Hema Ramkisson

The lo­cal busi­ness com­mu­ni­ty is brac­ing for the im­pact of the coro­n­avirus, from the im­ple­men­ta­tion of con­ti­nu­ity plans to lo­cat­ing al­ter­nate sup­pli­ers to ad­just­ing busi­ness mod­els; lo­cal play­ers are work­ing ve­he­ment­ly to en­sure their sur­vival as in­ter­na­tion­al ex­perts warn “the worst is yet to come.”

The omi­nous pre­dic­tion was made in an ar­ti­cle pub­lished in Har­vard Busi­ness Re­view ear­li­er this month, doc­u­ment­ing the dele­te­ri­ous im­pact of Covid-19 on glob­al sup­ply chains.

The ar­ti­cle pre­dict­ed that the peak of the im­pact of Covid-19 on glob­al sup­ply chains will oc­cur in mid-March.

In its analy­sis, HRB fore­sees thou­sands of com­pa­nies throt­tling down or tem­porar­i­ly shut as­sem­bly and man­u­fac­tur­ing plants glob­al­ly.

Chi­na rep­re­sents about 16% of the world GDP, an al­most four-fold in­crease since the SARS pan­dem­ic, 18 years ago.

The gov­ern­ment of Chi­na has closed sev­er­al bor­ders to con­tain the spread of the virus; this ac­tion has re­sult­ed in al­most one half of its 1.3 bil­lion pop­u­la­tion be­ing quar­an­tined.

The move has com­pound­ed the neg­a­tive im­pact on the coun­try’s trans­porta­tion and man­u­fac­tur­ing ac­tiv­i­ties cre­at­ing a rip­ple ef­fect glob­al­ly.

An­a­lysts have con­clud­ed that the im­pact of Covid-19 on Chi­nese man­u­fac­tur­ing is at least an or­der of` mag­ni­tude larg­er than that of SARS.

The most vul­ner­a­ble na­tions and com­pa­nies are those which re­ly heav­i­ly or sole­ly on fac­to­ries in Chi­na for parts and ma­te­ri­als.

The virus has now reached the Caribbean shores; the con­firmed cas­es in the Do­mini­can Re­pub­lic and the French Is­lands pro­mot­ed an emer­gency CARI­COM meet­ing over the week­end.

With new re­gion­al trav­el pro­to­cols ex­pect­ed to be in­tro­duced soon, un­cer­tain­ty is ris­ing.

It is now a race against time for the lo­cal busi­ness com­mu­ni­ty to adapt and ad­just to the shrink­ing trad­ing space.

TTMA re­sponds

TTMA Pres­i­dent Fran­ka Costel­loe pre­dicts that the im­pact on the lo­cal econ­o­my will be felt with­in the next 4 to 6 weeks and her mem­bers are find­ing cre­ative ways to en­sure busi­ness con­ti­nu­ity and sur­vival.

“Over the last decade Chi­na has dou­bled its share of trade with the world and giv­en T&T’s close trade re­la­tion­ship with Chi­na, we are like­ly to feel the im­pact. A con­sid­er­able por­tion of T&T’s man­u­fac­tur­ers pro­cure raw ma­te­ri­als from Chi­na, ei­ther di­rect­ly or in­di­rect­ly. The im­pact is ex­pect­ed to be felt with­in the next 4 to 6 weeks where the sup­ply of raw ma­te­ri­als will ei­ther be halt­ed or slowed.”

She stat­ed that there is “Mount­ing pres­sures for com­pa­nies to find cre­ative ways to re­duce the cost of do­ing busi­ness in T&T has re­sult­ed in meth­ods that re­duce sup­ply chain costs through means of lean in­ven­to­ry man­age­ment, out­sourc­ing and/or off­shoring.”

But with the new chal­lenges posed by the Coro­n­avirus on the glob­al sup­ply chain, can the man­u­fac­tur­ing sec­tor with­stand the un­cer­tain­ty?

