Local businesses anticipate economic hit and it will trickle down
Pago Pago, AMERICAN SAMOA — The American Samoa Chamber of Commerce learned some disturbing information after reaching out to local businesses for input on the business association’s COVID-19 economic response plan forwarded to ASG recently.
Some of the larger local businesses pointed out that confirmation of sufficient stocks to meet local demand has been difficult; and from this expect a downturn in container volume as the coronavirus has caused havoc in moving goods around the world.
This information prompted the Chamber to tell ASG “our businesses need help NOW. (Read details of Chamber’s response plan in Monday, March 30 issue.)
NEIL’S ACE HOME CENTER
“As you’re aware, the supply of face masks is depleted and we don’t know when we’ll be able to obtain more due to the huge demand that the health sectors identified as first priority,” Ngaire Ho Ching, chief executive officer of Neil’s ACE Home Center wrote to Chamber chairwoman, Ella Gurr in a March 16 letter.
“Essential supplies such as hand sanitizers, waters, antibacterial cleaners like Clorox wipes, as well as toilet paper are scarce and we’re having difficulty confirming when sufficient stocks will be available to meet the local demand,” Ho Ching explained.
She notes that production in China is currently at approximately 30% at best and “we estimate we will start seeing shortages across the board as well as for building materials and household commodities within the next month or so as current inventories are quickly depleted.”
In preparation for this, she said the company has increased its orders within the last month for approximately 3 months’ worth of supply on hand to six months, however, “we aren’t seeing those orders flowing as yet.”
“Exacerbating these supply issues was the shipping delay due to the Captain Papatele (container vessel) experiencing major engine failure,” she explained. (Capt. Papatele encountered engine failure early last month, and finally arrived here about two weeks ago.)
“Compounding these supply and demand challenges we’re currently facing is the concern of having to quarantine our staff in the near future. Or worst case scenario shut down all operations indefinitely,” said Ho Ching.
She explained that the company employs about 105 workers and the impact on the individual households alone would be detrimental to the economy if they were forced to be quarantined for a minimum of two weeks without any compensation.
Additionally, the loss of revenue in the form of payroll taxes, corporate taxes, etc., to the local government would be huge not to mention “the hit to our bottom line.”
She points out that Neil’s has already had to absorb the loss of revenue in February due to the three-storms in one-week which caused the company to close its doors for two-and-half days and resulted in a loss of over 6.5% in revenue year-to-date.
“We believe the government can and should assist us in our time of need in the form of tax breaks and short term unemployment benefits. The business sector continues to shoulder the brunt of taxes,” she said. “If we’re unable to receive the necessary assistance, we’ll be forced to take measures such as layoffs, which will be detrimental to our economy.”
“We are expecting a down turn in container volumes in the second quarter of 2020,” wrote Harbor Maritime & Stevedoring Co. general manager, Gary Walters in a Mar. 17th letter to Gurr, providing the latest outlook on shipping. “This shortage is due to supply chain and logistical challenges of the European, Asian and American markets caused by the virus.”
As to incoming cruise ships, for which the company is the local agent, Walters said that due to the coronavirus outbreak, the governor restricted cruises ships from entering the territory until further notice.
“We were expecting 19 ships in 2020. Year-to-date, we have seen 6 vessels denied entry,” he said adding the count of vessels denied is expected to increase each month.
He also noted that the company has seen a slight drop in revenue since the COVID-19 was identified and, he expects continued revenue decreases in the months to come.
Shipping company, Hamburg Sud shared with Gurr a Mar. 16th “customer advisory” issued by its US office saying that vessel and terminal operations continue to operate normally, “but we are seeing some terminal closures, primarily in Los Angeles and Seattle, due to decreased throughout.”
It also says that “we are continuing to see some equipment supply issues due to the decreased imports over the last months from the COVID-19 impact in Asia.”