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Schumpeter – Covid-19 is foisting changes on business that could be beneficial | Business

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IN FEBRUARY 2014 a strike on the London Underground offered management theorists a lesson in resilience and adaptation. Because the shutdown closed some but not all Tube lines, frustrated Londoners were forced to rethink their commutes to and from work. Researchers at Oxford and Cambridge universities subsequently found that around 5% of passengers stuck to their new itineraries even after normal service resumed. The long-term economic gains of one in 20 travellers adopting new and improved ways to get to work turned out to be greater than the short-term costs of the disruption.

The global covid-19 outbreak presents a far greater challenge to the corporate world than striking transport workers. Profit warnings are spreading nearly as fast as the disease. Analysts at Goldman Sachs, a bank, estimate that earnings growth for firms in the S&P 500 index could grind to a halt. Gauges of business activity, such as purchasing managers’ indices, have cratered in Asia and are expected to weaken elsewhere as the coronavirus crosses more borders. Consumers are spending money on little except sanitary wipes, face masks and tins of Campbell’s Soup. Fears of a pandemic have wiped $7trn off the market value of listed firms worldwide in the past fortnight (see article).

Some companies will, like most of London’s commuters, revert to autopilot once the threat recedes. But for others the interruption will have a lasting effect, accelerating trends in business organisation that were already under way. Two are particularly important. The next few months are set to be a giant experiment in whether new technologies can allow successful mass remote working for employees, speeding up the reinvention of the office. And for firms already worried about rickety supply chains amid a trade war, the virus gives another reason to reconfigure them.

Take employees first. Companies have had to ask themselves whether to let employees travel, attend conferences or even come into the office. In all three cases the answer is increasingly “no”. Many big firms, including Amazon and JPMorgan Chase, have banned all non-essential excursions. Airlines and hotels are reporting steep falls in bookings. Corporate Travel Management, a listed Australian firm that organises business jaunts, has warned the impact could last up to six months. It has slashed its earnings forecast for the year by up to 16.5%. A survey by the Global Business Travel Association, an industry body, found that business travel, which costs companies over $1trn a year (and emits roughly as much carbon as Ukraine in flights alone), could fall by over a third while the epidemic rages.

Large corporate events are being called off. The oil industry’s biggest annual jamboree in Houston and the Geneva motor show will not take place this month. Google and Facebook have given the term “teleconferencing” a whole new meaning by moving a few of their big shindigs partly or wholly online. With Milan and Paris fashion weeks curtailed, Armani streamed its autumn/winter show from behind closed doors. This is bad news for events firms such as Informa, whose share price is down by a fifth since the start of February, especially at a time when many high-profile industry powwows are already losing their lustre.

At the same time more companies are learning to love telecommuting. On March 3rd JPMorgan Chase told thousands of its bankers in America to work from home as it tests its contingency plans. Twitter has asked its 5,000 employees to do likewise. Sony went so far as to shut some of its European offices altogether, just in case. The affected workers are nonetheless expected to toil remotely.

As well as highlighting how bloated some travel budgets are, virus contingency plans may also reveal how inefficiently office space is used. Big British and American firms pay on average $5,000 per employee in annual rental costs. Just 40-50% of desks are actually used during working hours—often not very well. Last year two in five respondents to a survey of 600,000 desk-jockeys by Leesman, a data provider, said their office prevented them from working productively. If their managers now find that productivity does indeed rise—or at least doesn’t dip—as staff self-isolate at home, the case for teleworking may look irresistible. Investors are betting it will. In the past month the share prices of Slack, a corporate-messaging platform, and Zoom, which makes videoconferencing software, have shot up by 18% and 35%, respectively.

The second way in which companies are rethinking their business has to do with supply chains. Since the 1980s these have become more complex and global, with large firms now dependent on thousands of suppliers. The embrace of lean manufacturing and just-in-time delivery of components, pioneered by Toyota in the 1970s, has made production more efficient but more vulnerable to disruption, as companies stockpile fewer and fewer necessary materials. The median firm in the S&P 500 carries only 66 days of inventory, and some have far smaller buffers than even that—Apple has just nine days, according to data from Bloomberg.

When natural disasters strike big companies usually get by, shifting production temporarily from afflicted areas to those that are not. But unlike a flood, an earthquake or even the Sino-American trade war, all of which companies have some experience in planning for, covid-19 could affect all of a firm’s actual and potential subcontractors simultaneously. In such a scenario carrying bigger inventories and having suppliers at home may no longer look wasteful. It may come to be seen as necessary.

