The Coronavirus Economic Reopening Will Be Fragile, Partial and Slow

Date: Tuesday, April 14, 2020
Source: The Wall Street Journal

From airlines to car makers, companies are planning to gear up again. The new normal will look anything but.

Walt Disney Co. reached a coronavirus milestone of sorts last month when it reopened a portion of its Shanghai Disney Resort as China’s pandemic began to ebb.

But a trip to Tomorrowland may never be the same. Guests at the Shanghai resort must wear masks at all times, removing them only for eating. Hours and capacity are limited. And just to gain entry, visitors must submit to a temperature check and present a government-controlled QR code on their phone that indicates they are virus-free.

Executives around the world who rapidly overhauled operations when the coronavirus struck, and the politicians who made them do it, are now focused on restarting the economy and their own businesses. That restart, according to interviews with leaders across a range of industries, suggests that back to normal will be anything but.

The re-emergence over the coming weeks and months will be fitful, fragile and partial—and a bit dystopian, with frequent temperature checks, increased monitoring of employees and customers, and, potentially, blood tests to determine whether workers have likely immunity to the virus. Officials and business leaders predict that operations won’t fully return to normal until an effective vaccine hits the market, estimated at least a year away.

Some firms may bring office workers back in alternating groups to allow for social distancing in open-plan offices. Restaurant chains may operate at half capacity, installing plexiglass shields between booths, while stores may do away with tester cosmetics and sanitize items after customers try them on. Major League Baseball has discussed a season with no spectators, held in a part of the country where it can essentially sequester players for weeks at a time.

“When, where, and in what stages to do it,” said Rich Lesser, the chief executive of Boston Consulting Group, who has spoken with several CEOs on this topic. “It’s very top-of-mind.”

In many ways, companies are at the mercy of local and national governments to ensure that the reopening doesn’t reinvigorate the virus, which has so far infected nearly 1.8 million people world-wide and caused at least 110,000 deaths. Large-scale testing and tracing programs will become the norm, placing the average person under much greater scrutiny by the state.

The U.S. federal government has yet to launch a national test-and-trace strategy to find and isolate virus carriers and their contacts, although some state governments are discussing it. Many other developed countries are putting such programs at the heart of their efforts to keep the virus under control, using technology to identify those at risk of infection. One-third of Iceland’s population has already downloaded a new government-approved app that uses GPS to track users, who can give contact-tracing officials access to their data if they test positive for the virus.China was able to come out of lockdownthanks to its aggressive efforts to find and quarantine the infected, although it used draconian isolation policies that democracies would find hard to implement.

Companies themselves have a role to play, and many are laying plans to do their part. Dozens of companies have notified the U.S. Food and Drug Administration that they are developing tests that indicate whether someone has had—and is likely immune to—the coronavirus, though some early efforts have hit roadblocks in other countries.

“Testing capacity, which we still have to develop, that is going to be the bridge from where we are today to the new economy in my opinion,” New York Gov. Andrew Cuomo said Wednesday. “It’s going to be a testing-informed transition to the new economy.”

Major airlines are discussing the feasibility of having passengers submit to temperature checks before boarding flights. It isn’t yet clear whether airlines or airport security would shoulder that task. Two weeks ago, American Airlines Group Inc. began asking frequent fliers and top corporate customers what it might take to get them comfortable with flying again. Their answer? Clean planes.

The airline has been disinfecting cabins more often, among other measures; now, part of its task is making sure customers know what American is doing, said Kurt Stache, American’s senior vice president of customer experience. It is also looking at how to limit contact between travelers during boarding and in flight.

Passengers might grab their own beverages and snacks as they board through the jet bridge on short flights. The tradition of flight attendants’ serving hot nuts on a tray in first class may become a relic of a bygone age.

Customers contacted by American say they think the crisis will abate within three to six months, with half of customers surveyed saying they’d consider flying again about six weeks after the virus dissipates.

Manufacturers have redrawn factory floor plans and implemented processes, such as staggering shift workers or asking employees to take turns eating lunch in their cars to avoid cafeteria crowding, practices that may become standard as more plants come back online.

