Policymakers can learn from industry’s resilience


In our imaginings of remote working, few of us have in mind the drilling of oil wells or the reprogramming of complex machinery. Yet during the pandemic energy producers have embraced technologies that mean they no longer need to be on the ground to drill into the ground. Meanwhile Danone, the food manufacturer, was able to implement an entirely new production process at its Mexican plant using reprogramming done in Italy, Zoom calls and minimal teams on the shop floor.

Through collaboration and innovation, industry has returned to work fast after closing its doors briefly during the first wave of infections. As the eurozone’s two largest economies prepare to enter second lockdowns, and the US enters its third wave, factories and workshops look set to remain open.

Quick thinking has enabled industry to keep workers safe. In Germany, Kinexon, a company that made its name providing wearable sensors to monitor the performance of NBA stars and elite footballers at clubs such as Paris St Germain, has handed out its technology to many more firms, including in Switzerland and the US, so that staff can make sure they abide by social distancing rules. Volkswagen Group opened a Covid testing facility at its gargantuan Wolfsburg plant, which had the capacity to run 2,000 tests per day.

In the US Midwest, the shift towards vehicle electrification and autonomous driving has continued at pace. The car giants have also displayed a public spiritedness. During the early days of the outbreak, they quickly pivoted their processes to enable the production of ventilators. Other firms are developing technologies to make vehicle interiors more germ resistant.

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The broader economic impact of this adaptation is clear. The data show that being able to keep production lines rolling during the pandemic has led to a far stronger recovery in global manufacturing than in other areas of the economy. Closely watched purchasing managers’ indices show the performance of makers the world over far outpacing that of companies in the services sector.

The future looks brighter still. Herbert Diess, the head of Volkswagen Group, said this week that his company was now strong enough to do without government support. Volkswagen still expects to turn a profit this year, despite the fresh European lockdowns.

US and European industry can of course far more easily take advantage of demand in markets where coronavirus has been largely contained. Premium car brands, such as Daimler, have benefited from strong sales to China. Social distancing on factory floors, where much space is taken up by machinery, is far easier than in restaurants and bars.

The recovery remains far from complete — Germany’s Ifo think-tank estimates that one in five manufacturing workers in the country are still receiving some form of state support for working fewer hours than usual. And while many factories have moved quickly to keep cases at bay, there have been some worrying exceptions, notably in food processing plants, where significant outbreaks have occurred.

On the whole, though, industry has been resilient. A common thread in these tales of manufacturers’ adaptability has been the willingness to adopt global best practices. Many western governments, on the other hand, have largely ignored the lessons to be learnt from east Asia’s handling of this and earlier pandemics. Manufacturing is a rare success story of the pandemic. Public officials ought to take a leaf out of industry’s book in thinking about their own response.

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