Costel­loe said her mem­bers are strate­gis­ing, “ To mit­i­gate the risk of de­plet­ed in­ven­to­ry, T&T man­u­fac­tur­ers are forced to strate­gize new sup­ply chain man­age­ment sys­tems, that are not cost-ef­fec­tive, but al­low for meet­ing de­mand through; In­creas­ing in­ven­to­ry pro­cure­ment which re­duces cash flow and in­creas­es de­mand on for­eign ex­change; Us­ing al­ter­na­tive sup­pli­ers at high­er rates; New tool­ing meth­ods.”

She ad­mits that that trav­el ban may see a de­lay on projects, “T&T Man­u­fac­tur­ers and con­trac­tors that re­ly on ma­te­ri­als pro­cured from Chi­na should be pre­pared for how this dis­ease can af­fect the con­trac­tu­al re­la­tion­ship and if it con­sti­tutes as force ma­jeure. Busi­ness con­ti­nu­ity is a con­cern for com­plet­ing project with ma­te­ri­als on or­der from Chi­na but are in­evitably de­layed”.

The TTMA Pres­i­dent added that com­pa­nies are tak­ing proac­tive steps to pro­tect their work­forces and work­spaces. She said T&T Man­u­fac­tur­ers are im­ple­ment­ing meth­ods in the work­place to re­duce the spread of the coro­n­avirus by cre­at­ing safe work en­vi­ron­ments. Com­pa­nies are en­cour­ag­ing san­i­ti­za­tion and clean­li­ness through re­peat­ed hand wash­ing, and hand san­i­tiz­ing. In and out­go­ing trav­el plans to af­fect­ed ar­eas are be­ing de­layed or can­celled.

AM­CHAM

AM­CHAM CEO, Ni­rad Tewarie re­vealed that his mem­bers are mon­i­tor­ing the progress and spread of the virus and the glob­al busi­ness re­ac­tion.

Mem­bers he ex­plained are look­ing at the po­ten­tial im­pact of coro­n­avirus, not just on the sup­ply of goods, but on trav­el and po­ten­tial spread to TT.

He ex­plained that the sup­ply chain would be af­fect­ed and AM­CHAM’s mem­bers are watch­ing it dai­ly. Like his col­leagues in the TTMA, the mem­ber­ship is brac­ing for the po­ten­tial im­pact in the next 6 to 8 weeks.

“Busi­ness­es are plan­ning for dis­rup­tion, we be­lieve in 2 months, you will see an im­pact.” Tewarie said

He ar­gued that the mat­ter isn’t lim­it­ed to goods and ser­vices and the busi­ness com­mu­ni­ty is al­so look­ing at the im­pact on mar­kets. What it means for Cap­i­tal, the Her­itage and Sta­bi­liza­tion Fund; in­di­vid­ual com­pa­ny hold­ings and what would be the im­pact?

“What would be the im­pact on the stock mar­ket? Stock mar­kets around the world will be im­pact­ed, we are not im­mune.” Tewarie not­ed.

He said the trade and trav­el re­stric­tions will hin­der busi­ness re­la­tion­ships.

“The virus is in the Caribbean, these are coun­tries are fre­quent­ed by our na­tion­al car­ri­er,if it will come to TT, I don’t know but with the virus be­ing de­tect­ed in Flori­da what does that mean? “

Gov­ern­ment Projects

On Mon­day, Min­is­ter of Work and Trans­port Ro­han Sinanan stat­ed that sev­er­al projects un­der his min­istry will have to be re­viewed.

“The Curepe in­ter­change has been de­liv­ered on time, but we are as­sess­ing the im­pact of the Coro­n­avirus on the oth­er up­com­ing projects, there may be de­lays.”

The as­sess­ment is not lim­it­ed to the Works Min­istry. Sev­er­al projects ear­marked un­der the Health Min­istry have been aligned to Chi­nese Firms in­clud­ing the new cen­tral block at the Port of Spain Gen­er­al.

The Health Min­is­ter stat­ed that as­sess­ments are tak­ing place, he al­so re­vealed that they are meet­ing with stake­hold­ers to de­ter­mine the im­pact that a stalling of the glob­al sup­ply chain will have on ship­ment and sup­ply of phar­ma­ceu­ti­cals to the coun­try.

