Companies will struggle as long as a vaccine is not found soon, study revealed

Companies will struggle as long as a vaccine is not found soon, study revealed

If a vaccine is not developed soon, outbreaks could keep recurring, forcing people all over the world to abide by strict social distancing measures. The Office for Budget Responsibility estimates the construction sector takes a 70 percent impact from a full lockdown.

However, under the latest update from the Government, big companies are reopening with social distancing measures in place and tradesmen are being advised they can return to their activity – always following the medical guidance.

Manufacturing is also slowly recovering after taking a 55 percent hit during the lockdown.

The food and drinks subsector – the biggest portion of UK manufacturing – has seen usual or even increased capacity throughout the pandemic.

Car plants, are beginning to reopen, but with fewer staff members trialling new guidelines.

An industry inquiry by MakeUK revealed that on average manufacturers forecasted social distancing would slash their capacity by around 40 percent.

Seamus Nevin, the industry group’s chief economist, notes that lockdowns elsewhere in the world are an issue because manufacturers in the UK run on complex global supply chains.

This means that if one key component is not ready, they come to a halt.

Demand is a problem too, as seen with the crash in car sales last month.

“It could take 18 months for order books to get back up to where they would otherwise have been,” he says.

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Kate Nicholls, chief executive of UK Hospitality, estimates that hotels, pubs and restaurants will run at around 30 percent of usual capacity when they reopen.

By the end of the year they hope to be up to 60 to 70 percent of normal income, back to break-even point.

That will be partly because of companies adhering to the new guidance, but also from consumers regaining confidence and potential changes to the regulations, such as decreasing the social distance minimum length from two metres to the WHO-advised one metre.

“I think there is an anticipation that as we go over the course of the year, as we get over any second spike and move towards living with the virus, as we do with seasonal flu and other major diseases, that there may be an opportunity to relax some of that very strict physical distancing guidance,” says Nichols.

Richard Lim, chief executive of Retail Economics, expects out of town shopping parks to perform best as consumers can drive there instead of using public transport and walk outside between shops, as well as visiting large outlets with enough room to not have stringent customer limits.

Small high street businesses will encounter hardships, and shopping centres that rely on food, drinks and entertainment outlets will find their entire business model tested.

“The buzz word was ‘experiential’ retail, creating amazing experiences to dazzle customers, create excitement and loyalty,” says Lim.

“Now they have nervous, anxious shoppers focusing on needs over wants.

“Safety and the experience of safety becomes very important.”

Published at Wed, 13 May 2020 05:50:00 +0000