North America Update: May 21
- Memorial Day is the beginning of the summer driving season, but with many Americans shut in their homes for weeks, it is not clear how much drivers can or will take to highways and roads. Gasoline demand is about 30 percent below normal. Analysts say it will continue to slowly pickup as states continue to ease virus-related restrictions. Last year, 43 million people traveled over the Memorial Day weekend, and the lowest point was during the financial crisis in 2009, when 31 million traveled. Families across the country are thinking about their travel options as summer nears. Companies and states plan to purposely choke demand by capping crowd sizes at popular destinations, such as at beaches and amusement parks, for safety reasons.
- Today marks the first day in which all 50 states have at least partially eased tight restrictions on businesses, with a mix of policies letting restaurants, salons, or stores welcome customers. Just after midnight Wednesday, Connecticut became the last state to let business serve customers more directly than they have in weeks. Only Washington, D.C. remains closed to non-essential businesses and could remain so through June 8. Across the U.S., some cities and counties are keeping tight restrictions in place, with officials citing persistent levels of hospitalizations and/or new cases.
- President Trump will visit a Ford auto assembly plant in Michigan today, the home of Democratic Gov. Gretchen Whitmer, a frequent target of his criticism, and a key political battleground state in November. The president has cheered on Michigan protesters demanding a rollback of stay-at-home orders, even as his task force released guidelines recommending that states adopt a phased approach to reopening. The Ford factory in Ypsilanti was repurposed to make ventilators to treat COVID-19 patients.
- Disease models are suggesting that tens of thousands of U.S. deaths could have been prevented if governments had imposed shutdowns and social distancing measures earlier in March. Columbia University disease modelers say that about 36,000 fewer people would have died if the U.S. had begun imposing social-distancing measures one week earlier. And if the country had begun locking down cities and limiting social contact on March 1 – two weeks earlier than when most people started staying home – a vast majority of the nation’s deaths, about 83 percent, would have been avoided, the researchers estimated.
- On Tuesday, Prime Minister Justin Trudeau confirmed the Canada-U.S. border will remain closed to non-essential travel for an additional 30 days, until June 21. Trudeau would not speculate when Canada will open its border with the U.S., saying the government is making decisions on a week-to-week basis.
- Canada’s Chief Public Health Officer is now fully advising Canadians to wear non-medical face masks in public. Dr. Theresa Tam said the new advice comes as stay-at-home orders are being relaxed and people are going outside, riding public transit, or visiting stores more often.
- New details have been released for Canada’s Large Employer Emergency Financing Facility, which provides emergency loans of at least $60 million. Large companies seeking federal loans will be required to ensure that no executive is paid more than $1 million a year until the loan is repaid, and the government is giving itself the option of buying shares in the corporation.
- In an interview with The Guardian, Dr. Andrea Ammon, Director of the European Centre for Disease Prevention and Control, said that Europe must prepare for a second wave of the virus, stating “the question is when and how big.”
- The €500 billion European reconstruction fund announced by France and Germany on Monday has received support from the European Commission, but several European countries, including Austria, Denmark, the Netherlands, and Sweden, have already expressed opposition to the plans.
- Unemployment in the Netherlands increased from 2.9 percent in March to 3.4 percent last month.
- Greece will reopen its tourism industry on June 15 and flights from the UK and other destinations will begin on July 1.
- In the United Kingdom, Twitter, Google and Facebook are to be recalled to Parliament to give evidence on steps they are taking to tackle coronavirus misinformation.
- Singapore will end its “circuit breaker” on June 1: Most restrictions and guidelines will remain in place as the country looks to transition into a “new normal” phase. Only employees who can demonstrate a need to go to the office will do so, such as needing to utilize specialized systems and equipment that cannot be accessed from home.
- Back to school in South Korea: High school students in South Korea headed back to school on Wednesday, armed with masks and hand sanitizer. The Ministry of Education had postponed the start of the academic year five times. The latest delay was just last week, after the country faced an outbreak linked to clubgoers in Seoul. The return to school is part of a broader easing of distancing measures.
- Australian airline Qantas will not implement distancing measures when it resumes operations next month. It will offer masks and hand sanitizer to passengers but won’t make them mandatory. CEO Alan Joyce said Qantas has run several full repatriation flights with no issues. Pressurized plane cabins were safer environments than other transport, he emphasized.
- Mexican oil reached its highest price since March 6 when the conflict between Saudi Arabia and Russia began. Pemex reported that the cost of a barrel rose to $27.71.
