How companies plan to bring workers back from coronavirus

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At some point, America’s largest companies will tell their employees that it’s time to leave the house and return to work.

This decision will be fraught with risk without generalized tests for the COVID-19 virus. For some industries, such as Wall Street banks, ubiquitous testing is essential to bringing their workforce back to offices around the world. For other industries, such as automakers, plans are already underway to open factories in a few weeks, with Fiat Chrysler and Tesla both planning to resume production on May 4.

Other industries, particularly retail, are turning to China for advice. The Chinese economy has slowly returned online in recent weeks as the government lifts the freeze orders. As people start shopping again, retailers like Levi Strauss have said they will review consumer spending habits and adjust accordingly once stores open in the United States. Other retailers expect the shift to online shopping to accelerate as people are forced to order products online during containment. This is bad news for shopping centers and other brick and mortar stores that will have to adapt to reduced pedestrian traffic.

How the United States will move from widespread quarantine to a semblance of normalcy is still an unknown giant. But the return to work will almost certainly come in waves, driven by consumer demand and employer desperation, said Erik Gordon, professor at the Ross School of Business at the University of Michigan.

“For some things, demand will drop immediately,” said Gordon. “These jobs – dentists, health care, hair salons – there is a backlog. Then there is a similar category, like restaurants and bars, where people can be locked up for so long that they are desperate to go out to eat or get a drink. For other industries, the same urgency may not exist. It will take a while for people to start buying new cars and new homes. And for some industries, like retail and airlines, things may never get back to normal. “

Employers’ return-to-work plans will also depend on geography, according to Peter Cappelli, professor of management and director of the Wharton School Human Resources Center at the University of Pennsylvania. Employers in rural and suburban areas who have seen fewer confirmed coronavirus cases and resulting deaths will find it easier to convince workers that it is safe to return to the office than cities like New York and New Orleans. , did he declare.

Neighborhoods close to city offices can add another barrier to urban employers whose work spaces are not designed for social distancing.

“If you put it in everyone’s mind that they should be six feet apart and then you go back to an office and you are in the cubicles or an open plan office, in particular, what will be scary for people, “he said.

Any return to work will be a gradual process rather than setting a national “back to the office” day, said Gordon. Yet many companies are already in a hurry to get their workers back to work, said Cappelli. Business eagerness only increases when businesses see their employees’ productivity drop and their businesses “bleed the money like crazy.”

“When the restrictions are lifted, if states ever say ‘quarantine is over’, I don’t think we will have a big problem with people sitting on their hands,” said Cappelli. “We weren’t set up to work remotely. In most places, we sent people home and hoped for the best. “

Several Obstacles Obvious

A major limitation of any reopening will be child care. Parents cannot return to work if schools and daycare centers are not open. Many educational institutions have already proactively canceled during the month of April, if not more. With all of the schools making independent reopening decisions, it is almost impossible to have a coordinated short-term effort that is not on a case-by-case basis, employee by employee.

Another is simply to have enough knowledge about the spread of the disease, which means testing as many people as possible.

“We have to start planning, start life again,” New York Governor Andrew Cuomo said this week at a press conference. “We are not there yet, but it is not a light switch that we can simply activate one day and everything returns to normal. We are going to have to restart this economy. We are going to have to restart many of the systems that we abruptly shut down and we have to start planning for that. My personal opinion: It will depend on the quality of our tests. “

Several state governors discussed plans to get people back to work with Scott Gottlieb, the former head of the Food and Drug Administration, on Tuesday, the Wall Street Journal reported earlier this week.

“I am afraid we do not have the systems in place to carefully reopen the economy,” Gottlieb told the Journal. “You need to be able to identify sick people and have the tools to reinforce their isolation and [tracing of people they contact]. You must have it on a scale that we have never done before. We need leadership. “

Former Wells Fargo CEO Dick Kovacevich said CNBC workers should start coming back after cities “bend the curve” on new cases. Kovacevich said that when there is evidence that new cases are decreasing rather than increasing, sick people should remain in quarantine while people who have recovered from the virus and others under 55 should return at work if they are comfortable. Social distancing in restaurants and the workplace should continue, he said, but the country should “see what kind of response we get” and assess the results.

But just getting past the peak should not be enough to get people back to work, said Gordon. On the contrary, new cases will need to drop to almost zero for the public to be comfortable going back to work and starting to frequent bars and restaurants, said Gordon.

