Kenya is a long way from Iceland but the volcano’s eruption is having an impact on Kenya. Blame global supply chains.
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Exporting flowers and produce to the EU is a big business for Kenya, and no planes means no exports. According to the Christian Science Monitor (How the Iceland volcano ash cloud is crippling Kenya’s flower industry, Apr 19), horticulture is Kenya’s biggest source of foreign currency.
The East African country freights 1,000 metric tons of roses, carnations, French beans, snap peas, and other produce daily on overnight flights to Europe. About 1/3 of the cut flowers sold in the European Union are grown in Kenya.
The current shut down is costing the country about $3 million per day.
Already $12 million worth of flowers and vegetables destined for European supermarkets have had to be destroyed or given away. Jane Ngige, the chief executive of the Kenya Flower Council, estimated that $8 million worth of flowers had been wasted and would have to be composted. “It’s horrendous,” she says. “There are batches at the airport that were due to fly last Thursday which have had to be destroyed, and there are farmers having to dump product on their farms.”
Marketplace adds that many other firms — on both sides of the Atlantic — are feeling the impact of the airspace shutdown (Volcanic ash hurts U.S. exports, imports, Apr 19).
A number of European companies said today they were scrambling to get materials to their U.S. facilities: including Siemens, the big German engineering company, and BMW.Howard Archer is an economist with IHS Global Insight. He says many manufacturers keep their inventories low for efficiency’s sake. Now that’s causing problems.
HOWARD ARCHER: Companies that do engage in just-in-time production will be the most, most vulnerable. I mean, both in terms of getting inputs, and of course, for example, if they need any spare parts of the machinery.
While blaming everything bad on just-in-time inventory seems a little simplistic, the unprecedented shut down in air transport while everything else is more or less normal is clearly hugely disruptive. There does, however, appear to be at least one winner:
One U.S. business that’s feeling the impact isn’t complaining one bit, though. Cisco Systems says that with so many businesspeople unable to travel, it’s seeing a big increase in its videoconferencing business.
UPDATE: The BBC is now reporting that Nissan has had to stop producing three models in Japan because of the European air shut down (Ash disruption causes Nissan to suspend some production, Apr 20). The Cube, Murano and Rogue all use a pressure sensors for Ireland. This affects two plants and abut 2,000 units a day. Also, Samsung and LG in South Korea have been unable to ship out about 20% of their electronics exports. And, finally,
[T]he Federation of Hong Kong Industries said hotels and restaurants in Hong Kong were facing shortages of French cheese, Belgian chocolates and Dutch fresh-cut flowers.