ELEVATE update on COVID-19 (Coronavirus)
We are providing regular updates that address ELEVATE’s actions to address the COVID-19 and the impact of the contagion on our customers, people and partners. ELEVATE is also surfacing new insight from our customers, factories and facilities, people on the ground, and our EiQ data and analytics. We will share our insight regularly in the ELEVATE Blog. In the feed below you will find our posts to date, including CEO Ian Spaulding’s letter to customers dated 31 January 2020.
ELEVATE update on COVID-19 dated 25 February 2020
What’s new for our customers: operational implications
While a decline in coronavirus infections in China may be underway, manufacturing productivity remains hampered in part by travel restrictions. Some of these are beginning to lift.
The Chinese government is easing the approval process for factories to reopen. Rather than seeking approval in advance, some factories need to be ready for an inspection after opening.
ELEVATE has surveyed factories in China since the week of 3 February. Over the past week, confidence in the ability to reopen and achieve plan capacity quickly has eroded somewhat. For the week 18 – 24 February, 44 new respondents of the ELEVATE factory survey indicated:
- 84% plan to reopen by 1 March (vs 91% reported in the previous period)
- 32% expect to be at plan capacity between 80% and 100% when they reopen (vs 25% in the previous period)
- 32% expect to be at plan capacity between 40% and 80% when they reopen (vs 42% in the previous period)
- 36% expect to be at plan capacity under 40% when they reopen (unchanged from the previous period)
- 80% of respondents expect to be back to full production between the end of February and the end of March (vs 85% in the previous period)
To help factory owners, managers and supervisors prepare for the ramp up in production, ELEVATE is hosting complementary Chinese-language webinars on 27 Feb, 3 March and 5 March: Wellness at Work – Supporting workers during an epidemic. We invite factories to register here or visit the ELEVATE website.
ELEVATE was approved to reopen its offices in mainland China. With effect from 24 February, office-based teams have resumed work in our Shenzhen, Hangzhou and Shanghai offices with full sanitary precautions in place to keep our people healthy.
Additional insight for brand, retailer and vendor customers
- Our customers’ concerns have shifted from a week ago. While factories are still closed or running at low capacity, the trend now looks to be a lack or delay in raw materials, including fabric and packaging materials.
- Similarly, the transfer of goods out of China has slowed as container ships are by-passing China ports.
- Our customers have also pointed out that factories outside China may face worker strikes as workers are concerned about the virus and return of Chinese managers back at work.
- ELEVATE is working with customers to mitigate the disruption in China and other markets dependent on raw materials and textiles from China. Where possible, customers are advancing audit programs in Latin America, South Asia, and Southeast Asia. If you would like to learn more or have questions, please contact us.
ELEVATE update on COVID-19 dated 18 February 2020
- A survey of factories indicates that facilities are reopening starting from 10 February to 28 February; 95% of respondents have indicated they will reopen on 10 February or 17 February.
- Travel restrictions in mainland China are hampering workers’ ability to resume work. Factories estimate the percentage of workforce resuming after facilities open as follows: Between 80% and 100% (29%), Between 40% and 80% (41%), Under 40% (30%).
- Over half of ELEVATE’s key customers sourcing in China are rescheduling audits in China, and have expressed concern about workers’ ability to return, compliance issues and delivery schedules. Contingency plans are in development.
- ELEVATE office staff are back at work in mainland China (home-based until 24 February) and in Hong Kong (Quarry Bay office).
What’s new for our customers: operational implications
- As announced in our 11 February post (below), no onsite audits or in-factory consulting is being conducted before 24 February 2020.
- The company does not have any confirmed cases of COVID-19 among 10 auditors currently in Hubei Province or elsewhere (read senior assessor Virginia’s blog about life in Wuhan).
- ELEVATE’s office-based staff are working from home. ELEVATE’s Shenzhen, Shanghai and Hangzhou offices will be re-open on 24 February.
- See additional information below in the blog post dated 11 February 2020.
Hong Kong SAR
- All ELEVATE employees in Hong Kong have been working since the end of the Lunar New Year public holidays.
- With effect from 17 February 2020, ELEVATE employees have been working out of the headquarters office in Quarry Bay.
- Preventive measures are in effect including temperature checks, increased hand washing, use of face masks, sanitary gel and wipes etc.
Feedback from customers
- ELEVATE has collated customer feedback with regard to COVID-19. Most customers have been in a ‘wait and see’ phase although concern is growing as they recognize the delay in auditing assessments and factory openings and capacity.