Immune response

The coronavirus will not make business travel or lean global supply chains disappear. Chinese factories are cranking up again and high-flyers will, in all likelihood, be back in airport lounges soon enough. But the crisis offers a chance to experiment with new ways of doing things—and to question the wisdom of old habits. Chief executives should not be immune to the opportunity.

This article appeared in the Business section of the print edition under the headline “Plan V”

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UK housing market saw ‘mini-boom’ in July, Halifax says | Reuters | Business

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LONDON (Reuters) – British house prices saw a “mini-boom” as the market reopened following the coronavirus lockdown, mortgage lender Halifax said on Friday.

House prices rose 1.6% month-on-month, the biggest rise this year after being flat in June, Halifax said.

Compared with a year ago, prices were 3.8% higher – the largest annual increase since January.

(Reporting by Andy Bruce; editing by Sarah Young)



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VIDEO: ‘Ringing off the hook’: N.S. campground having busy summer season | Regional-Business | Business

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FREEPORT — If there’s such a thing as a COVID-19 success story in the tourism industry, you’ll find it on Long Island, a short ferry ride from Digby Neck.

A campground in its infancy is having a booming season, better than ever, to the utter shock of its owners.

Whale of a Time Camping in Freeport is owned by Gail and Reid Gillis. It’s built on a cliff with stunning views of the Bay of Fundy, where the sunset is so spectacular the place is abuzz every evening to find the perfect spot to soak it in and capture every colour.

It’s also a place where you can see (from your tent) whales puff water into the air.

The sun sets in behind Brier Island on Saturday, August 1, 2020. Brier Island is just a short ferry ride from Long Island. - Ryan Taplin
The sun sets in behind Brier Island on Saturday, August 1, 2020. Brier Island is just a short ferry ride from Long Island. – Ryan Taplin

It started as Reid’s dream, said Gail. He grew up on the island and owned the undeveloped property since he was 18. She’s from P.E.I., but now she’s utterly in love with the place.

“Four years ago we decided to put the road in, thinking we were going to live at the top (of the cliff) and we had people coming and saying, ‘You should really open a campground.’”

They started with a couple of sites to see if there was interest. Over the past three years, they’ve slowly built up the site to host 15 spots on the shore, seven on top of the cliff, and two cottages, all with their two young sons in tow. This year was going to be their first full season and they had high hopes. Instead, they were just happy they could open in July.

“We were grateful we were allowed to open but we never anticipated this volume. We thought maybe a few people here and there . . . and now the phone is ringing off the hook,” Gail said.

“We just look at each other every night and we’re like, ‘We’re doing it. It’s working! People love what we love.’”

Visitors to the Whale of a Time campground take in the view near sunset on Saturday, August 1, 2020. - Ryan Taplin
Visitors to the Whale of a Time campground take in the view near sunset on Saturday, August 1, 2020. – Ryan Taplin

Within two weeks of opening, they were filling up. They even needed to hire a staff member to help with demand.

Most of the customers are Nova Scotians, with a few from the Atlantic bubble, who have never journeyed to this part of the province before. Some of them didn’t know the area existed.

“We can’t thank Nova Scotia enough, really, for supporting us. These amazing people are supporting their community, supporting their province,” said Gail.

“We’ve had tears in our eyes because we can’t believe how welcoming everybody is to the project.”

It’s also been a boon to the community. The town’s store loves the extra business, and guests are taking in multiple whale-watching tours.

Amanda Crocker, a guide with Freeport Whale and Seabird Tours, also grew up on the island and has known Reid since she was three. She is thrilled they’re creating a sustainable business in the community when so many of their peers have moved away.

Amanda Crocker leads a whale watching tour for Freeport Whale and Seabird Tours on Saturday, August 1, 2020. - Ryan Taplin
Amanda Crocker leads a whale watching tour for Freeport Whale and Seabird Tours on Saturday, August 1, 2020. – Ryan Taplin

“I’m glad to see people my age staying around here and making a living because so many of us, once they graduate, they leave and don’t come back. They go and find their careers in other places,” she said.

“With COVID happening, this would be one of the biggest reasons people wouldn’t come to the area anymore and they’re still full. So obviously this place is going to be around for awhile . . . and hopefully I’ll be able to see them pass their campground on to their kids.”

But the whale-watching business hasn’t been doing as well. Crocker said that last summer they operated 131 trips but only 15-20 so far this year.

“We work hard to be able to stay here,” said Crocker, who has been a tour guide for 25 years.