Legally OK, deemed doubtful

The tension between getting up and running as soon as possible and taking risks with employee health is a moral and legal dilemma. Employers have a relatively low legal risk, but a high reputation, if they rush people into the office, said Jonathan Segal, a labor lawyer at Duane Morris law firm that specializes in human resources and minimizes risk legal and commercial companies.

Employers have a duty under the Occupational Safety and Health Act to ensure that they provide a safe workplace. But it will be difficult for an employee, customer or customer to prove that he was exposed to COVID-19 in the workplace, rather than laundry or grocery shopping, said Segal.

In addition to reopening some industries before others, companies are likely to slowly reintegrate employees into the workplace, rather than bringing everyone back at once, said Segal. A gradual return would help maintain social distance in the early days and also give companies time to require employees to complete health checks or get tested, he said. The United States Equal Employment Opportunity Commission issued guidelines in mid-March, stating that it is legal for companies to ask employees if they have symptoms of COVID-19, such as a cough or shortness of breath, and take their temperature.

Companies that have been able to support their home-based workers may want to extend these policies until workers are comfortable coming back alone, said Segal.

“In the absence of any agreement, employees can say,” I don’t want to go back to work, and if I do, I want it to be the exception, not the rule. I want to come on Wednesday and sign what I need to sign and pick things up. I want to arrive at 4 am, “said Segal.

CNBC met with executives and experts from various sectors to obtain a more accurate reading of return to work policies.

Here’s a look at what they said:

Aviation industry

Aviation industry leaders are among the most pessimistic about returning to normal anytime soon, saying the current crisis is worse than the one they experienced after September 11. The airlines have cut service by 60% or more, canceling international routes and cutting almost all service to and from New York. Airlines have also put hundreds of planes in stock as demand remains largely absent. About 40 percent of the world’s fleet of airliners are in service on Tuesday, according to aeronautical research company Cirium.

Business travel has come to a halt due to the virus, bad news for hotels and airlines that thrive on frequent travelers who often pay flexible last-minute fares. Ninety-eight percent of companies have canceled international business travel and 92% have done so for all or most of the domestic trips, according to a survey by the Global Business Travel Association (GBTA) released Wednesday.

“No one is going to give it their all unless they are safe from viruses,” said Scott Solombrino, COO and executive director of GBTA.

US air carriers are asking for $ 25 billion in subsidies that Congress approved last month as part of its $ 2 trillion coronavirus rescue program, but executives warn employees that they are still facing problems and continued low demand due to the pandemic and economic hardship. “I wish I could predict that it would end soon, but the reality is that we just don’t know how long it will take before the virus is contained and customers are ready to go,” said Delta CEO , Ed Bastian, to employees in a memo. the week.

United Airlines CEO Oscar Munoz and president Scott Kirby, who takes over in May, raised concerns about employees last month. deleted for months after that, maybe until next year. We will continue to plan for the worst and hope for a faster recovery, but whatever happens, taking care of each of our people will remain our number one priority. It means being honest, fair and direct with you: if the recovery is as slow as we fear, it means that our airline and our workforce will have to be smaller than today, “they wrote.

Even when quarantine ends, a general economic slowdown will cause consumers and businesses to look for cheaper options than flying, said Gordon. Months of Zoom conference calls can convince many large companies that business travel is simply unnecessary, leading to a sharp drop in the airline’s most profitable customers.

“You have companies that send armies of people point to point when we have teleconferences and when most of what we are looking at is in easy-to-share digital form,” said Gordon. “The airline industry will not return to what it was – perhaps never. “

Automobile industry

Auto makers could turn to China for answers on how to safely restart business in the U.S. Although demand for cars does not rebound quickly, unlike other industries, workers factory have a clear picture of what it would take to return to production. Car manufacturers and suppliers in China have implemented protocols to ensure safe working conditions for employees. In addition to thorough cleaning and disinfection of work areas, there are new processes to keep workers more separated, especially when entering and leaving factories and offices.

Other initiatives include all employees who continue to wear masks, limiting face-to-face meetings and even taking employee temperatures when entering the facility.

Fiat Chrysler said on Wednesday that the company had put in place such protocols to “gradually and safely return” to work in China for white-collar and blue-collar workers. The Italian-American automaker said earlier this week that it plans to restart its US and Canadian factories on May 4 with additional protocols such as redesigning workstations to maintain proper social distancing and extend cleaning protocols at all of its locations.