Tyson, the biggest U.S. meat company by sales, is installing walk-through temperature scanners at its plants across the country and sending home workers showing potential Covid-19 symptoms, said Hector Gonzalez, Tyson’s head of U.S. human resources. Scanners could remain in place beyond the pandemic, he said, helping reduce colds and influenza among employees.

“They may present an advantage in the future that we didn’t have before,” Mr. Gonzalez said.

When Toyota Motor Corp.’s American auto assembly lines restart, the lines will likely run at slower speeds than normal due to steep drops in consumer demand. The slowed-down lines will also help maintain social distancing in plants, said Chris Reynolds, chief administrator for manufacturing at the company’s U.S. division.

The Japanese auto maker, which has begun making face shields while its assembly lines are down, will integrate those emergency personal-protective-equipment efforts into the business, said Mr. Reynolds.

Toyota is also testing protocols like on-site health screenings for workers involved in medical-supply production that can be widened as the company restarts auto production.

“We never let a pilot program go to waste,” he said.

The company would consider antibody testing for workers if required, but views it as tough to implement, Mr. Reynolds said.

“That essentially means taking blood samples from our team members,” he said. “That’s a little more intrusive than putting a thermometer to your forehead and asking a couple questions.”

General Motors Co. is considering a number of options for testing workers for the virus and is prioritizing tests with quicker turnaround for results, said Jim Glynn, the auto maker’s global chief of workplace safety. That could include antibody testing, he said.

“If it’s scalable, easy, noninvasive and people are willing to do it, of course we would figure out how to implement it,” Mr. Glynn said of antibody testing.

Some plans sound like science fiction. Major League Baseball is exploring the idea of staging some form of a season by setting up a biodome, or closed ecological system, in the Phoenix area and sequestering players and other essential personnel there, according to several people familiar with the matter. Games would be held at the Arizona Diamondbacks’ Chase Field in downtown Phoenix, nearby spring training facilities and on fields at local universities. The league said in a statement that while it has discussed the idea of staging games in one location, “we have not settled on that option or developed a detailed plan.”

Many multinational operations are looking to their China units for a playbook.

Starbucks Corp. executives in the U.S. held talks with bosses in the company’s China division beginning in late January to understand the virus’s spread there. In February, the coffee chain imported procedures it had been using in China to the U.S., including stepped-up cleaning, paying workers to quarantine and pushing to-go offerings, before closing dine-in service at most of its 8,870 company-owned stores last month.

More than 95% of the company’s China stores are now open with limited hours and reduced seating, restrictions Starbucks could also implement in the U.S. as it returns to more normal service. Starbucks China “basically created a model that we are now using around the world,” Chief Executive Kevin Johnson said.

Disney’s Shanghai attraction may offer some lessons for the rest of the company’s theme parks. Disneyland and Walt Disney World have now been closed for more days than every closure in their history combined. Disney is weighing several changes to its global parks operations before reopening to the public, including temperature checks for guests, according to people familiar with the situation.

“To return to some semblance of normal, people will have to feel comfortable that they’re safe,” said Robert Iger, Disney’s executive chairman and former chief executive, in an interview with Barron’s, discussing tentative plans to reopen elsewhere. “We’ve asked ourselves the question, let’s prepare for a world where our customers demand that we scrutinize everybody. Even if it creates a little bit of hardship, like it takes a little bit longer for people to get in.”

Employers with large office-bound workforces are thinking about ways to bring employees back without spreading contagion.

“We’re already getting a lot of questions from clients about, ‘how do we create that physical distancing with our employees,’ especially in open plans where they may be sitting tightly together,” said Janet Pogue McLaurin, a principal at Gensler, a global design and architecture firm.

Some firms may bring office workers back in waves to keep numbers low, or encourage employees to work from home a few days a week in rotation to allow for “de-densification,” she said.

