Flexibility and patience will be key for all of us, as the U.S. and global economies reopen, post-COVID-19. According to Tinglong Dai, professor of Operations Management and Business Analytics at the Johns Hopkins Carey Business School, the post-recovery outlook will be progressive, and will entail a lot of back and forth, he says.
Dai says looking at China, which is a few weeks ahead of the U.S. in terms of recovery from COVID-19, people are getting out more, wearing masks, of course, however most restaurants are still closed. Factories are resuming operations, however new social distancing guidelines have been put in place, which adds an additional layer of complexity to resuming operations.
“Within factories here the workers will still need to meet the six-foot social distancing requirements, which is pretty much incompatible with our traditional manufacturing environments,” Dai says. “So, on the supply side, a lot of the disruptions, they’re not going away immediately. Although we talk about reopening the economy, it’s going to take a long time.”
It is reported that automakers such as Ford are experimenting with novel ways to help workers maintain social distancing guidelines, including wristbands that buzz when you get too close to someone.
On the demand side, Dai says we can expect a surge, given that motorists have not been driving for weeks, if not months, in some cases now.
“In terms of demand right now, most people are not driving so a lot of cars are sitting idle. We will certainly see a surge in demand, but it’s going to be a volatile process for a time, and again a lot of back and forth, much like with the supply, simply because this situation is not over,” Dai says.
“Even if this second wave does not come, the expectation that it might come has big impacts on economic activities as well,” Dai added, noting that some healthcare experts have projected a second wave of the coronavirus to return in the fall.
Demand may surge, however the expectation of a second wave of the virus, which may or may not come, as some healthcare experts have projected, will leave consumers a little reticent, Dai says. Production ramp-up likely will be slower because of this.
“Even if that second wave does not come at all, the expectation will trigger a lot of reactions,” he said. “The road to recovery won’t be smooth.”
On the upside however, once the dust settles, the automotive industry as a whole looks to be in a solid position, Dai says.
Dai also believes that the automotive suppliers and automakers that have pivoted to shift manufacturing their own products to that of making supplies for healthcare workers and those who are hospitalized such as Ford and 3M are in a win-win situation, not only helping the community, but creating positive PR that they can bank on later on. (To see all of the articles on aftermarket companies contributing to this fight, click here.)
“I think it’s complimentary,” Dai said. “Even if they don’t produce ventilators there is not much they can do [at this time] anyway, so I think they are providing good services. It’s almost like community service, reaffirming their reputation as good citizens in society. It’s definitely worthwhile and very beneficial in the long run because by contributing, they are helping protect society and helping to keep their own workers and consumers safe. And, on the demand side, this is one way to establish their brand image.
“After this you can almost be sure, consumers will be comparing which company made a great contribution to our society during this pandemic,” Dai said.