Power outages have hit China, putting the economy and supply chain in jeopardy - Mechanical Power Inc.

Many regions of China have implemented a power-saving policy from now until the end of 2021. As a result, factories within restricted areas will be impacted in some way.

China gets two-thirds of its electricity from coal, which Beijing is attempting to reduce to combat climate change. Coal prices have surged in tandem with demand. However, because the government maintains electricity prices low, especially in residential areas, household and commercial usage have increased.

Many sectors have begun to decrease production, such as the textile industry in Zhejiang Province has been shut down. 

“Factories are receiving notifications from the power supply department requiring a 20% – 25% reduction in electricity consumption for the remaining three months of 2021, which means that our production capacity will drop by 20% – 25%,” says David Hernandez, Materials Manager at Mechanical Power, a global sourcing company based in Wauconda, IL.

Most factories will likely experience temporary power outages without a warning.

As a result of the decrease in capacity, raw material costs may rise, resulting in longer lead times for current and future orders. Because of these unpredictable circumstances, it is important to pay attention and plan.

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Author: Daniel Szwed
Digital Marketing Manager, Mechanical Power, Inc.