Perfect Storm

Methodically over the past two decades Asian sources, especially China, have dominated the communication fiber optic industry. The components they supply include connectors, ferrules, lasers, couplers, cable assemblies and active network equipment to identify a few. U.S. manufacturers cooperatively profit from these Asian business ventures by heavily depending on the key components they supply for manufacturing operations in the U.S.

The perfect storm hits:

    • 25% Tariff placed on Chinese imported products impacting U.S. fiber optic manufacturers.

    • U.S. fiber optic market spending takes steps back, as major companies re-examine market activity, resulting in many acquisition surprises.

    • Corona Virus (COVID-19) restricts Chinese travel, production and shipment of products which impacts the U.S. market.

    • General world markets react to the impact of Corona Virus, causing major stock market corrections.

Interestingly, our industry’s major trade show, the Optical Fiber Conference (OFC) that opened March 9th received immediate effects from our perfect storm.

First, Chinese attendees and manufacturers began dropping out of attendance at OFC due to travel restrictions. Then European companies began reducing attendees and exhibition staff. This lead to recognized exhibitors from international companies such as AFL, OFS Fitel, Corning, US Conec, NTT, Sumitomo, EXFO and others pulling out from exhibiting and attending. There was no Chinese Pavilion, and only 2 or 3 companies in both the Canadian and European Pavilion areas. The restriction of travel simply resulted in the cancellation of thousands of attendees and exhibitors and their normal show booth presence.

OFC management quickly dropped expectations from 16,000 to 8,000 anticipated attendees at their annual event. In the days leading up to the opening of the conference, many continued to ask if the conference would be cancelled. Those who reached out to OFC staff to ask for an updated list of exhibitors were told that one was not available.

Arriving at OFC it quickly became evident why OFC management was so tight lipped. An overwhelming amount of exhibitors had pulled out days prior. Some exhibits were already completely setup, intact with lights on and display cases lit, for example the popular NTT exhibit, but no employees were dispatched, so displays just stood unoccupied. In OFC management’s defense, how might they anticipate how many attendees were or weren’t showing up? An email survey may have provided some more accurate estimates.

General attendance figures are not officially finalized, but they are expected to be significantly down. Rumors that occupancy at surrounding hotels fell from 100% to 16% lead us to suspect that the realistic attendance at OFC was likely below 3,000 - including exhibitors.

The damage from the storm has yet to be determined.

We have yet to determine the impact; like all storms; it will be affected by its duration. Business prudence and past experiences are needed to guide us to our best decisions. There will be many new winners that will deserve their new position.