“We’re not in trouble yet with things but it’s definitely making things harder. We don’t have a whole lot of extra money to have around right now for extra things, but we love our way of life here and can’t imagine anything else other than this.”

A family watches a humpback whale dive in the Bay of Fundy near Long Island on Saturday, August 1, 2020. - Ryan Taplin
A family watches a humpback whale dive in the Bay of Fundy near Long Island on Saturday, August 1, 2020. – Ryan Taplin

They usually have customers from all over the world but most of them this year are from the Halifax region, Yarmouth and the Annapolis Valley. Crocker said she’s having fun getting to know her neighbours a little bit better “and seeing the people from Nova Scotia who are so close to doing these things and have never seen a whale before.”

Her family fishes for lobster in the winter and does whale-watching tours in the summer. Her kids are learning the trade, too, and she hopes they stay to make their lives here.

There must be something about this island because Gail gets emotional just talking about the experience: the natural beauty and the warm community. She calls it a magical place.

A humpback whale dives near a whale watching boat in the Bay of Fundy near Long Island on Saturday, August 1, 2020. - Ryan Taplin
A humpback whale dives near a whale watching boat in the Bay of Fundy near Long Island on Saturday, August 1, 2020. – Ryan Taplin

She says its ability to distract people from all that 2020 has brought is what has made her campground thrive this summer.

“You can just come here and forget what’s happening everywhere else and feel normal. It’s summer, and that’s just how you’re supposed to be; you’re supposed to relax, enjoy it and breathe the sea air.”

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Retired director of Kingston downtown business association had ‘a blast’

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Doug Ritchie has retired from his position as managing director of the Downtown Kingston Business Improvement Area after 38 years with the organization. (Ian MacAlpine/The Whig-Standard)

Ian MacAlpine / Ian MacAlpine/Whig-Standard

KINGSTON — When Doug Ritchie first entered his office in January 1983, the lights weren’t working and the rotary phone had no dial tone.

Thirty-eight years later, Ritchie has stepped down from his position as managing director of the Downtown Kingston Business Improvement Area. During that time, the organization has grown from a one-man operation to an award-winning association comprising more than 700 downtown businesses and property owners.

As the first and only person to hold the position, Ritchie worked to revitalize and protect Kingston’s downtown core through numerous projects. He will advise the organization for the next six months as it transitions into new leadership.

General manager Michele Langlois will assume the responsibilities of executive director on an interim basis while the board of management searches for Ritchie’s replacement.

Ritchie said the decision to step down was “mutual” between him and the board. They were in discussions about his retirement as early as January. The start of the COVID-19 pandemic in March sped up the negotiations.

“I was already thinking that it was well time to go, and then we were locked down, and doing Zoom meetings, and I was sort of less and less comfortable in it,” Ritchie said. “I’m sort of a face-to-face guy.”

Of his many accomplishments, Ritchie recalls his contributions to the arts particularly fondly. He’s helped establish some of the city’s most popular summer events, such as Music in the Park, Movies in the Square, Kingston Buskers Rendezvous and FebFest.

Ritchie also remembers the Limestone City Blues Festival of 1999, when the headlining band cancelled with less than 48 hours’ notice. The crisis was resolved with The Tragically Hip filling in, Dan Aykroyd singing lead and Charlie Musselwhite playing harmonica.

“It was a disastrous Thursday night at 9 o’clock, and it was quite a success and celebration Saturday night at 9 o’clock,” Ritchie said. “It was fun to use culture, showbiz, to build our downtown.”

Ritchie also supported the redevelopment of Springer Market Square, the construction of the skating rink, the building of the Leon’s Centre and the renovation of the Grand Theatre.

In partnership with the Frontenac Heritage Foundation, Ritchie created the Heritage Week Awards to draw attention to the need to preserve Kingston’s traditional architecture and heritage buildings.

He also implemented an economic development program that helps guide the workings of the organization. In this vein, he facilitated several studies that were used to support new developments downtown.

“We were busy all the time for the good of downtown, and it was a noble cause,” Ritchie said. “Downtown is resilient and doing very well in dealing with COVID-19 and the ramifications on small businesses. Downtown’s gonna be OK.”

In retirement, Ritchie is looking forward to spending more time with his wife, children and grandchildren. So far, he is enjoying summer vacation — a concept unfamiliar to him since his start in the position.

He is also exploring the possibility of consulting, specifically in the realm of how businesses need to adapt to the realities of a post-pandemic downtown.

“I’m proud and happy,” Ritchie said. “It was a blast.”

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