Brokerage and real estate services firm Cushman & Wakefield, which manages 800 million square feet of real estate in China, created a 300-page manual on safely reopening offices, including advice for every part of the workday from the moment an employee leaves home, said chief executive Brett White.

Cushman’s Amsterdam office is testing a workplace setup designed for social distancing. In the “Six-Feet Office,” transparent shields divide desks, markers direct foot traffic and disposable desk pads catch germs and can be discarded when a worker leaves for the day. “In the next four to six to eight weeks as people begin going back to work, companies aren’t going to have the time or the ability to remodel offices,” Mr. White said.

Amol Sarva, chief executive of the flexible-office company Knotel, said he plans to add features to the company’s app for office tenants that would give employers the option to track some employee movements and trace their contacts to prevent the spread of illness.

“Security changed forever after 9/11, and it’s going to happen to the workplace now,” Mr. Sarva said.

As companies that cut swaths of their workforce think about hiring for a recovery, BCG’s Mr. Lesser said they’re likely to start by rehiring people they let go. And since the economy won’t be growing as fast as it was before, many of those people will come back, he predicted. “There won’t be so many job openings that workers will have much chance to jump to new employers,” he said.

Outside work, rituals like dinner and a movie or shopping trips will resume, although in vastly changed form.

Steakhouse chain Texas Roadhouse Inc. will likely reopen at reduced capacity through staggered seating, according to Travis Doster, a spokesman for the Louisville-based chain. The company may install plexiglass or wood dividers between booths and require customers waiting for tables to stand outside or remain in their cars, he said.

“You just don’t know how people are going to return,” said Mr. Doster.

Panera Bread Chief Executive Niren Chaudhary told his employees during a virtual company meeting Wednesday, that the fast-casual brand, which largely depended on dine-in customers, needed to find new revenue sources. “We will have to very carefully rebuild the brand for a new world,” he said.

The chain plans to keep the curbside, order-ahead business launched in response to coronavirus, along with the makeshift grocery stores to sell staples like bread, milk, and produce in 90% of its cafes—with delivery options. The 2,200 unit-chain owned by Krispy Kreme’s parent JAB is also considering building sites with smaller dining areas to give more room for the likely bigger to-go business.

Diners at Kith/Kin, a Washington, D.C., restaurant, may encounter disposable menus and silverware sealed in plastic instead of linen, said Chef Kwame Onwuachi. Restaurant signs will detail how surfaces are sanitized. Waiters may end up wearing gloves in his dining room.

“We’re going to need to look at more transparency in our practices,” said Mr. Onwuachi.

Mark O’Meara says he hopes to open his two independent movies theaters in Fairfax, Va., by June or July. In addition to stepped-up cleaning, he’s considering limiting capacity to 50% at reopening. Since Hollywood’s major studios have removed many of the highly anticipated titles from the summer calendar, Mr. O’Meara says he is open to flexible pricing for a short time to help entice moviegoers to come see lower-profile films, though he can’t make the decision on his own.

“We’re thinking about things to do we’ve never thought of,” Mr. O’Meara said.

Tim Leiweke, chief executive of Oak View Group, which operates and advises major concert and sports venues around the world, says “sanitation and cleanliness of facilities will be an ongoing issue for the rest of my career.”

Venues will add a new shift to sanitize after janitors finish cleaning venues post-events, and cashless transactions and protective shields at all points of purchase will become the norm, he said. Food and merchandise will be sold as grab-and-go.

School systems and colleges are planning scenarios for a hoped-for return to campus in the fall, if not earlier. David Greene, president of Colby College, a private liberal-arts college in Waterville, Maine, with 2,000 undergraduates, said he has recently begun considering how Colby could operate if the mandate to socially distance continues into the future.

“Do we thin the number of people on campus? Does it mean more online instruction? We’re planning for any and all of those, including a very different type of year next year,” Mr. Greene said.

Colby has had early discussions about the need for dorm rooms to house single occupants in that scenario, or having students come to campus for shorter-term modules to rotate students on and off campus.

“Our students come from 90 different countries and every state,” he said. “It’s not so simple to imagine.”

 

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