How a little-known company navigated the shortages and shutdowns of the pandemic while pointing the way to a less China-centric future


Less than a year after becoming CEO of Flex Ltd., Revathi Advaithi faced one of the most serious threats in the company’s half-century history.

The novel coronavirus pandemic had shut down the world’s manufacturing center in China, disrupting supply chains and underscoring the dangers of a globalized economy. Faraway factories, once celebrated for delivering lower costs, now seemed a fatal vulnerability.

For Flex, a Singapore-based manufacturer with 100 facilities in 30 countries, the consequences were particularly acute. Some of its 21 factories in China, where the coronavirus outbreak was preventing millions of workers from reaching their jobs, would stay closed for weeks.

Empty skies

A plunge in trans-Pacific air travel that began in January added to obstacles for manufacturers who depended heavily on airlines to move goods and people.


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Worse, snags in the company’s operations threatened to interrupt the production of consumer and industrial goods for its customers, household names such as Apple, Ford and Johnson & Johnson.

As the pandemic reshaped global demand, some Flex factories suddenly were producing too many parts while others were not producing at all. The crisis peaked on Feb. 22, when Advaithi learned her factories faced shortages of 8,000 individual items — roughly five times what Flex dealt with on a typical day. If the shortfalls of electronic components such as memory chips, connectors and LCD panels were not quickly resolved, production of a wide array of goods, including cordless vacuum cleaners and computers, might grind to a halt.

“We had a pretty serious problem on our hands,” said Advaithi.

Products that Flex helps manufacture
Apple Mac Pro
Google Chromecast
Novocure Optune
Philips ventilator
Ratio automated barista
Temi robot
Roche antibody test
HereO GPS watch for kids
Allergan dry-eye treatment
Wireless chargers/adapters

What had begun as a slow-burning, localized health issue in one country was fast becoming a major risk for the global economy. Companies had to adapt — and quickly — to outrun a virus that was chasing them around the world.

Over the next several weeks, production specialists at Flex re-created in Mexico an entire ventilator assembly line from the United States by copying images captured on a virtual reality system. Supply chiefs at a command post in California tracked the status of more than 1 million parts using a wall-size, touch-screen display. And with global travel all but impossible, Advaithi substituted digital technologies for the hands-on interaction the virus had rendered impossible.

By early May, Flex had redeployed hundreds of remote workers, accelerated production of medical gear required to fight the pandemic and scratched its way to a narrow profit.

Image: Flex CEO Revathi Advaithi visits the company's factory in Guadalajara, Mexico, in April 2019. The Singapore-based manufacturer has 100 facilities in 30 countries. (Flex)
Image: Employees in Flex's Juarez, Mexico, manufacturing facility work on ventilator production July 15 while maintaining distance. (Flex)

In Washington, President Trump lambasted corporate America for “these stupid supply chains” and said the pandemic had proven him right on the need to bring factories home.

“We have a supply chain where they’re made in all different parts of the world. And one little piece of the world goes bad and the whole thing is messed up,” he told Fox Business in May. “I said we shouldn’t have supply chains. We should have them all in the United States.”

Global distancing

This is Part in a series of stories on how the coronavirus is disrupting an interconnected world.

But as Flex’s evolution demonstrates, the pandemic did not — and likely will not — end globalization. Instead, it turbocharged trends that already were in motion when the virus first flared, including a diminishing reliance on China.

Digital data — illustrated by the proliferation of Zoom meetings — grew even more vital for executives, employees and customers trying to coordinate their actions. Software applications that had been used for years to track production were upgraded to provide more granular information about what was happening thousands of miles away.

Likewise, manufacturers that had started relocating factories from China, prodded by Trump’s trade wars and rising Chinese wages, reassessed their global operations in light of vulnerabilities exposed by the pandemic.

Armed with data and facing a perilous world, more companies recalculated the balance between cost and resilience, between efficiency of production and certainty of delivery, and imagined a less-China-centric economy.

The pandemic has driven down

imports to the U.S.

U.S. imports from China fell sharply in the 2019 trade war. As Chinese factories resumed operations after pandemic-related closures, they made a partial recovery even as imports from elsewhere declined.

