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Chairman's update

The following is an abridged text from conversations with Damon de Laszlo during the last week of March 2020.

Despite watching the situation unfold in China, the rest of the world was not prepared for the devastating impact the Novel Corona virus was about to have as it spread across the globe. In a very short space of time we have seen health systems overwhelmed and supply-chains dislocated – catching governments off-guard.

In both Europe and the USA the challenge has been, and will remain to be, imposing restrictions on citizens unaccustomed to reductions in their freedom. As we now know, this is not just a disease that affects the elderly and those with the now much-used “underlying health problems”. While the young and fit are at less risk than those over 70 years old, all ages are nevertheless seriously vulnerable. Thankfully we are now locking-down the movement of people, and most of the population are adhering to the new regulations.  There is encouraging evidence this is having a positive impact, as the number of fatalities begin to plateau in Italy and Spain.

In terms of economic damage, I think this is underestimated by many. It is unlikely that the economy will recover before the fourth quarter. Well over 50% of the western economic system is related to the service industries, and here the disruption is total as the economy shuts down.

It is also very difficult to see how major chunks of the manufacturing industry will “re-start”. The aircraft and automotive industries are both going to be dependent on government life-support. The fragmentation of supply chains as factories close means that re-starting presents extraordinary problems. It took many years to build the super-efficient global supply chains that service modern manufacturing. We can’t simply expect to turn them on again at the flick of a switch.

The major drop in commodity prices and the unpopularity of mining is causing exploration to stop, and mines to be shut down. The economic crisis that is affecting raw materials, when the global economy starts to recover, is likely to cause rapid price increases.

To paint a slightly brighter picture, the huge stimulus and support now being provided by governments around the world will probably stabilize markets; however, they are likely to remain weak with no v-shaped bounces likely in the next 7-8 months. By then, hopefully, there will be some clarity of the human effects of the Coronavirus, and the lifting of movement restrictions will enable businesses to start anticipating some form of normality.

As we navigate this difficult time, I would like to thank everyone at Harwin for the tremendous effort they are putting in to meet the demand for the components we supply into medical equipment. I appreciate that the present situation is causing considerable stress to the workforce, and to their families. Sadly very little press coverage is given to the many manufacturers who make up the supply chain that goes to create the ventilators, heart monitors, scanning devices, etc. that health services need so urgently. These are the companies that are giving life saving support that backs-up our NHS.

I am looking forward to being able to walk around the Harwin factory again, and to thank everyone personally, but in the meantime thank you for all your efforts.

Damon de Laszlo