RISKS AND UNCERTAINTIES

9 Months Ended

Sep. 30, 2020

Risks And Uncertainties, Unusual Items [Abstract]

RISKS AND UNCERTAINTIES

RISKS AND UNCERTAINTIES

In March 2020, the World Health Organization declared the novel coronavirus (COVID-19) outbreak a global pandemic. Various governments in Asia, Europe, North America, and elsewhere instituted, and may reinstitute, quarantines, shelter-in-place or stay-at-home orders, or restrictions on public gatherings as well as limitations on social interactions. These restrictions and limitations have had, and could further have, an adverse effect on the economies and financial markets of the countries where our products, or our customers’ products are sold. The resulting economic downturn has had, and could further have, an effect on the demand for our products and our customers’ products, growth rates in the industries in which we participate, and opportunities in those industries.

We have manufacturing facilities in the United States and 17 other countries. All of these countries have been affected by the COVID-19 pandemic. All of our facilities are open and running at this time. From time to time we have some capacity restrictions on our plants due to governmental orders in various parts of the world. We have been and could be further negatively affected by governmental action in any one or more of the countries in which we operate by the imposition, or re-imposition, of restrictive measures concerning shelter-in-place or stay-at-home orders, public gatherings and human interactions, mandatory closures of retail establishments that sell our products or our customers’ products, and restrictions on the import or export of products.

The U.S. and other governments have ordered that certain non-woven fabrics used to produce ComfortCore® innersprings be prioritized to produce medical supplies, resulting in shortages of the fabrics for non-medical applications. These shortages and very strong bedding demand have caused the Company temporarily to be unable to supply full industry demand for ComfortCore®. We are engaging with customers in an effort to work through these issues. The shortages have resulted in higher pricing for non-woven fabrics. If we are unable to obtain the fabrics, or cannot pass the cost along to our customers, our results of operations may be negatively impacted. As demand has improved, we also have experienced some temporary labor shortages. We are attempting to hire additional employees and add equipment, particularly in our U.S. Spring business to meet this demand.

Depending on the length and severity of the COVID-19 pandemic, our ability to keep our manufacturing operations open, maintain appropriate labor levels, obtain necessary raw materials and parts and ship finished products to customers may be partially or completely disrupted, either on a temporary or prolonged basis. The realization of these risks to our manufacturing operations, labor force and supply chain could also increase labor, commodity and energy costs.

Although not directly related to the pandemic, we have experienced supply shortages with certain chemicals, which has resulted in higher pricing for the chemicals. If we are unable to obtain the chemicals, or pass the cost along to our customers, our results of operations may be negatively impacted. Also, some facilities had experienced problems delivering products to customers because of disruption in logistics necessary to import, export, or to transfer products across borders. Currently, our supply chains have been hampered by congested ports, especially on the U.S. west coast.