith now says the situation “will have a material adverse impact” on first quarter operating results.

“The duration and intensity of the impact of the coronavirus and resulting disruption to our operations is uncertain,” the company said in a securities filing. “While our global supply chains are currently not affected, it is unknown whether or how they may be affected if such an epidemic persists for an extended period.”

A.O. Smith generated almost $840 million or 28% of its nearly $3 billion in net sales in China last year. The company operates a consumer brand in the country and sells its products in approximately 9,000 stores.

While concerns about the virus might seem to drive demand for A.O. Smith’s products, the company said in its filing that most of its stores have been temporarily closed or are operating at reduced hours.

“In addition, as a significant portion of our products in China require installation by a professional, actions taken to contain the spread of the virus have, in certain cases, limited access for installation,” the company filing said.

A.O. Smith has also contributed to efforts to limit the spread of the virus, donating and installing 2,000 air purification units along with dozens of water heaters and commercial water purifiers to hospitals across China.

Other Milwaukee-area companies are also monitoring the potential impact of the virus. Executives at Milwaukee-based Brady Corp., which gets around 4% of its revenue from China, said most of its factories were up and running after the holiday but logistics and suppliers remained a problem.

“The outcome of coronavirus, I don’t believe is known by anybody at this point,” J. Michael Nauman, president and CEO of Brady, said on the company’s earnings call last week. “I’m not going to pretend to give you a long-term diagnosis. What I can tell you is this, that I believe we’re in as good or better position as any of our industrial competitors by far.”

Blake Moret, chairman, president and CEO of Milwaukee-based Rockwell Automation Inc., said last week that his company is mitigating and managing the impact of the virus while also protecting its employees in China, where the company generates a little more than 5% of its sales.

“Some of the moves we made to mitigate tariffs in terms of moving parts of our supply base around are helping to mitigate the impact of coronavirus on our business,” he said.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.