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EDIT: This story was updated on February 21 to include information from Tractor Supply Company's 2019 annual report, which was released on February 20, and a press release from Kirkland's released February 21.

The coronavirus disease has slowed down economic activity in China, and while the economic impact on Middle Tennessee still isn’t clear, many local supply chains could be at risk.

The virus has already killed thousands of people, mostly in China, and sickened many more. In January, China’s government restricted travel in some areas of the country to prevent its spread, and in February a number of Chinese provinces asked companies and factories to temporarily shut down, according to a report from CNBC.

The shuttered factories are already having an impact on the global economy. Apple recently told investors to expect lower revenues because of the effects of the virus.

“Work is starting to resume around the country, but we are experiencing a slower return to normal conditions than we had anticipated,” the company told investors in a letter released earlier this week.

Economic impacts on local companies are less clear. The Home Page reached out to a dozen local companies to talk about the impact of the coronavirus disease on their supply chains, but few wanted to discuss the virus.

Manufacturing companies that rely on parts from China like Apple could be especially hard hit by the effects of the virus. 

According to the Bureau of Labor Statistics, there are more than 3,000 manufacturing workers in Williamson County and nearly 200 manufacturing firms. In 2018, the manufacturing sector contributed $2.4 billion to the local economy

Nissan, which has a North American headquarters in Franklin, closed several Chinese plants because of the virus. A statement from Nissan China says the company hoped to restart production at two plants by Feb. 17. Restart dates for other plants haven’t been announced. The shutdowns also slowed production at a Japanese plant that relies on parts made in China. 

Despite those closures, a spokesperson for Nissan North America wrote in an email that Nissan’s supply chain is functioning normally and the company doesn’t expect to see a significant impact on vehicle supply. 

Similarly, a spokesperson for Mitsubishi Motors North America, which also has its headquarters in Franklin, wrote in an email that the company has seen an impact at one facility in China, which doesn’t produce cars for the U.S. The company doesn’t expect it will affect vehicles coming to the U.S.

Tennessee receives more imports from China than any other country. Chinese goods represented almost a third of all imports last year. Gear boxes for cars and car parts worth more than $1.7 billion were imported into Tennessee last year.

Retailers that source many of their products from China could also be affected by the coronavirus. 

However, One day after Apple announced the revision to its financial guidance, Walmart told investors it is closely monitoring the virus outbreak, but did not include the impact of the virus in its financial guidance.

“One of the reasons we couldn’t put it in our guidance is because there’s so many moving parts right now,” Walmart CEO Doug McMillon said at an investor meeting this week. “How long will those shipments be delayed? What can we do to buy goods in the U.S. …  to supplement some of that so we don’t feel it as much? All of that is happening, which makes it really difficult to call how it’s going to play out. 

Walmart CFO Brett Biggs said the company does expect some impacts from lower sales in China. McMillon added that only about a third of Walmart products come from outside the U.S., which lowers the risk of store shelves sitting empty because of factory shutdowns.

The impact for the Brentwood retailer Kirkland’s could be larger. In its most recent annual report, the company says about 88% of its merchandise comes from manufacturers in China and other South-Asian countries. 

Kirkland’s lists this dependence on Chinese goods as an important risk, although, the company also notes that it believes it can find alternative sources of merchandise quickly.

Kirkland’s hasn’t released financial guidance for the upcoming year, but did report sales numbers for the holiday season. Sales fell compared to the previous year, but in the press release the company also briefly described the corona virus as a risk to the company’s supply chain. 

On Jan. 30, the same day the World Health Organization declared the coronavirus an international public health emergency, the Brentwood retailer Tractor Supply Company told investors to expect higher profits in 2020, but didn’t mention China or the impacts of the coronavirus in its press release or conference call. 

Three weeks after announcing financial guidance for 2020, Tractor Supply released its annual report, which specifically lists the new coronavirus as a potential threat that could impact the supply of products. 

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