Coronavirus: What companies can do in the current situation

There is no question about it: In 2020, the economy will decline sharply due to the coronavirus. The current situation is still confusing. Therefore, clear recommendations for action from the scientific community as well as strong support from politicians will be crucial in the near future. Companies can implement these steps promptly in order to make the best out of the crisis.

VDMA: A quick survey reveals uncertainty in the industry

On March 17, the German Engineering Federation (Verband Deutscher Maschinen- und Anlagenbau e. V.) published a study that shows the status quo of the industry on average. Approximately 1,000 companies participated in the survey. As many as 59 per cent had already observed "significant impairments in operational processes as a result of the spreading of the coronavirus". There were 7,500 confirmed corona cases in Germany at the time of publication.

Furthermore, 44 per cent of those surveyed have already observed noticeable or serious disruptions along the supply chain, and a further 49 per cent noticed minor disruptions. Only seven per cent of the companies can still purchase resources as usual. Orders from Italy and China are particularly slow to arrive. However, also drops in orders and cancellations severely affect the members of VDMA, 13 per cent have to cope with serious losses. 89 per cent of the companies report decreases in production due to the corona epidemic, eight per cent are seriously affected. 27 per cent have noticeable declines, while 54 per cent of the companies report slight declines.

One of the major problems is the maintenance of international supply chains. More than half of the companies concerned can obtain some of their goods from other sources. However, at the same time, 19 per cent of the companies do not believe that they have any chance of obtaining the required raw materials from other suppliers. This means that in case of doubt, the company has to stop operations, even though the workforce is not sick and is in good spirits.

The first companies affected include, amongst others, Arcelor Mittal, Salzgitter AG and numerous suppliers to the automotive industry, which is now also nearly completely paralysed.

Both the Federal Government and the Federal Minister of Economics and Technology, Peter Altmaier, are aware of the threat: Packages of measures and emergency aid for companies in all sectors and of all sizes are being compiled and released as quickly as possible. As of 23 March, financial aid loans will be available from the KfW Bank, which wants to assume 80 per cent of the default risk.

At the same time and with immediate effect, IG Metall is refraining from demanding further wage increases for employees in the metal and electrical industry this year. Nevertheless, employees will get more vacation days, and even short-term employees will receive additional payments. According to IG Metall, this means that there  is now a fundamental planning security.

The employers' association Gesamtmetall, as the umbrella organisation of the regional associations, is meanwhile taking a stand on the government's short-time working regulations: "Gesamtmetall particularly welcomes the coalition's decisions on the short-time working regulations. These are astute and also appropriate to the situation. They help all the affected sectors of industry and thus support job security during the corona crisis", says Dr. Rainer Dulger, President of Gesamtmetall.

In the meantime, VDMA is making demands on politicians. As well as the already implemented short-time working regulations, VDMA is also asking for the deferral of taxes and other charges. Security measures at EU level are also requested. Also the international delivery traffic, which is important for the industry, should be maintained. Not only material but also service personnel and commuters should be able to cross borders.

The association also attaches particular importance to the fact that it does not come to a complete standstill: The supply chains must not be interrupted in Germany, with special emphasis on machines for food production and medical needs. Furthermore, once the pandemic has been overcome, VDMA would like to see a tax reform, a reduction in bureaucracy and a more flexible labour market.

People's health is the first priority. That is why it does not make any sense to continue the business as before. Instead, clear measures are needed to avoid contact between workers as far as possible. For example, this includes the introduction of home office working for people who do not necessarily have to work in the company. Most accounting, inventory management and development programmes can also be remotely operated. Where possible, large teams work in separate smaller groups. Breaks and canteen visits are extended or varied in time. To prevent possible infections, employers should provide breathing masks, disposable gloves and disinfectants and inform employees accordingly.

Hygiene measures and the investments associated with them are clearly in the long-term interest of the company, even a single corona infection can mean a production stop for at least 14 days.

There is only one thing likely: After the corona crisis has ended, demand will increase drastically and plants will be working at 100 per cent capacity. The shutdown of the global economy is pausing countless projects that want their resources and products to be delivered as quickly as possible. Once the virus has been dealt with, the industry will also recover to a large extent.