Scrap everything you know: company survival in the ‘new normal’

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 7):

  • How the virus will upend the economy over the next year
  • Companies that survive the next 12 months will have to scrap everything they know to thrive in the new normal
  • Post-virus world: grimmer, risk-adverse, borders return
  • A shock of this magnitude will be enough to wreak fundamental changes in the way society operates
  • Finance, tech firms on hiring spree
  • The jobs market is not all gloom – for some
  • Post-virus, a fifth of office space to be ditched: forecast
  • Major employers preparing to cut costs by reducing their office estates
  • Coronavirus will turn your office into a surveillance state
  • Surveillance tech is booming as companies look to get people back to work
  • How Tesco’s ‘doomsday exercise’ helped it cope with the coronavirus
  • Company has had emergency plans in place for four years
  • …and, finally, when you thought it couldn’t get much worse: Has Trump’s coronavirus response sunk him? Don’t bet on it
  • By changing the conversation, Mr “America First” could be leading the world’s No 1 economy after November’s presidential election

How the virus will upend the economy over the next year

Natasha Bernal: When lockdown ends, the high street will be decimated, and household names will have vanished. In the first few weeks of the pandemic, companies already on the brink of administration were pushed over the edge, including department store Debenhams, homeware and fashion chain Laura Ashley, airline Flybe, rent-to-own giant BrightHouse and restaurant chain Carluccio’s.

But the bigger picture shows they are not alone. A chunk of Britain’s business landscape may have already been permanently erased, as some 21,000 more UK businesses collapsed in March alone than the same month a year ago, according to data gathered by the Enterprise Research Centre, a group of university researchers.

Companies that rely on consumer spend will be hit the hardest. Even in the most optimistic scenario of lockdown ending in June, people are not going to rush to spend money in shops or on leisure activities. And pubs and restaurants, at the bottom of the government’s priority list, may not reopen until next year — if they can survive that long.

Innovation and adaptability will help companies survive this crisis. But this could be bad news for workers that were put on the bench as soon as the crisis hit. The longer the lockdown lasts, the bigger chance that employers will decide that they were surplus to requirements. This downturn is highly likely to increase inequality across the income distribution, between young and old, and between those on insecure and secure contracts.

And yes, it is likely that the majority of office workers from major cities in the UK will be working from home in a year’s time if companies can’t find a way to corona-proof their offices and no vaccine is forthcoming.

In 12 months’ time, the global supply chains that retailers, manufacturers and tech behemoths relied on will be recast, speeding up the shift that started with Brexit and the US-China trade war. In the meantime, many businesses have put on a brave face while they scramble to perform damage control. There is a reason why companies have flocked to do social good during the pandemic: Alibaba founder Jack Ma distributing coronavirus masks, or Amazon donating $5 million to local businesses near its Seattle headquarters.

Companies that are considered to have behaved despicably during this crisis will face a consumer backlash like no other, says Mark Hart, deputy director of the Enterprise Research Centre. He also believes that the government will want to implement “some form of austerity”, but will be strong-armed into providing more budget to the NHS. “The country has seen who the key workers are in our care homes and everybody else on the front line.” he adds. “They won’t allow cuts of any description.” Wired 28 April

Post-virus world: grimmer, risk-adverse, borders return

Allister Heath; The “New Normal” After-Covid (AC) will be a grimmer, more cautious, less optimistic and poorer world; it will be at once more collectivist, with the state on a quasi-permanent state of “wartime” alert, a paternalistic public health and mask-wearing culture, and more data-sharing, but also more individualistic, as people and families strive to increase their sphere of autonomy to protect themselves from the outside world. There will be less division of labour. We will save more.

Risk-aversion will make a comeback, with hypochondria enshrined in the political psyche. Severe social distancing measures will be imposed whenever there is a major flu epidemic, and for each new virus – such as Sars, Mers or Ebola. Every company and every family will have to worry that the economy and international travel could be halted at a moment’s notice. The consequences will be debilitating, even if better preparedness, enhanced state capacity and a shake-up of the useless public sector bureaucracies make future lockdowns smoother.

Borders will return. Shutting them will no longer merely be a theoretical possibility: for the first time since the War, there will be a constant chance that we will be told we cannot freely leave our country. Citizenship, residency rights and geographical proximity will count for more. There will necessarily be some deglobalisation, not least because states will want to produce far more PPE and medicines domestically; protectionism, tragically, is the first reflex in every crisis.

The super-efficient business models of the Before-Covid (BC) are over: thousands of shops, restaurants, taxis and airlines can only survive if they are always packed, and just-in-time manufacturers if they hold no stock. The economic carnage will be eye-watering. The prices of many goods and services will rise; what used to be the normal will become a luxury.

