Post-virus everything is going to change. That’s the dominant view of national and international media. But how exactly do they see the future? This regular digest section gives some of their answers and views/Edited by George Hamilton
In this edition (May 11):
- FILM/TV PRODUCTION: #1 Virus-caused stoppage: some NI film and TV companies ‘may not survive’
- NI’s large, and growing, film/TV production industry has ground to a halt in lockdown, and some companies – and many of their staff – face a tough future
- #2 Studios bypass cinemas with lucrative lockdown premieres
- One on-demand hit recently made more in three weeks than its predecessor did in five months in cinemas – a pointer to the future of film distribution?
- The pandemic is fundamentally reshaping global trade
- Produced by the World Economic Forum, this, in my view, is probably the best global economic analysis I have seen
- ‘I made millions out of the last debt crisis. Now the wealthy stand to win again’
- Written by a former City trader, this is a startling – and brutally honest – piece about how the rich still benefit even under lock-down – and how to change this situation
- SHORT STORIES: #1 NI’s tourism industry may be ‘reshaped’: Diane Dodds
- #2 Homebuyers ‘plotting move to country’ amid increased home working.
- …and, finally, a tale of the unexpected #3 In lockdown, even the drug dealers are getting clean.
FILM/TV PRODUCTION. #1Virus-caused stoppage: some NI film and TV companies ‘may not survive’
Across Northern Ireland, 25 local factual and entertainment productions have been suspended as a result of the virus, including documentaries, comedies, dramas and Hollywood blockbusters.
Northern Ireland Screen chief Richard Williams said that local independent companies are having a tough time, with many facing tight profit margins and some will not survive.
“A lot of these companies are very, very small and they don’t have huge investment behind them so it’s a tough enough place to be but we have put out emergency development funding to help them during this period when the production is less than it would normally be.”
The film and TV industry relies heavily on freelance crew and while many have been able to take advantage of the existing government schemes, the NI Screen chief said a substantial number of them have been overlooked.
In March, Viking revenge film The Northman, starring Nicole Kidman, was forced to abandon filming on the north coast of Antrim due to fears over the coronavirus outbreak. A film set had already been built in the scenic and remote location of Torr Head.
Williams said: “That’s a project that’s financed out of the US studio system in America. Tens upon tens upon tens of millions of dollars in terms of production budget and in terms of the number of crew, you’re talking about 500 or 600 people.”
The latest series of BBC cop drama Line of Duty, which began filming in Belfast in February, is among the 25 productions postponed, as well as the third series of Lisa McGee’s nostalgic hit TV show Derry Girls, which was due to begin filming this month. Belfast Telegraph 7 May
#2 Studios bypass cinemas with lucrative lockdown premieres
An animated musical extravaganza about a group of pop-loving trolls may turn out to be the most important film in recent Hollywood history. Trolls World Tour, which has become a lockdown hit, notching up digital sales of $100m (£80m) in three weeks, has become the focal point of a battle that could forever change moviegoing habits in the Netflix era.
With cinemas closed, Hollywood studios are challenging the sacrosanct tradition that multiplexes air films first for up to three months, before their release on other platforms such as pay-TV, DVD and streaming. Instead, they are pushing new films straight to fans at home.
Universal gets a greater cut of revenue from digital services than at the box office, which means the film has made the same amount of profit in its first three weeks as the first Trolls film did during its entire five-month run in US cinemas.
Emboldened by its success, last week the company indicated that it would collapse the cinema release window by releasing films digitally at the same time. “As soon as theatres reopen, we expect to release movies on both formats,” said Jeff Shell, the chief executive of parent company NBCUniversal.
Those comments immediately prompted the world’s two biggest cinema operators – AMC, which owns the Odeon chain in the UK, and Cineworld – to issue a global ban on screenings of all films from the maker of the Fast & Furious and Jurassic World franchises when business restarts. The operators accused Universal of “breaking the business model” that has underpinned the Hollywood movie system for generations.
“Universal has cast the first stone,” said Jeff Bock, an analyst at research firm Exhibitor Relations. “This is exactly what the theatrical exhibition world had always feared – proof that bypassing theatres could be a viable model of distribution for studios. Like it or not, the floodgates have opened. This is just the beginning, and the longer it takes for theatres to open on a worldwide scale, we’re going to see the PVOD [premium video on demand] schedule become more and more populated.”
