Coronavirus and the impact on global business

Coronavirus and the impact on global business

The Coronavirus epidemic has captured much media attention in recent weeks.  Many of my colleagues ask me whether it is being overblown.  The answer is no, it is a serious problem.  The issue is that it is a contagious disease caused by a virus which appears in animals such as bats, pigs, and small mammals, and has the capacity to quickly make the leap to “animal to human” transmission.  The other issue is that there is no cure or vaccination yet developed to prevent widespread infection.  The only thing that can be done for patients is supportive care to help the body’s own immune system fight the infection.  It is also frightening that unlike the typical flu which most severely impacts the very young and the very old, this virus also kills regular healthy adults as well.

What makes this virus so dangerous is the ease of transmission, and how many people are infected and do not show symptoms.  It appears less deadly than its related disease, SARS, which affected in China in 2002.  SARS killed about 10% of those infected, while Coronavirus seems to be killing about 2% of those infected.  However, Coronavirus appears to be spreading more quickly than SARS did.   The mode of transmission is through cough, sneeze, or contact with saliva.  This means there needs to be close contact between an infected and uninfected person for the transmission to occur. 

From an epidemiologic point of view, the answer is containment and the prevention of spread.  This is done by removing the sources of the infection, as in cleaning up the meat markets where the initial outbreak occurred and others like them, and the placing in quarantine individuals who are infected or who have been exposed.  Travel restrictions help reduce the opportunity for spreading the infection.  Efforts are underway to quickly develop a vaccine, but even at its fastest that will take months.  In the meantime, basic principals of infection control and supportive care of those infected are all we can do.

There is no treatment for Coronavirus.  The only medical strategy is to provide supportive care to help the body’s immune system fight the disease internally.  Since this is a new illness, people have not been exposed to it in the past and have not developed any immunity to exposure.  With recent scientific advances, the development of an effective immunization appears possible.  However, the testing and production of this immunization will take months.  The hope is that containment strategies can hold the spread in check for the remainder of the winter, and that immunizations will be available by next winter.

From a business perspective, the impact is also great.  Many factories in China were kept off line for an extended New Year celebration to decrease the chance of virus spread, and many remain closed.  Any manufacturer throughout the world who relies on the production of a component of their product from China is likely to feel the impact of this stoppage.  Additionally, the ships that normally would take these products to their ultimate destination are left in port without their full loads.  This is creating a logistics back up as products that would be shipped on next legs of their voyage are still sitting in their ports. 

There are important lessons to be learned from this Coronavirus epidemic.  As advanced as healthcare has become in the modern era, we are still susceptible to breakdowns in hygiene and basic infection control.  We also continue to face new organisms that evolve and mutate for which we have no understanding, treatment or vaccination.  We must be able to rely on old-fashioned disease containment until we get the medical know how to fight each new illness.  There can be no political correctness or social progressivism when it comes to quarantine and containment—it applies to all regardless of nationality or demographic.  The sole determinant is infection or high risk exposure.

And from a business perspective, our risk assessments must include an understanding of regional health risks throughout the world.  These risks should be mitigated by diversification of supply chain, and better logistical planning.  Automation of production increasingly is reducing the value proposition of having production in low wage countries.  As automation creates the opportunity for goods to cost-effectively be produced close to point of consumption, it will decrease the risks described above.  You should assess your business risk for regional health interruptions or logistics backlog and develop a mitigation plan.

This article was written by Joseph Tomaino from Grassi, an independent firm associated with the Moore Global Network. © 2020. All rights reserved. Used with permission.