Pandemic era

$100 billion

Increase in imports

Decrease in imports

The pandemic has driven down

imports to the U.S.

U.S. imports from China fell sharply in the 2019 trade war. As Chinese factories resumed operations after pandemic-related closures, they made a partial recovery even as imports from elsewhere declined.

Pandemic era

July 2018: U.S. places sweeping

tariffs on Chinese imports

$100 billion

Increase in imports

Decrease in imports

The pandemic has driven down imports to the U.S.

U.S. imports from China fell sharply in the 2019 trade war. As Chinese factories resumed operations after pandemic-related closures, they made a partial recovery even as imports from elsewhere declined.

Pandemic era

$100 billion

July 2018: U.S. places sweeping

tariffs on Chinese imports

Increase in imports

Decrease in imports

December 2019

December 2016

Note: Each data point is the three-month average compared to the same period in the previous year.

Import chart data compiled by Brad Setser of the Council on Foreign Relations from U.S. Census Bureau data.

As the crisis entered its fifth month, Bank of America forecast “a much faster-than-expected shift in manufacturing away from China.” The bank’s investment analysts said 37 percent of the 3,000 public companies they track either had made plans to shift a portion of their supply chains or were expected to do so.

Flex already had cut its dependence upon China by half over the past five years and expanded capacity in other countries, including the United States. Its customers, the company said, were increasingly demanding regional production networks rather than a single global chain.

The moves largely involved lower-value final assembly and testing, but the growing footprint outside of China put the company “ahead of the game,” Advaithi told investors last month.

“You may see a permanent change in terms of where things are made and why they’re made in a certain place,” she said. “Being closer to a customer may be important in terms of your location of manufacturing.”

But first, companies must learn to survive a once-in-a-century calamity.

Advaithi had just returned from a Christmas holiday in India to her home near the company’s U.S. headquarters in San Jose, Calif., when she was alerted to a problem that would become, she later said, “probably the most difficult time in my 30 years of working.” In a Jan. 13 call with Francois Barbier, Flex’s head of operations, the former mechanical engineer learned that the coronavirus spreading across China showed no sign of abating.

“They came into the meeting with a lot of data and information that I was surprised with,” she said.

Already, there were rumors that the Chinese government might order factories to remain closed after the annual Lunar New Year shutdown. An extended interruption in Chinese manufacturing would imperil production for top companies such as Google, Fiat Chrysler, HP and Xerox, which outsource portions of their product design and manufacturing to Flex. The company produces hospital beds and surgical instruments, desktops and 5G communications gear, automotive displays and power converters for hybrid vehicles.

Image: White House senior adviser Ivanka Trump, left, President Trump and Apple CEO Tim Cook tour the Flex computer manufacturing facility in Austin, where Apple's Mac Pros are assembled, on Nov. 20, 2019. (Mandel Ngan/AFP/Getty Images)

In November, Trump visited a Flex factory in Austin, where workers assemble Mac Pro computers for Apple. The tour sparked a minor tempest after the president falsely claimed the factory showed his “America First” policies were succeeding.

“Today I opened a major Apple Manufacturing plant in Texas that will bring high paying jobs back to America,” he tweeted.

In fact, Flex had been making Mac Pros in the plant since 2013 and most workers who produce Apple products were still in China.

Founded in 1969, Flex employs roughly 160,000 workers worldwide — more than Boeing. Its 27 million square feet of manufacturing space would fill the Pentagon four times over. Annual revenue exceeds $24 billion.

On that Monday in January, Advaithi’s team quickly agreed to order enough personal protective equipment — masks, gloves, temperature scanners and hand sanitizer — to equip Flex’s 50,000 Chinese workers. Just two weeks later, with much of China still under quarantine, 3 million masks from India, Malaysia, Singapore, Mexico and Poland had reached Flex’s Chinese operation.

The early action paid off.

In China, Wang Ming, general manager for Flex’s Suzhou and Shanghai plants, had kept skeleton crews working throughout the holiday making semiconductor equipment, telecom gear, CT scanners and bedside patient monitors, mostly for the Chinese market.