- Most key customers are not changing their sourcing strategy as a result of supply chain disruptions resulting from the coronavirus.
- Most key customers are shifting audit schedules, with some China audits being push to the beginning of Q2 although there is concern that this is peak production for suppliers.
- Some customers have expressed concern about compliance issues without having visibility in facilities.
Fresh results from our factory survey
Operational readiness at China sites varies from location to location. We have been conducting a survey of facilities to gain insights. Based on the inputs received from 70 new respondents between 11 and 17 February 2020, we can infer:
- Respondents were from mainland China (85%), Hong Kong SAR (9%), Taiwan (4%), Japan (1%) and Canada (1%).
- Industries of respondents were (primarily): Textiles (32.9%), Toys (7.1%), Food (5.7%), Electronics (4.3%), Fashions (25%) and Miscellaneous (8.6%)
- Factories are reopening starting from 10 February to 28 February; 95% of respondents indicated they are reopening on 10 February or 17 February.
- After reopening, facilities believe that plan capacity will be: Between 80% and 100% (23%), Between 40% and 80% (40%), Under 40% (37%)
- Percentage of workforce resuming after facilities open: Between 80% and 100% (29%), Between 40% and 80% (41%), Under 40% (30%)
- 90% of facilities believe that they will be back to full production (barring any further challenges)
- Most facilities have put in place safety and protective measures (to varying degree) – including use of masks, temperature checks, regular disinfection, hand washing and sanitizer use, travel history checks, separate lunch areas, increase in the distance between workers on the production line etc.
ELEVATE update on 2019-nCoV dated 11 February 2020
This is an update following our conversations with customers and interviews with facilities in China since our last post on 4 February 2020. We are covering current conditions, implications for site operations and the safety of our ELEVATE people. We are grateful to report that all of our ELEVATE people, including outsourced staff, are safe from 2019-nCoV. (Editor’s note: WHO has renamed 2019-nCoV to COVID-19 on 11 February 2020.)
- Due to an abundance of caution, and informed by our staff on the ground, we have decided to postpone all fieldwork, including audits and onsite factory consulting, to the week of 17 February 2020. During this time, non-field staff will continue to support our customers.
- Site visits will resume during the week of 17 February except in Hubei Province. As outlined before, we are suspending operations in Hubei Province until further notice.
- Our 10 employees in Hubei Province are safe and at their respective homes.
- ELEVATE factory survey results indicate 45% of facilities expect to be at a plan capacity of 80%-100% when they reopen in the next two weeks (see more below).
What’s new for our customers: operational implications
- Multiple cities and provinces have begun to enforce lock downs and strict travel restrictions to contain the spread of the virus. This is changing every day and as of last count over 80 cities and 20 provinces in China have imposed such restrictions. This will affect ELEVATE’s ability to effectively service requests where travel is required.
- Multiple countries and regions have placed restrictions on travelers arriving from mainland China (and to some extent Hong Kong, Macau and Taiwan). As such, for other countries and regions in North Asia (South Korea, Japan, Taiwan etc), we will be reliant on our staff and partners in-country and will be unable to send any China assessors to those countries.
- Onsite service delivery by ELEVATE assessors and consultants has been deferred one week from 10 February to 17 February in regions outside Hubei Province. No audits will be conducted onsite until the 17th of February. We have made this decision to mitigate risk to people and because of reduced operational readiness at supply chain sites.
- In China, we are working with factories to plan as many site visits as possible in the last two weeks of February, to respond to customers’ requirements.
- Our 10 staff in Hubei Province are safe. We are monitoring their condition carefully and supporting them. We do not have a scheduled date yet for their resumption of work. As communicated in our 4 February post (below), when they do return to their place of work there will be an additional 14-day period of quarantine (during which they must remain asymptomatic) before they are allowed to conduct onsite visits.
- ELEVATE office-based staff in China will continue working from home and responding to customers during the week of 17 February. We are trying to avoid unnecessary exposure of people during crowded commutes to the office and in office elevators etc. Our plan is to have them return to ELEVATE offices in China on 24 February.
- ELEVATE will continue to field office phone calls and other communications from customers during this time.
- We also manage outsourced CSR programs for customers and all our outsourced staff in China are safe and covered by the ELEVATE plan of action.
Hong Kong SAR
- All our people in Hong Kong have been continuing to work following the end of the Lunar New Year holidays, from either our headquarters in Quarry Bay or from their respective homes.
- Virus protection measures are in place to protect our people in addition to other precautionary measures described in our 4 February post below.
