Foxconn sees full China production resuming late-February - source (updated)
05/02/2020 10:19
(Adds Foxconn comment)
By Yimou Lee
TAIPEI, Feb 5 (Reuters) - Taiwan's Foxconn 2317.TW aims to
gradually restart operations at factories in China next week but
it could take one to two weeks from then to resume full
production due to the coronavirus outbreak, a person with direct
knowledge of the matter said.
Taiwan's Foxconn, which makes smartphones for global vendors
including Apple AAPL.O , has filed requests to reopen factories
with Chinese authorities, the source said, adding that a full
resumption was not possible until late February due to various
travel restrictions imposed to curb the virus.
A delay in the resumption of operations could have an impact
on the global technology supply chain and shipments to Foxconn's
customers, including Apple. urn:newsml:reuters.com:*:nL8N2A42ES
"Roads are closed in some parts of the country. Nobody knows
for sure if some workers could get back in time," said the
source, who described a "chaotic" situation in the company's top
management as it scrambles to meet different requirements for
the resumption of operations set by various local governments
across China.
"A full resumption will take at least one to two weeks from
Feb. 10."
In some cities, authorities are asking companies to put
workers returning from other provinces under a three-day
quarantine, which was a challenge for big companies like
Foxconn, the source said.
"How is it possible to quarantine tens of thousands of
people in one neighbourhood for three days?" the person said.
The factory halt is set to hit Foxconn's profit for 2020 but
it was still evaluating the likely impact, the person said.
"Profit is definitely going to be hit, but as to how big the
impact will be, we're still calculating," the person said.
Foxconn said it does not comment on specific production
practices but the company has "measures in place to ensure that
we can continue to meet all global manufacturing obligations."
"Our facilities in China are following government holiday
schedules and will continue to do so until all businesses have
resumed standard operating hours," it said in a statement,
adding that the company is able to address the needs of both
employees and customers, citing its experience in dealing with
the Severe Acute Respiratory Syndrome outbreak in 2003.
The outbreak of the coronavirus, which the World Health
Organization has declared a global health emergency, threatens
to disrupt swathes of Chinese manufacturing and will force
policymakers to ready measures to stabilise the economy.
urn:newsml:reuters.com:*:nL4N29Z2NJ urn:newsml:reuters.com:*:nL4N2A32XZ
Companies in China, closed for the Lunar New Year holiday,
were told to stay shut for an extra week, until as late as Feb.
10, including those in the southern manufacturing hub of
Dongguan in export-oriented Guangdong province, where some
iPhone plants are located.
Foxconn, the world's largest contract electronics
manufacturer, was making plans to ensure the health and safety
of its hundreds of thousands of workers, including scanning a QR
code on employees' mobile phones for health screening.
The company will use local workers as much as possible while
allowing time off for those who can not travel long distances to
get back to work, according to an internal document reviewed by
Reuters.
Foxconn's factories are dependent to a great extent on
migrant workers from poorer regions.
"We will be very glad if the return rate could hit 30% (on
Feb. 10)," the source said.
Shares of Foxconn, formally known as Hon Hai, have dropped
more than 10% since the market .TWII reopened last week
following the Lunar New Year holiday.
(Reporting By Yimou Lee and Taipei newsroom
Editing by Robert Birsel)
((yimou.lee@thomsonreuters.com; +886-2-8729-5122;))