Anyone with a long economic memory or an acquaintance with business history can recount some of the events that changed the economy life of this country. Among them: Henry Ford’s development of the assembly line; Ford’s one-mile-long River Rouge plant, which enabled Ford to turn raw materials into finished automobiles and boats all within the one complex, and the adoption of “just-in-time supply” global chain management.
Just-in-time is finished. So in many respects are global supply chains. The failure of both of these has been demonstrated by the novel Coronavirus. We have row after row of vacant shelves in grocery stores, a failure of the just in time philosophy. The result is panic buying, which leads to even more vacant shelves. Pharmaceutical makers say they can’t get critical ingredients for needed medicines because they are made in China or other overseas locations, a failure of the global supply chain theory. We don’t have enough ventilators to treat patients nor enough masks or personal protective equipment to protect health care workers in the current pandemic because the people responsible were buying “just enough” to get through until the next shipment.
We will see more warehouses in the future and storage space in retail shops. We will see more manufacturing in the U.S.
Snow days are finished, too. We know that because we talked the other day with Tom Hogue, who handles congressional and public affairs for Alcohol & Tobacco Tax & Trade Bureau. From the day it was carved out of the former Bureau of Alcohol, Tobacco & Firearms, TTB was designed to operate with a widely scattered workforce many of whom didn’t go into the office. “I don’t recall the last time I’ve had a snow day,” he said.
Stay-at-home orders issued by various governors are forcing other companies to figure out how to operate with fewer folks going into the office. That will change real estate: A demand for living space that can include offices will reduce demand for both office space and small living units.
Public schools are having to figure out how to provide instruction to students in their homes, not in their classrooms. That means that in the future schools will provide students not only with textbooks but with laptops.
The move of businesses and jobs to large population centers such as New York City will slow if not reverse. It turns out New York City, just like a college campus, is a Petri dish: Of the 43,499 people in the U.S. who have tested positive for the virus, according to Times, about half are in New York State – and about half of those are in New York City. . . . that’s about one-quarter of all cases in the U.S. just in New York City. If the U.S. follows China, that could mean that when stay-at-home is lifted in the rest of the U.S., it may remain in effect in New York City.
Saving will become fashionable again. An entire generation has learned that it’s not just a short-term job loss that can imperil one’s financial position. So can a “black swan” event like a global pandemic whose effects will go one for months. Decades ago financial advisors would recommend three months savings in the bank. We suspect they’ll recommend six after this.
We will get through the novel coronavirus, but life will never be quite the same again. Not in the United States and not in any other country.
Footnote: South Korea showed it’s possible to contain the coronavirus without closing the economy. How it did it.