- Guests to our Hong Kong office will be requested to complete an ELEVATE Visitor Travel & Health Declaration Form prior to visiting, and wear surgical masks, have their temperature taken, and sanitize hands upon arrival. Thank you for being part of the fight against 2019-nCoV!
Operational readiness at China sites varies from location to location. We are conducting a survey of facilities to gain insights and the following can be inferred from 30 respondents since the survey was initiated last week:
- Respondents were from China (68%), Taiwan (23%) and Hong Kong (9%)
- Industries of respondents were (primarily): Textiles (32%), Toys (19%), Food (16%), Miscellaneous hardgoods / fashion accessories (20%)
- Most respondents have said they plan to reopen by 10 February or 17 February
- After reopening, facilities believe that plan capacity will be: Between 80% and 100% (45%), Between 40% and 80% (42%), Under 40% (13%)
- Percentage of workforce resuming after facilities open: Between 80% and 100% (48%), Between 40% and 80% (39%), Under 40% (13%)
- Most facilities believe that they will be back to full production (barring any further challenges) between the end of February and mid March.
- Most facilities have put in place safety and protective measures (to varying degrees) – including use of masks, temperature checks, regular disinfection, hand washing and sanitizer use, travel history checks, etc.
We also have some anecdotal feedback from facilities based on relationships we have with owners and senior managers:
- We are hearing that facilities are somewhat hesitant to reopen without appropriate prevention / protection measures in place, as a case of the coronavirus being found on site will require the suspension of operations for the entire facility for 14 days.
- Facilities have not indicated a need for financial aid from customers but are hoping customers will not cancel orders, will be understanding of delays, and will consider waiving any penalties for delayed delivery of goods.
We are finding that many global brands, retailers and vendors are still in strategic meetings to understand and model the supply chain disruption. Subsequent to this, they will be putting together mitigation / contingency plans and sourcing and CSR decisions are expected to follow.
We’re discussing with many customers the advantages of advancing audit programs in sourcing destinations outside of China e.g. Latin America, South Asia, and Southeast Asia. Many customers have shown a willingness to do this, and are working with us on such plans. If you would like to learn more or have questions, please contact us.
Due to the significant drop in assessments in China, and the resulting increased staff bandwidth, customers are also considering the possibility of focusing on other projects. We are also recommending that customers engage us to leverage data analytics to inform adjustments in sourcing and program design to mitigate risk and improve effectiveness.
ELEVATE update on 2019-nCoV dated 4 February 2020
As we work through the challenges posed by the 2019-nCoV (Coronavirus) outbreak, our primary focus remains the welfare of our staff and partners while maintaining excellent service delivery to our customers. This blog outlines some updates that cover ELEVATE’s actions to address the 2019-nCoV and the impact of the contagion to ELEVATE customers.
Please understand that the situation is fluid and new information, policies, regulations and actions being enacted by China and other affected geographies are surfacing on a fairly regular basis. We will reflect some of those updates in the ELEVATE Blog.
ELEVATE precautionary measures in mainland China and Hong Kong SAR
While the virus has spread geographically, the epicenter of the outbreak remains China – which has been significantly affected. We are taking several measures to address this.
- Release of an ELEVATE Health Declaration for employees
- Release of an ELEVATE Travel Status Survey for employees
- Release of Frequently Asked Questions about the Coronavirus for employees and preventive measures for business travelers
- Our Human Resources department is in communication with all China staff via email and WeChat (group)
- Implementation of comprehensive virus preventive measures in ELEVATE offices including temperature testing of employees and visitors prior to entering our offices. Additional measures to uphold good hygiene address sanitizing hands, wearing masks, and disinfecting office equipment.
- Sourcing extra masks and hand sanitizer supplies to provide to our China team for use when visiting customer sites.
Meeting our commitments to our customers
It is our aim to continue to deliver excellent service to our customers with minimal disruption. We are working hard to do so while protecting our teams and other workers in the supply chain.
In line with Guangdong, Zhejiang and Shanghai governmental regulations to extend Lunar New Year holidays to 10 February 2020, ELEVATE offices in Shenzhen, Hangzhou and Shanghai will remain closed through 9 February. Most on-site operations are resuming during the week of 10 February 2020.
