Cummins Inc. has issued a company-wide travel ban to South Korea and parts of Italy in addition to maintaining restrictions on all employee travel in and out of China until next month as world health officials continue to grapple with an outbreak of a new strain of coronavirus.
The virus, known as COVID-19, has infected more than 82,000 people globally and caused 2,800 deaths, with cases of the illness surging in South Korea and northern Italy, The Associated Press reported Thursday.
The company travel restrictions include all of South Korea and the Lombardy and Veneto regions of Italy, including their capitals, Milan and Venice, and are expected to be in effect until March 9, said Cummins spokesman Jon Mills.
The China travel ban is expected to be in effect until March 16, around the same time the company plans to reopen its 10 facilities in Hubei Province, including its capital, Wuhan, Mills said.
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The Hubei facilities have been on an extended shutdown following the Lunar New Year holiday in an effort to contain the spread of the virus, ensure the health and safety of its employees and comply with governmental requirements, the company said.
“We continue to reevaluate our restrictions in order to ensure the health and safety of our employees,” Mills said.
As of Thursday, there were 447 confirmed cases of the virus in Italy and 12 deaths, according to The Associated Press. There were 1,766 cases and 13 deaths in South Korea.
There have been 2,744 deaths among 78,497 cases in China, mostly in the central province of Hubei, where Cummins has 10 facilities.
Cummins also has facilities in South Korea and Italy, company officials said.
The extended shutdown in Hubei Province has impacted Cummins’ business operations in China, delaying production by around one and three weeks, Cummins Chief Financial Officer Mark Smith said last week during Citi’s 2020 Global Industrials Conference.
“Some of our customers (in China) haven’t yet started up,” Smith said. “…In China, the question is going to be what is the pace of the reflation of the economy, and is this a temporary situation where demand recovers over time or is there a broader impact, and at least, the signals we’re getting in China is the government’s very interested in the economy returning to its natural growth pattern as soon as practically possible.”
“It’s tough, but it’s not going to be a financial crisis for Cummins,” Smith added later in the conference.
Earlier this year, Cummins official expected losses due to the outbreak to have been delayed because Chinese factories were closed during much of January to let workers travel home for the week-long Lunar New Year holiday, company officials said.
“We rely upon these facilities to support our business in China, as well as to export components for use in products in other parts of the world,” the company said in its annual report. “While the closures and limitations on movement in the region are expected to be temporary, the duration of the production and supply chain disruption, and related financial impact, cannot be estimated at this time. Should the production and distribution closures continue for an extended period of time, the impact on our supply chain in China and globally could have a material adverse effect on our results of operations and cash flows.”
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