The news recently has been all about Coronavirus. How many may get sick and the impact on the economy seems to be all the news can talk about. But I don’t really want to talk about those things. Rather I’d like to talk about how Covid-19 could change your career and the world of business.
I’m Not Going to Tell You Coronavirus Will Be a Non-Incident
Other then a post on not going to work when you are sick, I have largely avoided the topic of the Coronavirus. I have shared a little of others work on our Twitter feed, but otherwise largely ignored the topic. That really boils down to I am neither a doctor nor someone on the ground who has studied the virus.
Which means my voice on your odds of getting the virus has no value. Now that doesn’t mean I don’t have a position. It just means I believe I’m more likely to be impacted in the short run by the related virus panic then the virus myself. So other than telling you not to panic I don’t have much to contribute on the short term impacts.
The Long Term Impact of Coronavirus
Stock market slides, viruses, and everything else will pass into history one way or the other. So the real area I might be able to contribute that might be of value is an analysis of what this virus may do to your career and business going forward. I’m not the only one writing on this topic, Indeedably wrote a great post a few days ago on a more narrow focus.
The Supply Chain Impact
Lets first look at the more obvious impacts. China is shut down. Supply chains are reaching the straining point as items manufactured there are not making it to their end businesses. In the long run, companies are most likely going to push away from China-sourced manufacturing. The smart ones will probably go to redundant or multi-sourced manufacturing.
I do not believe this means the manufacturing base will move back into the US. The comparative advantage of lower-cost manufacturing centers is just too large to be ignored. But going forward I could very much see manufacturing for the same product being shared between say China and Mexico. Spread the risk around so to speak.
Even before the virus manufacturing was shifting away from China. Their comparative advantage has begun to wain vis-a-vis other regions. This event will likely speed that transition.
Remote Work During and After Coronavirus
But shifting manufacturing plants won’t be the only likely impact. All throughout the world businesses are executing models where the workers are shifting to a work from home model. Many industries have been reticent to shift to this model. The simple reality is old fears of out of sight out of mind die hard. But if the businesses continue to be resilient after the massive shift to remote work the genie will be out of the bag. The model will have proved itself to be just as effective as on-site for many roles, thus accelerating the move towards a remote freelance economy I have previously postulated.
Accelerated Automation
But what about those amongst us that work in the service industry where remote work is not possible? Well if it gets bad enough I suspect you’ll see a major ramp-up in automation to remove these jobs altogether. Depending on how long this lasts I would recommend folks in a direct service position accelerate any alternative career aspirations they may have. Otherwise, you may be left out in the cold. (Pun intended, what too soon?)
Business Travel and Coronavirus
The final impact I see will be on business travel. Regular readers or those I have met me in person know I most certainly qualify as a road warrior. In fact, since the beginning of the year, I have traveled 50% of the weeks. That number is in-fact tame when I turn around and look at some of the managers I work with regularly.
But here is the thing, many people that travel for business can just as easily do things remotely. I can’t recount how many times I have seen a manager or executive fly to some remote location just simply to “check things out”. My prediction is if the virus continues to be an issue most people that don’t really have a reason to fly for business, won’t.
I don’t fall into this category of flying to tick off a box, unfortunately or fortunately. It would take a halt in Mergers in Acquisition, a change in jobs, a financial calamity for my employer, or me quitting to get me off the travel treadmill. But I strongly suspect the numbers flying with me will plummet.
Based on this I would recommend brushing up on your telepresence and teleconference etiquette. You might find yourself doing so a lot more with others in your corporation.
Investing to Proft from Coronavirus?
I’d like to say all the above can lead you to potentially extremely profitable investments in companies, but I’ve been around long enough to know better. The simple reality is all the above will still be long term trends. The behavior of any stock’s value meanwhile will remain influenced by other short term factors. As the saying goes the market can remain irrational longer then you can remain solvent. I am not even willing to weigh in on the travel industry impacts.
These type of major events have a habit of changing how people approach work, investing, and life. Just as the great recession changed these behaviors, so too will the Coronavirus. Anyone else see any other potential long term trends from this potential pandemic?
Remote work should be a better option in the future. People that can work from home really should work from home more often. It’s a win win. Companies can save on infrastructure spending and employees get a huge gain in QoL. You minimize commute time, reduce BS meetings, and are probably more productive by working from home.
I really enjoy having the option to work from home. Still I wonder if the transition will be hard for some folks.
You raise some interesting points there.
Here’s a few more random thoughts about long term trends that emerge or accelerate as second or third order effects from the disruption/quarantine if the pandemic takes more than a few week to play out.
Small businesses will go broke en masse, as a quarantined/scared customer base chokes off the cash flow and supply chain they require to remain viable. Few small businesses can survive for long without a steady flow of saleable goods and customers. This triggers a ripple effect of defaults and bankruptcies, cascading through suppliers and commercial landlords.
A similar outcome occurs for individuals living close to the edge, many of whom lack access to sick or holiday pay and are unable to work remotely. Missing out on a pay packet or two is potentially disastrous for them and their families.
Meanwhile people will get used to remote provision of services they previously may not have entertained. Teaching via apps and YouTube. GP triage and prescription renewal via video conferencing. Self printed postage and customs forms. There is a long potential list, but you get the idea. Once a semblance of normalcy returns this remote provision will remain, reducing demand for locally based service providers. They won’t go away entirely, but there will be fewer of them and they will be paid less.
In a similar vein, it will hasten the demise of on-premise hosted IT infrastructure. That small data centre full of legacy technology that a firm operates with its own staff starts to look like a vulnerable single point of failure when the infrastructure staff all find themselves quarantined at the same time as an outage occurs. Vendors offering discounts for “lift and shift” migrations to cloud hosted managed services will experience a short term boom.
I hope the virus passes swiftly and the first part doesn’t come to pass. But it’s a very real possibility.
I think the IT provisioning and remote services might happen regardless of length. Fear and anxiety can have long standing impacts regardless of outcome. We live in interest times.
You raise some very interesting points, FulltimeFinance. I guess there is always a silver lining. I definitely see a shift towards remote work happening. I have been feeling like going to work is unnecessary for years actually. Thanks for sharing your thoughts.
Let’s see if this finally kicks the remote work revolution into reality. It’s been promised for far too long, but hasn’t really materialized.
But we were also told paper and printing would be a thing of the past as long ago as the late 90’s, how did that work out? Business trends and prognostications are hard.
Very true. Albeit similarly, I expect a lot of it is old habits die hard. I prefer paper newspapers because that is what I am use too. If I can’t get a paper copy for some time how long before I adapt to a new preference.