Until the dust settles, no one can be certain how deep the economic impact of the coronavirus pandemic will be. Disruption to supply chains, the economic lockdown, and the effects on the health condition of the workforce will all have repercussions.
As the industry journal Chemical Processing reports, “The COVID-19 outbreak is wreaking havoc on businesses. A Dun & Bradstreet report indicates that 94% of Fortune 1,000 companies are experiencing supply chain delays. This is in addition to workplace absences, lower productivity, travel cutbacks and reduced trade and investment.”
Despite its importance, the chemical industry, functioning at the centre of all major economies, will not be spared. Industry consultants as PwC reporting that, “The chemicals industry is likely to feel the impact of the coronavirus (COVID-19) pandemic from every direction. Just as supply chains are being disrupted by outbreaks in key regions, demand may fall due to uncertainty in the global economy and capital markets.”
So how should chemical companies respond to the current situation?
What can the chemical industry do to minimise the coronavirus economic fallout?
The coronavirus pandemic is unlike any other economic crisis in the last 100 years. As such, business plans set up for a ‘worse-case scenario’ may often not have considered many of the events of recent weeks.
As PwC confirms, “Typical contingency plans help enable operational effectiveness following events like natural disasters, cyber incidents and power outages, among others. They don’t generally take into account the widespread quarantines, extended school closures and added travel restrictions that are now being enforced in countries across the world.”
Special circumstances like these, require a novel approach. One that enables the core of any chemical business to continue throughout each virus wave.
With this in mind, Bloomberg Businessweek contacted several specialists in emergency planning to find out how to protect companies from the worst of the virus and how to ensure that businesses are ready to respond when the situation returns to normal.
The tips include:
1. Form a war room.
A core of decision makers that are able to communicate easily and make decisions as quickly as the situation changes. Assembly of the war room members will need to be possible both in person and remotely.
2. Identify critical operations.
Chemical company leaders will need to decide what to focus on to ensure the business survives. Reduced manpower, raw material delays, and a limited supply chain means that it is not business as usual. Company executives must decide what is truly important for the business right now.
3. Assemble skeleton staffs.
Who are the key workers who must have access to office premises, the warehouse, and the production floor? Can workers rotate their time, so as to avoid or minimise contact with others? Also ensure that a back-up system is in place should key staff fall sick or require self-isolation. As Brion Callori, manager of engineering and research at insurance company FM Global, says, “Prepare for situations when critical personnel are unable to come into work.”
4. Consider a digital supply network.
A point that is especially relevant to chemical companies is the continued delivery of raw materials. When it is not possible for procurement officers to meet face-to-face, a digital supply network can help suppliers, customers, and logistics teams stay connected. This will leave chemical company leaders free to solve problems at the larger scale, rather than having to step in to resolve individual supply chain issues.
No one can guarantee that these steps will prevent business failure. The nature of the economic lockdown has frozen operations in some sectors, while others have continued without restrictions, or have even seen boosted trade.
Perhaps though, it is important for chemical producers, consumers, employers, and employees to know that while times may be tough for business, the economic crisis, like all others before it, will pass.
As Her Majesty Queen Elizabeth II made clear in her speech to the British people, “… we join with all nations across the globe in a common endeavour. Using the great advances of science and our instinctive compassion to heal, we will succeed, and that success will belong to every one of us. We should take comfort that while we may have more still to endure, better days will return.”