Coronavirus (COVID-19) has infected over 90,000 people, killed 3,000, and essentially put entire countries on lockdown. As those numbers rise, the growing impact on global business is staggering: 94% of Fortune 1000 companies have seen a supply chain disruption as a result of the virus. The worst is yet to come, both medically and economically. Harvard Business Review predicts that thousands of American and European manufacturing plants will temporarily shut down or reduce production within the next few weeks. How long this will have to last remains anyone‘s guess.
“Best case, it will disappear as the weather warms as did SARS,“ says Allen Frank, President of Retail and SCM at Katalyst Technologies, referring to the outbreak of a similar but less prominent flu-like virus in 2002-03. “Worst case, it turns into a worldwide pandemic. If it goes away in April, then the question becomes does it reappear next winter?“ Vaccines are in development, but World Health Organization approval will take time. Frank predicts that while businesses will eventually get back to normal, working from home will become more commonplace, and travel for work will be reduced even after the panic dies down, and there will likely be long-term effects on the economy, including a possible recession.
Impact at Katalyst
Katalyst will continue to provide its services and expertise to our valued clients, but we know that global business is going to be affected, and it will also have a significant impact on our employees worldwide.
“It’s a global impact, it’s not just one or two countries.” “It’s spreading across the world, and a lot of our associates have families in India. If something goes bad, will they be able to go travel to see their family? I think the [humanity] aspect is also a lot larger.”
In a memo sent to the entire company last week, Shah shared a list of tips and practices that Katalyst plans to implement and are also recommended for other businesses:
- Prioritize employee health and safety. Encourage sick workers to stay home and consider allowing employees to work remotely.
- Cut back travel. As the virus spreads, travel should generally be reduced, but specifically international travel to countries that have been widely impacted. Avoid events with large crowds.
- Practice good hygiene. Mom was right to demand you wash your hands and sneeze into your elbow. So many infectious diseases would be less common if everyone simply followed these simple directions.
Fashion Forward
Since China is such a hub for the fashion industry for both its fabrics and inexpensive labor—the country manufactures more than a third of clothing worldwide—designers are already forecasting long-term difficulties. Summer collections could be delayed several weeks. The uncertainty in the virus’s endurance makes it hard to predict the impact on fall fashions, but experts aren’t optimistic.
Businesses that hadn’t already looked for alternate supply chain sourcing as a result of the ongoing tariff situation are now scrambling to find options in the increasingly fewer number of unaffected countries. There’s even concern about how the virus itself might travel throughout the supply chain.
“One major issue is whether the COVID-19 can adhere to packaging,” says Frank. “So far most experts claim it can’t, but there is a minority opinion that it can.” Indeed, the CDC cites anecdotal evidence that similar viruses (including SARS) were not able to survive on surfaces in ambient temperatures.
Manufacturing
Though China is often seen primarily as a producer of materials, corona concerns disrupt selling to the country as well, with some companies having to put deals on hold. Travel bans on China and other nations have already limited the audience for CONEXPO, one of the largest construction trade shows in North America, and while organizers tentatively intend to go on with the event, there’s a chance it will be canceled with less than a week’s notice.
“It’s a heavy equipment show, so the staging of that show literally cost millions for [potentially] no one to show up,” says Ray Bellan, President of Global Manufacturing and Engineering at Katalyst. “Any kind of networking events like some major trade shows, even if they still go on are going to be massively unattended by people who feel like it’s just an unnecessary risk to go parading around a show with hundreds of thousands of people, where your probability of virus spread seems to be much, much higher. And this is a once every three years show. It’s a massive loss.”
Katalyst will continue to monitor the coronavirus and update our employees and clients appropriately. For now, we wish safety and health to all.
