COVID-19 is having a massive effect all across the world. Con-Expo went ahead went last week, but some high-profile regulars pulled staff at the last minute. Volvo and subsidiary Terex decided not to attend even through their machinery was in place. After the announcement, Paul Douglas, Managing Director of Terex said, “We are great supporters of Con-Expo, and despite being in advanced preparations for this year’s event, we believe it was the right thing to do to withdraw. Our first concern is the wellbeing of employees, customers and the wider public. It’s very disappointing not to be attending but our first priority is health and safety.” It is likely all large events like this will postponed in the short term at least.
Staying in the US, The United Auto Workers, General Motors, Ford and Fiat Chrysler have announced they are forming a COVID-19/Coronavirus Task Force to implement enhanced protections for manufacturing and warehouse employees. Hyundai Motor America is reinstating its Assurance Job Loss Protection program to support customers affected by the uncertain business and financial environment created by the pandemic.
Nissan North America has sent employees to work from home where possible. The company, based in Nashville, released the following statement: The safety and well-being of Nissan employees is always our highest priority. Starting March 16, we are directing those with the ability to work remotely to do so until further notice. This action is out of an abundance of caution to help reduce the risk of spreading the corona virus and to allow us to redeploy resources for the employee populations who are unable to work remotely.
Meanwhile in Italy, Ducati has adopted a series of measures to limit the probability of the virus spreading at its plant in Borgo Panigale. The most important were the measurement of the temperature at each person entering the plant, trips limited to the strictly necessary, meetings with reduced participants and distance between them, and a canteen with special procedures and revision of shifts to reduce close contact between people. Ferrari has decided to suspend production in Maranello and Modena until at least 27th March, citing supply chain issues.
Accessing the virus fallout
It does seem that factories will be falling silent across the planet. For some, like those above, it’s about not spreading the virus around now. For others, the airline industry for example, the picture is more complex as travel restrictions may lead to a falling off of demand. Following the implementation of new measures in France and Spain, Airbus has decided to temporarily pause production and assembly activities at its French and Spanish sites. This will allow time to implement health and safety conditions in terms of hygiene, cleaning and self-distancing, while improving the efficiency of operations under the new working conditions. In those countries, the company will also continue to maximise homeworking wherever possible. According to Reuters, the firm has signalled that some government support may be needed if the crisis lasts for several months.
What does the future hold for industry?
Those making ventilators and PPE will clearly do well here. The blunt truth is though that many firms will need to be bailed out or, if there’s an outbreak of capitalism to match the virus, go bust. The problem is, with a weak global economy since 2008 and near/zero interest rates already the central banks are not in a position to offer much stimulation. Negative rates anyone?
Borrowing more, or a tax payer-funded bail out is not really an option either, existing debts are already too large.
As time goes by, it does appear that the economic impact may be so huge it raises the prospect of a major economy defaulting, which will change the global economic landscape for years to come. Also there is the risk of desperate governments implementing so-called ‘helicopter money’ potentially triggering Venezuela-style hyperinflation. Even before COVID-19, quantitive easing looked like it may become never-ending, aggravating existing money supply issues.
Corona virus may be the pin that pops the everything bubble. What ever happens, it will not be business as usual. It’s not all doom and gloom though. It’s been widely reported that Pornhub has given Italians who are locked down free access to premium content. Let’s hope the broadband tech keeps working.