Factories shift operations in scramble to restock supermarket shelves

By Melissa Fares and Lisa Baertlein

NEW YORK/LOS ANGELES (Reuters) - With supermarkets stripped of food and many other essentials, consumer product companies halted factory runs of niche items such as scented bleach in order to speed up production of more basic merchandise that is in high demand.

Retailers have warned that hoarding toilet paper, cleaning supplies and food staples was fuelling shortages and stoking fear. Amazon.com <AMZN.O>, the biggest online retailer, said it sold out of many household staples after orders spiked.

As the fast-spreading coronavirus continues to alarm consumers across Europe and the United States, Trump held a phone call on Sunday with 30 executives from grocery stores including Amazon.com's Whole Foods, Target Corp <TGT.N>, Costco Wholesale Corp <COST.O> and Walmart Inc <WMT.N>. Trump Administration official Larry Kudlow assured television news viewers that U.S. supply lines were "working pretty well."

"The grocery supply chain is not going to shut down," said Doug Baker, who leads crisis management for the Food Marketing Institute (FMI), the trade group representing food retailers and wholesalers.

That does not mean that every product and Doritos chip flavour will be on store shelves.

As factories move to round-the-clock operations, they are focussing on the highest priority items to address the unprecedented surge in demand, said Baker.

For example, rather than cranking out bleach in several different sizes and scents, they will limit production to the most popular. Slow-selling flavours of certain foods may also be halted. That saves times because machines have to be changed to produce a different product.

"Manufacturers have also started allocating goods so they can ensure equal distribution across the country," Baker said.

U.S. retail giants such as Walmart Inc, Publix and Kroger Co <KR.N> have set restrictions on purchases of toilet paper, Lysol sanitising wipes and other in-demand products.

Walmart, which gets more than half its U.S. revenue from grocery sales, has given store managers authorization to manage their inventory, "including the discretion to limit sales quantities on items that are in unusually high demand," a spokesperson said.

Walmart's replenishment efforts include "diverting products to areas of the country where they are needed most and routing deliveries directly to stores," the spokesperson said.

Harold Edwards, chief executive of agribusiness Limoneira, said he has ample supplies of lemons, oranges and avocados for retailers, particularly as demand from restaurants, cafeterias and other food service clients dwindles.

At least 62 have people have died from coronavirus illness in the United States, where infections are expected to rise from the currently confirmed 3,000 cases.

Companies across the grocery sector are working to ensure that they have enough labour to keep supplies moving.

Baker, from FMI, said contingency plans include shifting workers from restaurant supply chain jobs as more cities impose curfews and "social distancing" measures, such as barring sit-down dining, to stem the spread of the virus.

Companies across the grocery landscape hope to employ furloughed workers as theatres, cafes and "non-essential" retailers shut down.

"We have immediate positions available combined across our retail stores, manufacturing plants and distribution centres," said Kristal Howard, spokeswoman for Kroger, whose supermarket chains include Ralphs and Harris Teeter.

Volume is up anywhere from 20-50% at Lineage Logistics - the leading provider of warehousing for frozen and refrigerated goods ranging from fruit to fish - and the company is recruiting to fill "a couple thousand openings," said CEO Greg Lehmkuhl.

"We're thinking about our employees like first responders. We have to get the job done," Lehmkuhl said.

Meanwhile, the hunt for sought-after goods continues.

Donna El-Armale, 53, turned out in the predawn hours to join a long line of shoppers in the Costco parking lot in Marina del Rey, California.

"We're just trying to get our normal two-week supply," said El-Armale, a therapist, whose shopping list included paper towels and water for herself, and toilet paper for a family member.

Like many Los Angeles-area shoppers, who have weathered earthquakes and riots, El-Armale expected life to go on.

"We know the stores will be open," she said.

(Reporting by Melissa Fares in New York and Lisa Baertlein in Los Angeles; Additional reporting by Jeff Mason in Washington; Editing by Daniel Wallis)