However, theatrical release represents a huge slice of income that is difficult for studios to ignore. When a film’s big-screen run is finished, there is a second wave of income from digital and on-demand services; this double-window revenue stream would disappear if multiplexes were taken out of the equation.
There are also other issues making a total shift away from cinemas unlikely, for now at least. China, for example, along with many developing countries, has a tiny digital-video rental market, which would severely limit income from direct digital releases, whereas it boasts the world’s second-biggest cinema box office market, at $9bn a year. Guardian 2 May
The pandemic is fundamentally reshaping global trade.
Probably, in my view, the best global economic analysis I have seen. Its an article from the World Economic Forum (best known for its annual shindig at Davos in Switzerland attended by the world’s movers and shakers).
Recent data from Tradeshift, a global platform for supply chain management, reveals the magnitude of the impact on trade and demand. It suggests the effects of the initial shock may continue to linger for the coming months. In China, domestic and international trade transactions suffered a week-on-week drop of 56% beginning mid-February. The United States, United Kingdom, and Europe followed suit, with a combined initial drop of 26% in the beginning of April, and a continuing decline of 17% in late April.
Furthermore, trade has flatlined in every region affected by the lockdown. Overall weekly transactions on the Tradeshift platform since March 9th are down by an average of 9.8%, compared to pre-lockdown figures, with a pronounced decline in invoices and orders since the end of March.
Two side effects of the contractions in global trade have emerged. One is that it takes longer to settle an invoice, reversing a previous trend of faster payments.
Secondly, the lack of orders going through the supply chain is building up to another tidal wave with new orders slowing and invoices dropping off. So far, businesses are still receiving money from orders placed before the lockdown, but those are drying up. The coming months could be very difficult for suppliers globally.
Despite recent efforts to reopen factories and ease lockdown restrictions, China continues to feel the effects of the broader slowdown. Factories may be reopening, but consumers aren’t buying.
China’s trade activity surged briefly after factories reopened, but that activity is now beginning to stagnate even after lockdown measures were eased in Wuhan. The return-to-work rate in China has crept up as more companies resume production, but the domestic landscape remains drastically altered.
China’s reputation as the ‘factory of the world’ is also causing problems as many of the country’s trading partners remain in lockdown. Exports account for a fifth of China’s GDP. As orders are flatlining in the US and other key trade partners, it is doubtful whether China can orchestrate a recovery purely on its own terms.
According to PWC’s April CFO Pulse survey, cash flow is the primary concern amongst business leaders, with 77% of CFO’s implementing cost containment measures. 56% of respondents thought they could get back to ‘business as usual’ in three months, down from 90% when the survey ran in mid-March.
For a growing number of multinational companies, the reality of the crisis presents an increasingly stark choice between self-preservation and supplier solvency.
Median small businesses have enough cash in reserve to keep them solvent for 27 days. If cash flow dries up, it could have a devastating impact on supply chains, lengthening any recovery period dramatically. Companies such as Unilever have already agreed to pay suppliers earlier. However, such measures won’t be possible in every case. Financing arrangements will need to adapt to give smaller suppliers better access to working capital.
COVID-19 has exposed the vulnerabilities of complex global supply chains built on lean manufacturing principles. This is particularly true in the healthcare sector, where the scramble for protective equipment has laid bare the inherent risks of inventory and single-sourcing models driven exclusively by cost control.
The impact of China’s lockdown and its dominance in key areas of manufacturing have further highlighted the problem with modern supply chains. When Chinese factories closed, manufacturers struggled to pivot due to a lack of flexibility in their supplier base. One likely consequence is that global firms will diversify their supply chains in the future, instead of relying only on China. Manufacturing hubs such as Vietnam, Mexico, and India are likely to benefit from that shift.
We will also see a decentralization of manufacturing capacity, with companies looking to bring production home. This trend grew with the likes of automation and small batch production, which had become so cheap that a number of countries started moving portions of their supply chain back home. Policymakers may be increasingly pressured to consider whether certain products need to be manufactured in the country or the region.
The transition to a new model for supply chains will be underpinned by a rapid and wholesale digitization of the paperwork that accompanies global trade. By Jesse Lin, Project Specialist, Digital Trade, World Economic Forum and Christian Lanng, Chief Executive Officer, Chairman and Co-Founder, Tradeshift World Economic Forum 6 May
‘I made millions out of the last debt crisis. Now the wealthy stand to win again’
This is a startling – and brutally honest – piece about how the rich still benefit even under lock-down. Gary Stevenson, a former City trader, says we urgently need a fairer tax system “so that rich people like me help solve the fallout from coronavirus, not just profit from it”
I made my first million the year Greece went under. I was 24 years old at the time.