“As a result of these actions, we will only resume operations with safe, secure and sanitized workplaces to protect all of our employees,” the company said in an emailed statement, citing officials who worked with government and union representatives on procedures.

Valerie Workman, Tesla’s North American human resources manager, wrote to workers on Tuesday that the automaker also intends to resume production of electric cars at its plant in Fremont, California on May 4, reported CNBC Tuesday.

Detroit mayor Mike Duggan said Tuesday that expectations were for Motor City, a growing hot spot of COVID-19, to “lead the country in business reopening strategies.”

“We have a team working on the return to work,” he said, citing a subsidy program for small businesses in the city and a program that allows the city to buy meals at local restaurants. to support them and give them to the Detroit police. EMS and health workers.

Banks and financial services

Unlike many industries, investment banking and other financial services have been able to transition to a work at home environment quite easily. Almost all of Goldman Sachs’ employees had been working from home for about two weeks, according to someone familiar with the matter.

Investment banks and many other large US companies are likely to follow suit with health officials, such as the Centers for Disease Control and Prevention. Since the tests are likely to be administered first to anyone who is in close contact with sick patients, such as health workers, ordinary Americans can take months to get tested. Goldman is in talks to purchase infrared body scanners to screen people entering buildings that are obviously sick. Temperature scanners are a method of testing for fever and illness and should also help overcome the psychological barrier of office workers’ sense of security.

JPMorgan Chase CEO Jamie Dimon wrote in a letter to shareholders on Monday that return to work can be accelerated if tests are widely available that can determine whether people have recovered and are now relatively immune to COVID-19.

“Initially, we need a buffer period of several days or weeks for people to be tested, then for those who test negative for the virus, we need to find out if viral antibodies appear in serological tests”, said Dimon.

Retailers Prepare For Changing Shopping Habits

The retail industry is undergoing seismic development, with the coronavirus accelerating many of the trends that were happening before the crisis, but at a slower pace until now.

Buyers’ habits are being reshaped, as they have recently rotated to stock up on essentials. Stores selling clothing and other discretionary items have been temporarily closed, with hundreds of thousands of retailers on leave.

When, and in some cases, if these brick and mortar stores reopen, they will be staffed with different staff to adapt to changing consumer habits. Consumers are now more comfortable than ever shopping online, when it’s the only choice they have.

Thousands of stores across the country, including Gap, Macy’s, Apple and Nike, have been temporarily closed. The largest mall owner in the United States, Simon Property Group, has closed all of its malls and retail centers for the foreseeable future, employing 30% of its staff. Lululemon CEO Calvin McDonald said he expected retail stores to be closed due to the pandemic longer in the United States than in China, where COVID-19 originated. In China, the majority of Lululemon stores were not closed until two weeks before they reopened, with buyers returning more slowly, the CEO told CNBC earlier this month.

“In the United States and Canada, we are going to be closed for a much longer period. This will create much more pent up demand, ”said McDonald.

In the meantime, however, more people will be shopping online and these habits will continue, McDonald said, calling it the “new reality of retail.”

Levi Strauss CEO Chip Bergh told CNBC earlier this week that the denim maker was trying to learn from China, where buyers are returning to stores, what goods people are looking for. This will guide the company in its production and marketing decisions.

“We are really trying to learn from the reopening of stores in China,” he said. ” What are [shoppers] worried when they come back to the stores? What are they looking for? “

Nike also said it uses China as a “playbook”.

Blocked by the coronavirus, another mall owner in the United States has already rewritten the plan for his American Dream project, still in preparation, in New Jersey. Before the coronavirus pandemic in the United States, American Dream was to be a mix of 55% entertainment tenants and 45% retailers, when fully completed. Now the project will be about 70% entertainment and 30% retail, developer Triple Five Group told CNBC.

“There is no doubt that when it is finished, there will be retailers who will get by … trying to survive. These retailers who were on the bubble – I expect a number of these retailers will disappear, “said Don Ghermezian, co-CEO of American Dream. “They cannot bear to have no income,” he said.

“And some of them are on leave. It’s a very difficult time. I expect there will be records for the closure of retailers [in 2020]. This virus has exacerbated this situation. Many retailers will not reopen. “

WATCH: We should get people back to work when the curve is bent: former CEO of Wells Fargo

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