To take precaution during the Coronavirus outbreak, ELEVATE will:
- Not carry out audits or onsite service delivery before 10 February 2020
- Place any staff that have been in Wuhan or elsewhere in Hubei Province under voluntary quarantine for an additional two weeks after travel restrictions have been lifted there and they travel back to their respective work cities. After this period, they will be allowed to return to work provided they are not displaying any symptoms
- Require non-field staff to work from home for an additional two weeks until 24 February 2020
- Have team members in supporting functions such as Coordination, Report Review and Client Services work to support customers
- Reschedule audits that were previously scheduled to take place in China between 3 – 9 February 2020. Our Coordination team is following standard protocols to reschedule these audits
- Remain sensitive to the fact that factory approval or new factory on-boarding may depend on an audit. In such cases, on request, we will work with customers to accommodate such priorities
- Suspend travel by ELEVATE employees between China and Hong Kong until 2 March 2020. This suspension may be extended by the ELEVATE Risk Committee if the situation has not stabilized by then
- Not take on audits in Wuhan or elsewhere in Hubei Province until further notice
We have already started scheduling audits for the remainder of this month. Here is what we are observing:
- Not all facilities will reopen the week of the 10th– so some audit requests may be delayed as a result
- Some facilities have agreed to audit dates, but have informed us that they may not be operating at full capacity (due to staff health or travel restrictions)
- Facilities are asking us to provide some information pertaining to our staff’s recent travel history, the use of masks while on site, and compliance with the site’s health precautions. We have agreed to comply with these requests and are asking that sites take similar precautions when we interview their workers
In particular, we have adopted additional steps during coordination processes to confirm factory status on their operations as appropriate. However, we would like to make you aware that until all facilities return to normal operations, you may notice an increase in missed audits or access denied alerts – especially when such audits are unannounced (and even sometimes for semi-announced).
We anticipate that there may be some impact in terms of turnaround time for scheduling, audit execution and report review (especially for China). We are endeavoring to maintain the high level of quality our customers expect of ELEVATE.
For further information, refer to CEO Ian Spaulding’s blogpost below (dated 31 January 2020), which outlined the Chinese Government’s new dates for the resumption of work following the Lunar New Year holidays, and ELEVATE’s initial response to customers.
We will continue to publish regular updates on the 2019-nCoV (Coronavirus) on this blog post. Where required, or if there is significant impact, we will also reach out via email. We appreciate your patience as we continue to work through this challenging time.
Letter from CEO Ian Spaulding on ELEVATE’s response to the Coronavirus dated 31 January 2020
For our customers with supply chains in China, the Coronavirus coming at the same time as the Lunar New Year break has created anxiety, confusion and most likely some business disruption. Our colleagues in China were scheduled to return to work from the holiday on Friday, January 31st but the Coronavirus has changed this timeframe.
The Chinese government has taken several unprecedented moves to contain and manage the outbreak. They have effectively quarantined Wuhan and adjacent cities. On January 27, 2020, the State Council of China also announced the extension of Lunar New Year holidays to February 2, 2020 from January 31st. On January 28th, Guangdong Province, Zhejiang Province and the Shanghai Municipal Government announced a further extension of the holidays to February 10th. As of January 30th, the WHO has declared the coronavirus outbreak a global health emergency. Adding to this, travel between Hong Kong and China has been restricted/prohibited. This only becomes more complex when we consider that individual factories may or may not open on February 10th. The situation is fluid.
Based on government decisions to extend the holiday, ELEVATE’s mainland China offices (Shenzhen, Shanghai and Hangzhou) will be closed through February 9th, 2020. There will be no audit or onsite service delivery before February 10, 2020. Additionally, non-field staff will be working from home for an additional two weeks. However, we will have team members available in supporting functions such as Coordination and Client Services.
Accordingly, we have rescheduled audits that had been confirmed to take place between February 3rd and 9th. Our Coordination team has followed standard protocols for re-scheduling, working directly with factories and/or clients. There may be some impact in terms of scheduling turnaround times and report review times for China once the teams are back online.
We recognize that in some cases, factory approval or new factory onboarding may be dependent on an audit. Please let us know if there are such cases and we will work with you to accommodate these priorities. Just like previous years, we will see peak demand on return from Lunar New Year holidays. This will be even more intensified with the extension of the holiday. We will do our best to accommodate your requests. but we may check with you to see if there is flexibility in your schedule. Where it makes sense for you, we would also be open to prioritizing audits in other regions for the early part of 2020.
We are closely monitoring the situation and will be keeping our customers updated regarding significant developments and any further adjustments. Updates will be provided via this blog and if you have any questions or inquiries, please contact us and we will reply promptly.
Thank you again for your patience and partnership. We wish you a healthy Year of the Rat.
Ian Spaulding, CEO, ELEVATE
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