As he sought to resume full operations in early February, Wang battled shortages of labor and material. A cutoff of rail and bus services to contain the coronavirus made it difficult for the plants’ 5,000 workers to return from holiday visits to distant hometowns. Many of his local suppliers lacked enough masks to satisfy government regulations requiring them before work could resume.

But Wang had more than he needed. So he equipped his suppliers with masks, cleaning supplies and training manuals.

“If they don’t give us the materials, we can’t produce,” he said. “So we help them.”

Flex spent $52 million by the end of March on coronavirus-related expenses and expects the bill for the current quarter to top $100 million.

The pandemic all but grounded Flex’s leadership. Rather than taking their customary 700 trips a month, managers boarded just a dozen flights. As air travel grew too risky, Zoom calls filled the gap, soaring to 226,000 in April from about 63,000 in December.

The video conferences became so ubiquitous that Advaithi eventually issued a directive requiring a minimum 15-minute break between calls.

From a Flex command post in Milpitas, Calif., Lynn Torrel, the company’s chief procurement officer, monitored 16,000 suppliers and more than 1 million individual items using a data analytics tool called Pulse.

Image: Javier Ramirez, Flex's director of supply chain solutions, adjusts the screens in Pulse Center at the company's Milpitas, Calif., office. Pulse, a data analytics tool introduced in 2015, helps the company monitor its operations. (Christie Hemm Klok for The Washington Post)

Introduced in 2015, the cloud-based system gobbles data from 88 sources, providing a cohesive view of the multinational’s operation. Arrayed on a wall, 22 video screens provided near-real-time information on every .0005-cent screw and each integrated circuit costing hundreds of dollars.

Each weekday on a 5:30 a.m. conference call, Torrel and the logistics team juggled priorities as the virus disrupted their tightly choreographed network.

From the start, they flagged every part originating from China, reconfirming orders with both suppliers and customers to make sure that everything that had been ordered was actually being produced and was still needed.

“I wanted to ensure . . . that it was true demand that we were looking at,” she said.

For parts needed immediately, she scoured the globe for alternative suppliers. After Chinese production of a critical building block used in many electronic products dried up, Torrel’s team located a vendor in Malaysia that could make the tiny devices known as resistors.

When Chinese factories started returning to work in early February, another problem loomed. Much of what Flex produced in China traveled to the United States in the belly of passenger jets. But major airlines had canceled 1 million flights, causing air cargo rates to spike.

Torrel called on her ties to airline managers and her customers to secure space for Flex products.

Yet even with Pulse, Torrel and her team were operating amid “the fog of war.” Many of Flex’s Chinese suppliers were physically unable to return to their factories because of a government-ordered quarantine, let alone confirm purchase orders.

On one 16-hour day, Torrel found herself working into the evening, still wearing the pajamas she had slept in the night before.

On the daily calls, a recurring issue involved the buildup in inventory resulting from the patchwork of operating factories and shifting production needs.

“When Asia was shut down, the rest of our facilities around the world were still manufacturing,” she said. “One part can bring a line down, so you can have all of your product available and one [missing part] prevents you from manufacturing.”

Stretching sometimes limited supplies, Flex juggled customer demands. But the company says it never suffered a complete breakdown.

Others weren’t as fortunate. In early February, a Hyundai plant in South Korea closed after running out of made-in-China parts. One week later, the same thing happened to a Nissan factory in Japan.

By Feb. 16, more than half of Flex’s Chinese workforce was back on the job. But a problem that had initially seemed confined to China was metastasizing. By late February, Italy, where Flex has three facilities, was a second coronavirus hot spot. Brazil, where a populist president scoffed at the pandemic, would eventually become a third.

The company applied its China playbook to these countries as the virus spread, tagging affected parts and moving to reroute supplies.

Flex was making progress on other fronts, with component shortages down by one-third since the Feb. 22 peak.

By the end of March, inventory had increased by $101 million from the previous quarter, according to regulatory filings. Holding extra inventory in an era of just-in-time deliveries is expensive. To conserve cash for a lengthy recession, Advaithi instituted an across-the-board 20 percent salary cut for executives, many of whom earned six-figure salaries. The CEO absorbed a 50 percent cut in her $1.1 million salary.