- The Association of Banks of Mexico (ABM) said banks are concerned about the reactivation of consumption, exports, and infrastructure. Despite this, ABM also said that Mexico continues to be attractive for foreign investments and that a return to activities will trigger economic recovery.
- The governor of the state of Puebla, Miguel Barbosa, said that he will not allow the VW and Audi plants to start operating at the same time as the entire country, because its citizens are experiencing the most serious moment of infections.
- Brazil accounts for 1 in 7 new cases of coronavirus in the world, according to Johns Hopkins University. The country has the third highest number of cases worldwide, following the United States and Russia. At least 3.7 million people have already been infected in Brazil. Rio opened a hospital with 195 beds to treat COVID-19. The São Paulo government received 11 million masks imported from China. In the furthest parts of the Amazon, doctors are transferring severely ill patients to urban centers by plane. The House of Representatives approved aid of up to BRL 160 million for institutions that house elderly people. At the request of President Bolsonaro, the Ministry of Health released chloroquine to all patients with COVID-19. The government also allocated BRL 5 million for research with nitazoxanide.
- The United States government announced a $3 million donation to Brazil. U.S. Vice President Mike Pence said the U.S. government is considering banning flights from Brazil.
- The Chamber of Foreign Trade created an agenda to attract new foreign investments. The coronavirus crisis in Brazil has significantly affected the iron-ore market and the price of the raw material reaches US $107 per ton in futures contracts traded on the Dalian Commodities Exchange in China. According to a study carried out by the National Supplementary Health Agency, the COVID-19 pandemic did not cause financial losses to health plan operators. The operating profit of Hapvida, the largest health operator, increased by 56 percent. Companies planning to reopen will do so with increased safety measures, such as social distancing, temperature monitoring, COVID-19 testing and even GPS monitoring of corporate cell phones. In Brazil, 65 percent of hotels are closed indefinitely due to the pandemic. Hotel occupancy rates dropped to 9 percent in April. The coronavirus crisis already accounts for 20 percent of new labor lawsuits.
INSIGHTS & INTEL: MANUFACTURING RECOVERY IN THE ASIA PACIFIC REGION
As countries continue to fight COVID-19, the manufacturing of essential medical supplies and personal hygiene products is on the rise.
- The strong demand for medical supplies and equipment is the bright spot in manufacturing in Asia Pacific. Kao Corporation, a personal care conglomerate in Japan, has ramped up disinfection production capacity by more than 20 times to address growing demand. The company has also observed recovery in China for its products. A bio-refinery in Australia re-opened at the end of April to produce ethanol – a key ingredient in sanitizing products – to meet rising demands.
- In Singapore, biomedical manufacturing saw growth, with pharmaceutical output growing by 126 percent due to higher production of pharmaceuticals components and biological products. Malaysia’s manufacturers of medical supplies are operating at full capacity: The country delivers 65 percent of the world’s rubber medical gloves, in part due to its 1.7 million hectares of rubber plantations.
- The production of consumer electronics has resumed across the region. Apple moved the production of over 3 million AirPods units to Vietnam in Q2 2020, the first time these units will be produced outside China. Vietnam’s ability to maintain a low case count despite sharing a border with China has inspired business confidence, which will likely lead to a further increase in foreign direct investments in manufacturing.
- Other markets are gearing up to re-start manufacturing with mandatory adoption of hygiene and safe distancing measures. In Malaysia, the gradual relaxation of distancing measures has enabled companies such as Sony, Panasonic and Sharp to resume operations. These manufacturers are striving to restore normal production and mitigate delays caused by earlier plant closures. Taiwan Semiconductor Manufacturing Co. (TSMC), Taiwan’s largest company, sustained production throughout 2020, reporting a 91 percent year-on-year jump in net profit. S&P Global Ratings has maintained Taiwan’s AA- rating, citing its “dynamic and highly competitive” electronics manufacturing sector as a likely driver for a strong economic recovery.
- South Korea’s domestic manufacturing sector continued to record modest growth for its third consecutive quarter through Q1 2020. Driven by demand for semiconductor components, capital goods supply jumped by nearly 25 percent. The nation’s manufacturing sector has also been able to benefit from the growing demand for medical diagnostic tool kits, semiconductor manufacturing materials, and plastic products.
- Thailand’s Prime Minister Prayuth Chan-Ocha has highlighted the importance of factories reopening in inspiring consumer confidence and restarting the nation’s economy: “If workplaces reopen, there will be employment and salaries… If factories reopen and employ people, rehabilitation will start.”
