It was the best of times, 'twas the worst of times
The multidimensional effects of COVID-19Sunday, April 05, 2020
BY NORMAN HORNE
In the field of disasters, COVID-19 is unique as its unrelenting disastrous effects simultaneously undermine the health and economic sectors of a country in a reasonably short time. The fact that its variables are for the most part unknown makes it dangerous and makes planning unsure.
Consequently, to avoid placing those two sectors in a comatose state, the response has to be twofold and in unison. This requires a fine balancing act.
As the Government grapples with trying to get it right, the manufacturing and distribution sector also has a similar challenge. Any success will depend not only on strategic, grave economic decisions but also on the existing health of the manufacturing companies. A company undergirded by good corporate governance practices and a vigorous risk management portfolio may better find the flexibility and agility required. Therefore, one positive outcome of this crisis could be the testing of each company so that lessons can be learned and ultimately our companies and the manufacturing sector can be stronger.
COVID-19 has already created a cultural business shift by invoking higher levels of creativity in response to having to function within a new abnormal. For example, as a result of the new social distancing behaviour, companies have now instituted work from home and flexi-work which was not welcomed with open arms generally but is now fully embraced by all.
Unfortunately, the only part of manufacturing and distribution that can be done from home is administration.
Operations are now between 9:00 am and 4:00 pm. We have had to adjust working hours and re-engineer the workplace to maintain social distancing. This has required the relocating of machinery and equipment. Also, deliveries have been rescheduled within the newly gazetted time, which has led to new overnighting arrangements for truck drivers.
Though COVID-19 has engendered a culture of fear, interestingly, it has also reinforced discipline in the workplace as employees are now seeing the important link between discipline, safety and production through a new lens.
We are all wearing masks and it is my view that everyone should wear a mask to stop the spread of COVID, be it paper, cloth, surgical or even a handkerchief because this is the best defence against the spread.
A drastic reduction in world oil prices has resulted in a substantial reduction in Jamaica's oil bill. This will mean more foreign exchange than budgeted for the country and will further stabilise the Jamaican dollar.
Jamaica should now prudently maintain the same amount of resources budgeted for oil purchase and use the surplus to forward buy. This would provide greater levels of economic stability over the COVID-recovery period by taming inflation and by reducing the cost of production, transportation and electricity.
There are some favourable conditions now. For example, some commodities, like steel, have a greater supply than demand resulting in a lowering of prices.
In relation to shipping, more cargo ships are available and the shipping rates are therefore lower owing to oil price reduction. This is good for the distributive trade.
However, with perishable commodities like timber, the reverse is true with an increase in prices.
Overall, it is suggested that imported goods will be in short supply. However, in the world post-COVID-19 it is difficult to project market pricing. We could easily see the markup or conversely the plummeting of the prices of building materials, commodities and manufactured goods as happened in the 2008 world financial crisis.
THE INVESTOR MARKET
With the advent of COVID-19, the initial reaction of investors was to take profits, thereby creating a dramatic depreciation in the world stock market. As it intensified, investors not only took profit but converted their investments to cash or near-cash investments. This has caused the mass devaluation of the stock markets resulting in the loss of trillions of capital.
Equally, the Jamaican stock market has suffered devaluation and capital erosion, thereby affecting all business sectors, including manufacturing.
Until the world turns the page, production is back in gear and companies start to enjoy earnings and investor confidence, this bear market will remain the status quo.
Commercial life has taught the seasoned businessman that for every debit, the offsetting entry is always a credit. Home can now be described as a multipurpose facility, thereby creating a fertile environment for family-oriented activities, especially since COVID-19 has highlighted the fragility of life.
Family bonding and the imparting of good social and spiritual values are now at a premium. Proper scheduling and time management with a double focus on work and family should pay great dividends in both work and family life.
The integrity of a healthy microcosm, be it in government, business, community or family, has been shown by COVID-19 to be of paramount importance. One takeaway is that to be able to withstand any shocks in a resilient way, one must have made good, solid decisions while building the foundation of that microcosm.
As a people, therefore, we must use the distilled wisdom of the past as evidenced by the actions of our forefathers coupled with present-day best practices in every area. We must now, more than ever, remain glued together, strongly anchored by the resilience of our people.
We shall overcome.
Norman Horne is executive chairman of ARC Manufacturing Ltd.
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