Business In The Time Of SARS

In 2000 more than 63,000 people died of pneumonia in the United States. That same year, AIDS killed more than 14,000. These figures aren’t anomalies — 2000 wasn’t an especially bad year for either disease.

So far, no one has died of severe acute respiratory syndrome, or SARS, in the U.S.

But turn on the TV or click through the Web today, and you’ll be buried by an avalanche of stories on SARS. As an emerging disease, this new strain of pneumonia has cast a pall of fear over Asia — and much of the rest of the world.

“The concern about SARS is a bit like having children and being worried that they’ll be kidnapped by a stranger,” says O’Neill Sportswear President Kelly Gibson. “Statistically, there’s almost no chance that it will happen, but it’s still the type of fear that’s probably kept every parent up at night at one time or another.”

And perhaps some of those fears are well founded. “We still have no capacity to predict where SARS is going or how large it’s ultimately going to be,” Julie Gerberding, head of the Centers for Disease Control (CDC) in Atlanta, Georgia, told the press on Tuesday.

Today the World Health Organization increased its SARS travel warnings, urging people to avoid unnecessary trips to China’s Shanxi Province, Beijing, and Toronto in Ontario, Canada. These are additions to the previous travel warnings to Hong Kong and China’s Guandong Province, where SARS was first reported.

For the action-sports industry, like most industries, the disease outbreak has halted many business trips to Asia — and has caused a few companies to put off meeting face to face with Asian business partners here in the States as well.

Sanük President Jeff Kelley is supposed to be in China right now overseeing the production of the brand’s sandal lines. Instead, he’s getting business done by phone. “I had a long phone conversation with a friend {from Asia} last night and he said to stay away from any of the areas that could be affected by the disease,” he says, quickly adding, “but there’s no way I’d go there now.”

Kelley says that since many factory workers in China sleep in company-owned dormitories, the disease could spread like wildfire if it gets down to the assembly line.

Steve Wilson, executive vice president of merchandising and design for Billabong USA, has also set aside plans to travel to Asia. “Traveling to any of the affected areas has been put on hold for all our employees,” he says. Wilson says the restriction has been extended to visitors from affected areas visiting the Billabong offices as well.

“I got an e-mail from good friend and business partner about the severity of the situation {in Asia},” says Wilson. “He works in a small office and everyone comes to work now wearing face masks. Anytime they go out, they wash their hands before returning to work. Employees with fevers are immediately sent home. We certainly won’t be traveling out there now.”

Gibson says that he’s been checking the Centers for Disease Control Web site for guidance, but that he still has questions. “They suggest that you don’t fly, but what do you do about people coming from overseas?” He says O’Neill had meeting with a group in from Asia last week and that the office was pretty jumpy. “I’m personally a little paranoid,” laughs Gibson. “Right now, we’re being cautious but we have no policy {relating to SARS} in effect.”

Jared Bevins, the snowboard category director at Vans, says this is a critical time of the year for the company. “It’s in the production phase of the 2003/04 product, as well as deep into the development stage of the 2004/05 line,” he says. “Vans has put a hold on all employee travel to the Far East until further notice. That being said, we have an amazing Vans development team based in Hong Kong and Southern China.”

“Coincidentally,” continues Bevins, “about a month or so before the SARS situation became public knowledge, we established a new video conference system with our team in the Far East. So far, we’ve been able to use this effectively in substitute of going over there. The direct video conferencing, combined with a lot of express shipping of samples back and forth, is getting the job done for the short term.”

Burton doesn’t have a mandatory ban on travel, but PR Coordinator Leigh Ault says most staff members have elected to hold off on travel at this time.

“Although our manufacturing happens in a few different locations — including Burlington, {Vermont} — we do have manufacturers in China,” she says, adding that no Burton boards are manufactured in China. “SARS has not affected our current product timelines, but we have concerns about the long-term, as there is only so much you can do virtually.”

Right now, Ault says Burton — like most companies — are doing the best they can with alternative methods of conducting business, such as phone calls, e-mail, and video conferencing.

According to Sole Technology VP Of Marketing Don Brown, “The whole SARS issue has definitely made Sole Technology employees more cautious of their travels to Asia. Right now we have all Asian travel on hold, and we’re closely monitoring the effects and spreading of the disease on a global scale.”

Brown says Sole Tech’s primary concern is the health of its employee. “To protect them, our current communication with Asia is done through technology and not physically meeting,” he says. “The affects of this are extending a few projects, but nothing that will prevent us from delivering our products to our retailers.”

Another concern for Brown is the “Slam City Jam” skate contest on May 2-4 in Vancouver, Canada. “We have many riders and employees going to the event, and with Toronto now claiming fifteen people dead from the disease, it’s a concern that the epidemic may spread to the west coast,” says Brown. “As I mentioned, keeping our employees and riders healthy is our number-one priority.”

So far, it appears SARS has made a minimal impact on production and delivery deadlines. “It’s more of an inconvenience than a disruption,” says Op President Dick Baker.

According to Billabong’s Wilson, “Fortunately, we’ve been dealing with our vendors for a number of years, and they’re familiar with our high levels of quality. So even if we aren’t there to see the line as it’s produced, it’s not a huge issue. We still QC everything once it’s delivered. At this stage, it hasn’t affected our deliveries — at this stage.”

Wilson’s implication is clear: no one knows what the ultimate extent of the disease will be or how it will be contained. Let’s all hope it doesn’t become a bigger story than it already is.

As of April 23, the World Health Organization reports that the virus has killed 229 people in 27 countries, with 3,947 probable cases being reported thus far.