The new normal will come with a cost
Looking ahead, prepare for other unanticipated crisis events.
As the COVID-19 pandemic winds down (so far, anyway) and Canada eases back into a state of being that resembles revival, the crisis has run up an astronomical cost that will have to be reckoned with.
When the New Year beckoned, no one could have anticipated the chaos that quickly followed as SARS-CoV-2 swept across continents, hitting some countries harder than others, and rapidly tallying deaths while plunging the world into economic turmoil.
Severe acute respiratory syndrome coronavirus 2 – as of June 4 – afflicted more than 6.29 million people in 188 countries and territories, leading to over 380,000 deaths. More than 2.38 million people have recovered. On the same date, Canada reported almost 93,085 cases, 7,498 deaths and 48,000 recovered.
The world has become a different place in many ways, that includes doing business. Moving ahead comes at cost. Prepare for other unanticipated crisis events. It’s the new normal. Here are some factors arising from the COVID-19 experience to consider:
• Safety tops the list – screening, more sanitizing done more frequently, barriers, mapping out reduced contact and flow of people.
• Identify critical functions and personnel, put a backup plan in place. Who can work from home? What can be done remotely?
• How smart is your production floor? It may be time to get into the efficiencies of digital technologies and automation.
• Dig deeper into the supply chain. Who provides what from where? Think about offloading some global sourcing in favour of relationships closer to home.
• Keep a closer eye on assets, money in, money out. It will reassure your lender of choice, especially during a major economic distortion.
And now a few words about the Trudeau government’s pre-COVID policy of endless budget deficits.
Before the virus, Liberals rationalized it was okay to pile them up because the debt-to-GDP was so low (around 34%). That’s grand, unless there is an unexpected event – like a pandemic.
This year the deficit will balloon by $250 billion or more because of lost economic activity and cash outlays from Ottawa to keep the economy afloat. The net debt is heading to $1 trillion-plus ($612 billion when Stephen Harper left office) and the debt-to-GDP ratio could exceed 48%. A healthy ratio is 27%. When interest rates go up…well, let’s not think about that.
Its legacy of credit card budgets and COVID-19’s first wave leaves the Trudeau government less room to manoeuvre, especially if there’s a second wave. Chickens-roost. Structural deficits need a rethink.
This article originally appeared in PLANT Magazine’s May-June 2020 print issue.