Pandemics impact everyone, but some industries have been much harder hit and may need to rethink their strategies for recovery and survival.
Virtually every industry has been an innocent bystander devastated by COVID-19, and the fallout has yet to be tallied. Still, these five industries top the list of the hardest hit by the pandemic, according to S&P Global.
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As every country worldwide continues to struggle with getting the pandemic under control, travel, especially air travel, has been ground down. With planes sitting on the sidelines, airline employees staying home self-isolating, and airports operating at a fraction of the traveler volume, it’s anticipated that $252 billion in revenue will be lost in 2020 alone. About $200 billion in government assistance is being considered to keep the airline industry flying. These funds would be just the starting point. Further, the International Air Transport Association (IATA) has estimated that 4.8 million jobs in aviation may be lost by the beginning of next year, a 43% reduction from pre-COVID levels. Survival will depend on airlines putting people first, transforming their supply chain, leveraging loyalty, and recalibrating their brands, among other things.
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Auto parts and equipment
The increase in COVID cases in Europe and North America has increased the need for automotive companies to remain nimble in their responses to the crisis, according to one report by PricewaterhouseCoopers (PWC). Supply chain disruptions and the significant macroeconomic uncertainty fueled by the global pandemic spread have made it difficult to determine the best response to a moving target. PWC suggests the industry should consider the volatile economic, policy, and financial market terrain, address reduced production volumes created by supply chain disruptions, and decrease consumer demand and focus on remaining agile.
When most people would turn to their local gyms, dance centers, or recreation centers to reduce their stress through exercise, these facilities are quickly becoming places where the pandemic is flourishing. Many indoor recreation centers and gyms are losing large amounts of money, and the probability of default (PD) level has increased from 1.67% in January 2020 to 7.30% in August, ahead of the second wave. While most of the recreation facilities aren’t being allowed to open, this may spell potential to change in-facility exercise programs to virtual classes or the outdoors or as weather permits and social distancing is an option. It may require some rethinking of strategy and additional approval hurdles, but there are options still available.
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Oil and gas drilling
The COVID pandemic is not the first time the oil and gas industry has experienced a collapse; this is the third price collapse in 12 years, according to McKinsey. Today, however, oil prices have hit 30-year lows; it’s a time of crisis, and the pandemic has accelerated what’s looking like one of the industry’s most transformative points in time. There were many environmental and operational challenges before the pandemic. Now, companies within this industry will need to look for new emerging partnerships, change their focus, and reshape their portfolios and find ways to become more resilient.
Not eating out may slim-down our waistlines, but it may also trim profits to the tune of $240 billion in North America by the end of 2020. The probability of default level for this industry has gone from 2.17% in January to 6.36% in August. This has prompted many restaurants to rethink their strategies for survival. Since the start of the pandemic, delivery and takeout orders have increased 14% to 68%.
Until the pandemic is behind us, it may be challenging for companies within these industries to understand how to position their products and services fully. The one key message for these industries is clear: Their survival will depend on agility and adaptability.