I’d attended a presentation given by one of Citibank’s senior economists, in which he explained that government debts of the world’s major economies had grown to dangerous levels, and were continuing to grow. He warned that markets could stop lending to some of these governments, forcing a devastating round of austerity on to already battered economies.
On the Citibank floor millionaires to my left and right stared bought stocks and lent money to governments and banks. It was these people, and the people whose money they managed, to whom all of these debts were owed. As governments and workers accumulated debts, these people accumulated property, stocks, bonds and gold. This money would not cycle back through the system, pushing up wages; instead it pushed up the prices of these assets.
So, I placed a bet on the future of the global economy. I bet that over the next three years global central banks would be unable to normalise interest rates from emergency levels because economies permanently weakened by rising inequality would not be able to survive doing so. By the end of that year, 2011, I was Citibank’s most profitable trader globally, and a millionaire. I made that same bet again in 2012. In 2014 I retired.
I cannot tell you whether governments will again resort to austerity to try to pay these debts off, but I can tell you what the rich will do with their new piles of cash. They will buy more stocks, bonds, gold, land and houses. I know this because they did exactly that when they received large amounts of newly printed money after the 2008 and 2011 crises. I know this because I’m doing it myself.
It is not right that society’s richest people profit from this crisis while millions fall into desperate poverty. I include myself in this. We urgently need to develop a fairer tax system so that we can contribute to solving the crisis, not just profit from it. At a time of crisis, when the richest will profit while so many struggle, a wealth tax has never been more obviously needed. Gary Stevenson is an economist and former interest rate trader in London and Tokyo Guardian 7 May
SHORT STORIES: #1 NI’s tourism industry may be ‘reshaped’: Diane Dodds.
Northern Ireland’s tourism sector has gone from a £1bn industry employing 65,000, to “start-up mode” and could be rebuilt in a way very different to what existed before the Covid-19 crisis, Economy Minister Diane Dodds said.
Speaking at the first meeting of the tourism recovery working group, which has been set up to help the industry rebuild after the lockdown, she noted: “What we are seeing is a resetting of global tourism. Previous assumptions which informed the business no longer apply. Our tourism destinations are effectively in start-up mode”, adding that the circumstances were also an opportunity to reshape the industry. Belfast Telegraph May 7
#2 Homebuyers ‘plotting move to country’ amid increased home working.
After the lockdown, the exodus. Estate agents are reporting a surge in the numbers of would-be homebuyers plotting a move out of the city to a rural area or smaller town as people conclude that home working is here to stay.
Firms said that during the last few weeks they had seen a big increase in enquiries about well-connected countryside and “out of city” locations – ranging from English market towns to Scottish fishing villages – where people could split their working week between home and office once life starts to return to normal.
The pandemic has effectively pushed the UK housing market into a temporary deep freeze. However, Rightmove has revealed that visits to its site during the last three days of April were up more than 20% compared with the first few days of lockdown, as more people stuck at home started to think about a new life in the country.
Rightmove said Inverness in the Scottish Highlands was the location seeing the biggest year-on-year increase in searches – up 167%. Guardian May 8
#3 In lockdown, even the drug dealers are getting clean.
The UK’s drug dealers – “sellers of weed, cocaine and the rest” – have a “high adherence to government social distancing advice”, with two-thirds of sellers practicing the two-metre rule, a new survey of drug users says
The survey, by Release “the national centre for expertise on drugs and drugs law” also says that dealers are wearing gloves (37 percent) and using different packaging for the drugs (29 percent).
Just like Sainsbury’s, over one in five dealers would not accept cash, preferring for their customers to pay by bank transfer or PayPal. Some people reported that their supplier was paying particular attention to the cleanliness of the cash they were receiving, with one respondent saying: “I was quite surprised, he was even disinfecting the notes.”
Dealers have been operating a bit like Amazon. One respondent explained how their deal was: “Dropped in garden, phone call to let me know, bank transferred money.” Perhaps looking for that unique edge over their competitors, suppliers are advertising the fact they have adopted new practices, with one respondent saying: “He said he’s washing his hands and using gloves to bag up. Received several texts from other dealers with policies like this.” Vice magazine 7 May