By March 20, three of Flex’s medical industry customers, including Philips had asked whether the company could take on the job of manufacturing ventilators. Hospitals in the United States and around the world were running short of the lifesaving equipment. To meet the urgent need, Flex had to redesign the devices to shrink the customary 12 to 24 months needed to design, produce and secure regulatory approval for medical hardware.

The problem was that the engineering team for the company’s medical business is located in Milan, in the middle of the hardest-hit Italian region. After the government locked down the Lombardy region on March 8, some Flex employees took test equipment home to continue working.

With the Big Three automakers having announced plant closures on March 18, Flex reassigned to the ventilator effort supply chain specialists from its automotive unit and other projects that faced slowing demand. Working remotely, a team of 75 supply specialists at a Columbia, S.C., manufacturing site helped secure needed parts.

Under normal circumstances, one of the customers, a Pennsylvania-based ventilator maker, would have shipped Flex the equipment to install in a new site. But since Flex’s customer couldn’t spare any production equipment amid the crisis, workers in Pennsylvania walked the existing assembly line using an augmented reality system to capture each required step.

Like an Internet-age paint-by-numbers kit, Flex used those images to replicate the original manufacturing facility at a new site in Juarez, Mexico. Working 24-7, the company converted a 1.2 million-square-foot automotive parts warehouse into a medical products factory by mid-April.

“We had to duplicate everything. Typically we’d go up and spend weeks in their facilities learning all the details of the product assembly,” said John Carlson, president of Flex Medical Solutions. “Well, one, we couldn’t travel and, two, we didn’t have weeks. So we had to find ways to do it virtually and do it in days.”

Image: Employees at a Flex manufacturing facility in Suzhou, China, stand in line in the cafeteria in April 2020. (Flex)

The rolling shutdown that had started in China sent trade into a free fall. April’s global trade volume fell more than 12 percent from March, according to the CPB Netherlands Bureau for Economic Policy Analysis, the biggest one-month drop since those records began in 2000.

Yet, Flex’s global operation continued to heal. On May 8, the company said it had eked out a $48 million profit on revenue of $5.5 billion for the first three months of the year.

With all factories operating and parts availability back to normal, Advaithi and her team debated how much of the pandemic-related change would endure.

Already the company had instituted some pandemic lessons by tweaking Pulse. Flex could now filter its supply chain by specific localities, not just the country of origin. Pulse also included new information on suppliers’ financial health, a missing data point that the lengthy pandemic shutdowns proved essential.

The future course of the pandemic and the U.S. presidential election in November made broader conclusions hazardous. But existing trends toward greater regionalization of production, especially in sensitive medical and technology sectors, and less reliance upon China were expected to continue.

Even before the pandemic, Flex had begun leaning away from China in response to a shifting product mix and customers’ desire to have goods produced closer to their final destinations.

In 2015, 37 percent of Flex’s global footprint was based in China and just 11 percent in the United States, according to the company’s securities filings. Today, the two nations’ shares are almost equal: China has 18 percent; the United States has 17 percent. (Flex spreads the rest of its manufacturing capacity across countries such as Mexico, India and Hungary depending upon customer needs each year.)

Still, the pandemic’s likely impact should not be overestimated.

“Without broader policy shifts, the world will return to something that more closely approximates the pre-covid trade patterns,” said economist Brad Setser, who managed international economic issues for the Obama White House.

Massive government subsidies could change that. Japan’s government is providing $2 billion to lure Japanese companies home from China. Former vice president Joe Biden, the likely Democratic presidential nominee, this month called for “a more resilient domestic supply chain” to produce drugs, semiconductors and electronics.

But there is an unmistakable trade-off between cost and efficiency. Bringing supply chains back to the United States or adding redundancy, so that an outbreak of disease in one country does not cripple production elsewhere, would be expensive.

“The real question is: Are people going to be willing to pay more to have certain things made?” Advaithi said. “And who’s going to pay the price?”