That, at least, are some of my predictions. What is certain is that the last few years BC were a golden age and yet, foolishly, we never realised how good we had it. Daily Telegraph 29 Apr

Finance, tech firms on hiring spree

The coronavirus is roiling global job markets, but the picture is not all gloomy. Finance, technology and consumer goods firms are hiring tens of thousands in the United States and other countries, according to data from Microsoft Corp’s professional networking site LinkedIn.

Across seven countries in North America, Europe and Asia, healthcare providers are among the busiest recruiters given the ongoing battle against the virus, said LinkedIn. But lifestyle changes during lockdown are also driving demand for financial consultants, factory workers, animators and game designers, and delivery workers.

Overall, the hiring rate has plunged in the first quarter from the year-ago period, and in late April remains lower than a year ago across most countries surveyed by the platform. But the data offer a glimmer of hope with a gradual uptick in China, where the coronavirus emerged last year and which leads the world in surfacing from a months-long lockdown.

The International Labour Organization warned that 1.6 billion workers, or nearly half of the global workforce, especially in the informal economy, could lose their livelihoods.

Since China is ahead of other countries on the pandemic timeline, improvements there could suggest the same is in store elsewhere, Guy Berger, principal economist at LinkedIn in California said. Reuters 30 Apr

Post-virus, a fifth of office space to be ditched: forecast

Businesses will abandon up to a fifth of their office space as part of a permanent shift towards working from home, experts are predicting, amid claims “there will never be a back-to-normal”.

Andy Pyle, head of UK real estate at KPMG, said: “Ultimately, I would expect there will be a need for less office space and also different office space. My guess is that the fall would be somewhere between 10pc-20pc, on an individual company level on average.”

A string of major employers have said they have learned mass remote working is easier than feared and are already preparing to cut costs by reducing their office estates.

Barclays, WPP, AstraZeneca, St James’s Place, Next and Vodafone are all exploring changes to working practices.

Numis, broker to more than 210 London-listed companies including Asos and Ocado, has told City staff that while “nothing replaces the value of a face-to-face meeting”, Monday to Friday office working will “simply not return”. Alex Ham, its joint chief executive, said: “There will never be a back-to-normal.

“It would be a great shame if, having been through this virtual working that we were thrust into, we didn’t make some permanent changes to the way we work.”

In a survey last week, 86pc of Numis staff said they were either as efficient or more efficient since they started working from home, while 89pc said their health would benefit from more flexible working. Daily Telegraph 2 May

Coronavirus will turn your office into a surveillance state

As countries around the world prepare to ease their coronavirus lockdowns and allow people to return to work, employers are rushing to kit out workplaces with tech to ensure they’re safe. But these moves also bring a new wave of surveillance that many employees may not be comfortable with: from artificial intelligence security cameras to thermal sensors.

Enlighted, a subsidiary of Siemens, is now pushing its software as a way to track people who may have coronavirus symptoms. Acting as a kind of contract tracing tool, the technology can monitor where infected employees have been, who they came in contact with, and which floors of an office they may have spread the virus in.
The system can also be used to institute social distancing. Today, companies want their spaces to be underutilised, for social distancing purposes. Managers can be alerted if too many employees are congregating in, say, a ten ten foot space.

Another route companies are taking to monitor employees is the use of thermal cameras that can take employees’ temperature – in some cases as they walk into a building.

In the UK, Bournemouth Airport has said it will trial the technology when more of its flights resume. Amazon has also announced that it would be using no-contact thermal thermometers to check employees at the entrances of its European and U.S. warehouses as well as its Whole Foods stores.

One big unanswered coronavirus question is whether it travels via air. Scientists are currently unsure whether Covid-19 can be spread via airborne transmission, although it has been found on particles of air pollution. Despite the lack of evidence, indoor air quality monitoring services have seen a spike in interest from companies wanting their employees to return to work.

UK air quality monitoring firm Kaiterra says inquiries are up as much as 40 per cent.

While the technology will enable people to get back to work, will they feel more surveilled?

Some privacy advocates already believe it does. Gus Hosein, executive director of Privacy International, a London-based charity that defends privacy rights, says technical solutions such as these will only exacerbate the existing inequalities for those occupations already under a lot of surveillance – and that have little job security – such as delivery drivers and those working in warehouses or call centres. The data generated from this technology can now be used to target and sanction these employees, Hosein adds.

“The truth of this environment is that you could be forced to lose income because of erroneous tech and data,” Hosein says. “The idea of putting sensors throughout the workplace has long been an ambition of employers seeking to control their workers and monitor efficiency. This appears to be the latest excuse.” Wired 4 May

How Tesco’s ‘doomsday exercise’ helped it cope with the coronavirus

Four years ago, Dave Lewis, the boss of Tesco, ran a “doomsday” management exercise in which UK’s biggest supermarket chain imagined its head office in Welwyn Garden City would have to shut down completely.