“There is a meet­ing that will take place in­volv­ing Nipdec, pri­vate sec­tor sup­pli­ers as well as min­istry of­fi­cials to ac­cess how and if there will be any hic­cups in the phar­ma­ceu­ti­cals drug sup­ply.”

Con­struc­tion

Pres­i­dent of the Con­trac­tors As­so­ci­a­tion Glen Ma­habirs­ingh re­vealed that his mem­bers are brac­ing for the im­pact and some are ac­tive­ly look­ing for new mar­kets.

“The Coro­n­avirus is im­pact­ing glob­al trade, we an­tic­i­pate de­lays and avail­abil­i­ty and some lev­el of ma­te­ri­als.”

He re­vealed that con­trac­tors are look­ing to al­ter­na­tive mar­kets to fill po­ten­tial gaps, “A lot of things are man­u­fac­tured in Chi­na and we al­ready iden­ti­fied that there may be an is­sue, mem­bers are now try­ing to se­cure them in oth­er mar­kets.”

Ma­habirs­ingh says Chi­na’s sup­plies not just big-tick­et items to the sec­tor, but ba­sic items fun­da­men­tal to the in­dus­try

“ Sim­ple things like wheel­bar­rows, tools, saws, tiles oth­er build­ing prod­ucts most of these items are man­u­fac­tured in Chi­na, if not di­rect­ly parts for many pieces of equip­ment are as­sem­bled in Chi­na.”

How are com­pa­nies prepar­ing?

ANSA McAL, one of the Caribbean’s largest Con­glom­er­ate, re­veals that they are prepar­ing for the rip­ple ef­fect.

Group Cor­po­rate Com­mu­ni­ca­tions Man­ag­er, Sharon Bal­roop stat­ed that Chi­na’s in­flu­ence is so wide-rang­ing that there will in­evitably be con­se­quences and we must pre­pare.

She added, “Cur­rent­ly, with­in our Group, we are re­view­ing our sup­ply chain mech­a­nisms and ac­ti­vat­ing in­ter­nal pro­to­cols in re­sponse to COVID-19. Sec­tor Heads are meet­ing with our HSE Teams, as well as Man­ag­ing Di­rec­tors and Gen­er­al Man­agers, to iden­ti­fy the scale of the virus and to come up with mit­i­ga­tion mea­sures that need to be tak­en, and plans that will al­low min­i­mal dis­rup­tions to our busi­ness­es.”

Bal­roop main­tains em­ploy­ees re­main a pri­ma­ry fo­cus of pol­i­cy.

“With­in the ANSA McAL Group, we are al­so fo­cus­ing on the wel­fare of our em­ploy­ees as they are a crit­i­cal re­source. As such, we are es­tab­lish­ing a Coro­n­avirus Pro­to­col for em­ploy­ees as well as our cus­tomers and ser­vice providers”.

Trade Min­is­ter Paula Goopee Scoon said she was sat­is­fied with gov­ern­ment’s over­all prepa­ra­tion and com­mu­ni­ca­tion and re­main cau­tious­ly op­ti­mistic of the sit­u­a­tion be­ing con­tained.

She said coun­tries and busi­ness­es have had to en­dure sev­er­al glob­al chal­lenges over the last two decades, with the lat­est be­ing COVID-19 and as re­gards to health mat­ters some­what sim­i­lar to the H1N1 in­fluen­za sce­nario of 2009. She said the ma­jor dif­fer­ence how­ev­er is that it sur­rounds pri­mar­i­ly the world’s largest man­u­fac­tur­ing econ­o­my Chi­na, be­ing the epi­cen­tre.

Ac­cord­ing to the Min­is­ter there is ex­pect­ed to be sup­ply chain dis­rup­tions and man­u­fac­tur­ers and dis­trib­u­tors are like­ly to be af­fect­ed.

“This may call for some re­cal­i­bra­tion and per­haps the need to source prod­ucts, raw ma­te­ri­als, ma­chin­ery parts and equip­ment from al­ter­na­tive lo­ca­tions.” Goopee Scoon told BG.