Hicks: Virus Will Impact Supply Chain for Months

The director of the Center for Business and Economic Research at Ball State University says Indiana manufacturing is facing a supply chain disruption for the next several months as a direct result of the coronavirus outbreak in China.

Professor Michael Hicks says Indiana annually imports about $7 billion worth of goods, about half of that for Indiana’s automobile sector. Much of that, Hicks says, comes from China.

“Those (plants) have been idling in China from six to eight weeks now. And most (Indiana) factories are going to have 90, maybe 120 days of stockpile and so the supply chain has been broken,” explains Hicks.

Hicks say decreased parts supplies will last as long as Chinese factories have limited production as it deals with idled plants and transportation delays within the country.

The economist talked about the coronavirus impact on Indiana, as well as positive economic news coming out of Kokomo, on this weekend’s edition of Inside INdiana Business with Gerry Dick.

Hicks says in a normal economic downtown, the Federal Reserve Bank can lower interest rates to bolster consumer confidence. But he says in this case, confidence is contingent upon controlling the disease.

“I don’t think there’s anything federal government could do to restore confidence in our interest in going on a cruise or taking a flight or going to Disney World,” says Hicks. “So, I think we’re in for a really rough patch for the next few months.”

On Sunday, the Indiana State Department of Health reported a second confirmed case of coronavirus. The state announced the first case on Friday.  The ISDH says both patients had been at the same convention in Boston.