China Energy Communication # 2

From David Power – President Exact Medical Manufacturing

 

Summary Notations

  • The energy crisis intensifies here in China with even more dire cut backs in allowed electricity usage
  • All factories in our Changzhou City area are now restricted in allowed operation and electric usage, including Exact Medical
  • The only unlimited available electric usage is now during the minimal usage overnight hours.
  • It is becoming evident that issues of energy availability are affecting many parts of the world and not just China.
  • As energy costs are skyrocketing, oil derivatives are experiencing significant inflationary pressures.

 

Since my last communication on the topic, the availability of electricity has become more dire. Previously as a low electric user compared to the number of employees we provide an income to, allowed Exact Medical to operate in a normal unaffected manner. Now however as the crisis has worsened all companies including Exact Medical are now restricted in their allowed electric usage. Our current situation is we are only allowed sufficient electric service for factory security and minimal office use between the hours of 0700 and 2300 four days per week with normal unlimited electric only three days per week or during the overnight hours during the four restricted days.

In recent months Exact Medical has been honored with increasing customer orders and the addition of a number of new clients that grace us with their trust to produce product for them. Our commitment is unwavering, and we reject any path that does not fulfill our obligations to our customers.

Clearly these restrictions are not acceptable. In order to maintain and achieve the promises and commitments we have made to our customers; our operating schedule has been modified. Since overnight electric service is available without restrictions, we have changed our work schedules to operate during those nighttime hours.

Therefore, and effective immediately, Exact Medical production hours are:

 

Monday Tuesday Wednesday Thursday Friday Saturday
23:00-7:00 19:00-7:00 19:00-7:00 19:00-7:00 23:00-7:00 23:00-7:00

 

This schedule conforms to the available electric service we need and including over time will allow Exact Medical to maintain our production schedule and on time shipment of all customer orders.

It is currently unknown what the duration of this crisis will be. Many China Government Officials minimize the situation and talk in terms of a few weeks or little more. I personally believe this situation could easily be with us for some months or more, and as with all things we hope for the best but prepare for the worst.

As this is becoming more evident in news reports from around the world, energy is in short supply. We note the energy issues of availability and rapidly increasing cost in both Europe and The United States. Of particular note the rapid rise in Oil with a barrel more than doubling in price during the last year. The economic recovery from the pandemic is much faster than anticipated and with OPEC + and other producers not increasing supply as rapidly as needed inflationary pressures are severe. The obvious consequences are upward price pressure on oil derivatives, and we are experiencing strong price increases on our many plastics raw materials. To date Exact Medical has been able to absorb these cost increases, however there is no assurance we can continue to do so in the future unless energy and oil price pressure abates. We hope for our clients understanding should cost pressures go beyond our ability to absorb.

 

I will continue future communications as circumstances change and/or warrant.

 

With Best Personal Regards

 

David Power

President

Exact Medical Manufacturing