“At the time people said it was a bit ridiculous and extreme,” says Lewis.  As it turns out, it wasn’t extreme at all, and now looks extraordinarily prescient.

Fewer than 30 people have been working at the supermarket chain’s vast campus in Hertfordshire, which usually houses about 6,500 workers, in the past six weeks. Lewis is one of them, frequently popping in from his nearby flat.

Thanks to a plan informed by that doomsday exercise, Tesco already had the kit in place for remote working. Some teams have been using Zoom calls to gather hundreds of staff together for about two years.

In January, Tesco’s first concerns about the coronavirus were focused on ensuring its non-food ranges were not affected by the impact of the outbreak in China. But by the end of that month the supermarket had spied big potential problems looming, and had a crisis response group in place which was holding daily meetings.

As the UK government dithered on implementing a national lockdown, Tesco’s chief executive signed off the retailer’s plan to help feed the nation in mid-February.

Lewis, 55, who is to leave the retailer in October after six years in the job, says the industry has now bounced back from the shock when panic buying set in and shoppers loaded the equivalent of the peak-Christmas trading day into their baskets for five days on the trot.”In certain categories we were selling seven weeks’ worth of sales in five or six days.”

Lewis says shortages have now disappeared in all but a handful of categories, such as flour, but the way people shop has altered dramatically.

The big weekend shopping trip has disappeared in favour of a steady flow of shoppers throughout the week. Instead of visiting an average three or four different shops to keep topping up their fridge, shoppers now rarely visit more than one, and have returned to a big weekly stock up any day of the week.

But perhaps the most dramatic change has been on grocery home shopping. The retailer has reached its target of offering 1.2m slots a week, and Lewis says it is now aiming to offer 1.5m within the foreseeable future.

Unlike online specialist Ocado, which uses robot-driven warehouses to pick groceries, 90% of Tesco’s home deliveries are picked by hand in stores. That has given it the flexibility to expand by about two Ocado-sized businesses in just six weeks.

To meet that demand the first big change was to switch the opening hours of the 350 stores where it picks home shopping orders, from 24-hour trading to daytime opening hours, so that more orders could be picked overnight.

The company hired 12,000 new pickers and 4,000 extra drivers. It added 400 extra vans and emergency changes in regulations allowed van drivers to work longer shifts.

Refrigerated lorries were parked in Tesco car parks so shoppers could order online and then pick up their groceries in their own vehicle.

Lewis says they are breaking records, but still not meeting demand: “Last week we picked over 10m items [for online orders] in one day for the first time. We don’t think there is a business anywhere in the world that does 1m food orders a week like us

But there are not enough delivery slots, and never will be, Lewis says. “There is more demand out there but we can’t meet it all.

“Even if capacity triples across the whole industry, which is something very difficult to do in a short time, there will still be 80% of the market that needs to visit a store. That’s why we need to make shopping environments as safe as possible.” Observer 3 May

Has Trump’s coronavirus response sunk him? Don’t bet on it

Cas Mudde: While Trump clearly botched his response to the pandemic, he has found a successful way out of it: refocusing the debate on “Reopening America”. By downplaying the health costs of the pandemic and emphasizing the economic costs, Trump hopes to come out of the crisis as the savior of the US economy. While the grim unemployment numbers might not seem to support this strategy, there are reasons to believe it might work.

Many anti-Trump pundits take hope from public opinion polls that show that a majority of Americans, including a plurality of Republicans, support the current lockdown measures and oppose the anti-lockdown protests. But, as time passes, the US will inevitably have to “reopen” – as even Democratic governors like Andrew Cuomo have argued – and Trump will be able to claim, with some credibility, that he was the one to put this on the political agenda.

Recent polls already show that the mood is shifting, particularly among Republicans. Three weeks ago, 55% of Republicans were more concerned about the pandemic’s public health impact than the economic impact; that number has dropped to 44%. Although majorities of Democrats (72%) and independents (57%) are still more concerned about the public health impact, we are starting to see some shifts there, too.

Then there is always Trump’s most effective backup card: racism. Like all far-right politicians, the president has emphasized the “foreignness” of the virus from the beginning. He has consistently used the term “China virus” and increasingly blames China for the whole pandemic – a strategy enthusiastically endorsed by the Republican party.

But it could get uglier. With a large number of Covid-19 cases and deaths in New York and California, the far right is working hard to characterize coronavirus as an urban, coastal disease that does not threaten so-called Heartland America. This fits perfectly into an existing far-right narrative that casts California and New York as multicultural dystopias. Cas Mudde is the Stanley Wade Shelton UGAF professor in the school of public and international affairs at the University of Georgia. Guardian 29 Apr

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