Left in the wake of the Coronavirus crisis is the expectation that most of the world will face the largest recession since 1870. Oil prices have collapsed, manufacturing, engineering, and construction industries are feeling the tightening squeeze as COVID-19 chokes global economies.
By Paul McFadyen, Managing Director of metals4U
Some retail areas have managed to remain financially healthy, mainly due to good web-based sales platforms and effective marketing strategies; but the reality remains that across all sectors there have been casualties, and we will continue to see the demise of many more as we struggle to revive our local, national, and global economies.
The areas that will be the worst hit are the developing countries that are less equipped to deal with economic shocks - Latin America and the Caribbean are set to be among the hardest hit by economic contraction, as are countries in Europe and Central Asia, the Middle East, North Africa, Sub-Saharan Africa, and South Asia. The effects of this global economic crisis will be hardest felt through the lives of the predicted 420 million people that are estimated to be plunged into extreme poverty.
Whatever the outcome of the Coronavirus crisis, as businesses we need to find ways to weather the storm and continue to grow. One of the strongest strategies for company growth is to make sure we take on board and learn from past experiences from within our own business, from others in our industry, and from global successes and failures.
As an industry we have several responsibilities; we have the economic success and longevity of our business to maintain, we also have responsibilities to our employees and stakeholders to ensure we are the best we can be within our field.
Of all the many lessons we have learned over the last six months, one topic that keeps appearing is that of ethical responsibility. One way we can adapt and move forward is to look at how we can incorporate the practices of a circular economy. Reducing waste at all levels of your business processes can accelerate growth of your balance sheet and productivity. Waste can be reduced on everything from workforce, materials, and assets. Look at ways by-products from your processes can be reused, reduced, re-purposed, or eliminated right along the chain, not just in the manufacture stage. If it does not serve your business, just let it go. It is short-sighted to think this will never happen again so plan now to get your balance sheet healthy by looking for areas that can be streamlined; removing products and services from your portfolio can reduce pollution, save resources and enable financial savings.
A crucial factor in surviving, and even growing, during recession and uncertainty is your ability to stay focussed on the end game. Of course plans change and economies may throw you a curve ball, but have faith in your ability to run your business; if you have a vision of where you want to be, organise your strategy and stick to it. Make sure the people you employ share your vision, and really understand it - they don’t need to agree on the best way to achieve outcomes, in fact it may be an advantage if they challenge your thinking from time to time, negotiation of the way ahead will evolve, but your aims must ultimately be the same.
In the post war era, many developing countries turned their back on international trade and market economics in favour of substituting imports with internally produced goods and services, however, for those countries, poverty and weak markets were the only assets they had. This is an important lesson to remember in today’s economic climate - we should not recoil from international trade and the drive of globalisation as these are the driving forces of economic growth and advancement.
During the 1980’s the model of global industrialisation increasing productivity led to getting more people out of poverty and strengthening economic growth; during the period between 1980 and 2015, extreme poverty had decreased from 43% to 10% worldwide. There is no doubt that extreme poverty is on the increase in the present economic climate but using this past business model we can hopefully shorten the consequences for the poorest of the poor.
Quick thinking and an ability to identify trends will help businesses harness the power available in new consumer, supplier and producer habits. Everyone has had to adapt to change and adopt new ways of visioning their world during lockdown, so make sure your business is harnessing online opportunities to keep moving forward. Sales negotiations, business meetings, e-commerce platforms, and quality targeted marketing are just some of the online tools that help reduce business costs while improving the visibility of products or services.
At metals4U, we have seen how the demand for metal within transport and agriculture manufacture has taken a downturn due to a drop in current demand, other areas we supply have boomed in this time of change and uncertainty. Our ability to quickly adapt to change through keeping a strong balance sheet, investing in stock so we can to bring our products to market quickly without suffering our own sourcing issues, and most importantly, our strong internet presence and robust IT infrastructure has maintained our strong market position through Q1 and Q2 of 2020.