BUSINESS RESPONSE TO CORONAVIRUS
Below are summaries of interesting business responses to COVID-19 in recent days.
- American Airlines partnered with Deloitte to deliver 40,000 pieces of critical personal protective equipment to the Mount Sinai Hospital in New York City.
- Bed Bath & Beyond announced a $10 million plan to donate essential items to those affected by COVID-19. The ‘Bringing Home Everywhere’ program will deliver products that provide home comfort and essential support to communities and those on the frontline of the pandemic across the U.S. and Canada.
- Audible donated $1.5 million to restaurants in Newark, New Jersey, to help feed the elderly and poor in the city.
- Stanley Black & Decker donated $25,000 to West Tennessee Healthcare Foundation’s COVID-19 Response Fund. The funds will provide grants to organizations helping those impacted by the pandemic.
- Truist Bank announced it will commit an additional $25 million as part of its Truist Cares Initiatives, doubling the company’s existing commitment to $50 million. The additional funding will go to underserved communities, provide resources for small businesses and essential technology services in areas with limited access.
Social Media Platforms Take on Wellness
- As mental health care moves increasingly online, psychologists are taking to TikTok to dispense breathing exercises, pep talks, and mini sessions aimed at curbing anxiety and nixing the stigma against talk therapy. As Dr. Julie Smith puts it, “If I make a really informative video, that has maybe a smaller effect [than a therapy session], but for lots more people.” (In her case, that’s 750k followers.)
- Instagram has announced a new function that allows users to discover recommendations, tips, and other content from a range of creators and organizations on the platform. Named “Guides,” the new feature will launch by focusing on wellness content, as Instagram aims to offer support for people struggling during the current coronavirus pandemic.
- After the words ‘thankful’ and ‘grateful’ were tweeted over 265 million times since COVID-19 lockdowns began, Twitter created a new emoji —hands making a heart—that appears when you hashtag any common phrases of gratitude.
Continued Layoffs and Furloughs Across Media Conglomerates
- Bustle Digital Group laid off two dozen staffers. That includes eliminating the entire staff of The Outline, a culture site that it acquired a year ago.
- The Economist Group laid off 90 non editorial employees and ceased publication of its bimonthly culture and lifestyle magazine 1843, which will become a digital-only brand going forward.
- Roger J. Lynch, the chief executive of Conde Nast, sent a memo on Monday to 6,000 employees around the world to inform them of an austerity plan that includes pay cuts, furloughs, and possible layoffs. Mr. Lynch did not specify how many layoffs were under consideration. Conde Nast publishes magazines including Vogue, Vanity Fair and the New Yorker.
Film Academy Considering Postponing 2021 Oscars
- The 93rd Oscars aren’t until February, but the Academy of Motion Picture Arts and Sciences is considering postponing the big night, according to multiple sources.
- The academy recently changed its eligibility rules, temporarily, to allow streaming-only films to compete at the 93rd annual telecast due to the coronavirus pandemic, which has halted the release of many films.
- There are no definitive plans to delay the event yet; one insider said new dates haven’t been discussed or proposed, but the source said postponement is “likely.” The broadcast is currently slated for Feb. 28, 2021, to air on ABC.
- COVID-19’s Impact on Conference and Event Planners: A New York Times article outlined the impact COVID-19 is having on the events ecosystem – especially for meeting and conference planners – as they navigate the shift from in-person meetings to virtual and begin to think through all aspects of convening an in-person event once these gatherings are allowed.
- Continued Rise of Virtual Events: Politico, Techonomy, The Economist, Financial Times, Fortune, among others, are continuing to expand their roster of virtual events. Thematically, these virtual gatherings continue to focus heavily on the COVID-19 pandemic – everything from charting a path forward and the road to recovery, the economy and leadership during a crisis.
- MLS: The MLS cancelled its All-Star Game set for L.A. on July 29. Meanwhile both the Leagues Cup and Campeones Cup, which are part of the growing relationship between MLS And Liga MX, were cancelled as well.
- Belmont Stakes: The Belmont Stakes will run before the Kentucky Derby and Preakness for the first time and lead off the Triple Crown on June 20 in New York with no fans in attendance and at a distance of 1 1/8 miles, instead of the usual 1 ½ miles.
- Boston Marathon: Boston Marathon organizers remain in active consultation with governmental entities to see if they can avoid canceling the event for the first time in 124 years, even with the marathon postponed to September 14.
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