The U.S Post-Pandemic: Rebirth of a nation?

Sectors vary in what a return to pre-pandemic levels requires. Energy and hospitality and leisure were hard hit by the massive and swift cessation of mobility and travel. Others also faced pain because of multiple supply chain disruptions. If parts aren’t readily available, entire production lines could come to a halt.

“One sector that fell off because of supply chain disruptions was automotive,” says Mike Parra, CEO, DHL Express Americas. “That is slowly rebounding, although right now there’s a challenge with semiconductor chip manufacturing that’s going on.” A single car can incorporate hundreds of dollars’ worth of the devices.

Semiconductors weren’t the only shortages the auto industry faced. “Tires are being shipped by airfreight,” says David Goldberg, CEO, DHL Global Forwarding USA. The move is unusual because such bulky and heavy goods typically ship by sea to reduce handling costs, but dealers can’t sell cars without tires. 

Some sectors became stronger. “The strain on the U.S. economy resulted in an uptick in companies and entrepreneurs pivoting to creating new product lines to meet demands, such as personal protective equipment, or PPE, and other items,” according to Lee Spratt, CEO, DHL eCommerce Solutions Americas. “Additionally, many companies with an online presence were also forced to ramp up and accelerate investments in their e-commerce capabilities.”

Consumers made substitutions in their consumption. Pickup and delivery replaced sitting in restaurants in many areas. As movie theaters went dark, streaming services from the likes of Netflix, Disney+ and Amazon lit up. 

Spratt notes that many bricks-and-mortar retail stores shifted their fulfillment strategies because of shutdowns. “For some, this meant a permanent shift to a ‘dark store’ model, in which traditional retail stores are converted to local fulfillment centers,” he says. Customers can opt for pickup or delivery while reducing strain on main retailer fulfillment hubs.

Other areas, like energy, will also improve. “People will start driving again,” says Thomas. And food services as well as hospitality should begin to rebound, though it will take time for the extent and manner of growth to become clear.

Some sectors, however, may be more up in the air. Increased demand during the lockdown for bigger living spaces that better facilitate remote work and study led to a shortage of houses on the market – which pushed prices up and precipitated a building boom. Yet nearly three million homeowners are behind on their mortgages, according to government figures. That could mean a wave of foreclosures and a fall in housing prices. 

“There is always tension because it’s competitive and there is always trade,” Sureddin says. “Beyond a successful vaccine rollout, I think the most positive thing we can expect from the outset is a normalization of trade relationships with partners around the world. Today, it’s so global, products are going to move.” Relations with China, in particular, won’t seriously deter trade. “China is such a large economy, there are so many imports coming from there, it is just going to happen.” 

Still, trade tensions drove multinationals to better diversify their supply chains into other countries to avoid being stuck. Another possibility would be to bring certain types of sensitive manufacturing – semiconductor chips or medical products, for example – back to the U.S. The reduction of supply risk can more than make up for the loss of somewhat lower production prices overseas.

     “Puerto Rico was a big manufacturer of life science products,” says Goldberg. And it could be again. Intel has large semiconductor manufacturing facilities in the U.S., and other companies could follow suit. But no matter what the industry, rebuilding capacity takes time and investment and also raises a question: “Do we have the technical capabilities to produce things in the U.S. that we haven’t produced in a long time?” he asks.

Smaller businesses also face disruption risks. Whether directly or indirectly, all businesses depend on supply chains. New COVID-19 variants could complicate risk mitigation efforts. Should new upswings in infections and resulting shutdowns occur anywhere in Asia or Europe, that could again affect supply chains and have “an impact on microsized and medium enterprises,” said Parra.

Whatever the industry, companies must consider operational and strategic adaptations they might have to make.

“People throw around the phrase ‘the new normal’ because it’s fun to say, but we have to think of what the implications of the new normal are,” says Giacomo Santangelo, a senior lecturer in economics at Fordham University. 

An example is video streaming. As people get out of isolation, chances are good that figures for streaming will drop and that audiences might shrink. “At this point, everyone in the United States of America who was going to get Netflix got Netflix,” Santangelo says. Where can companies in that space expand next?

People who feel uncomfortable near others as businesses reopen might demand bigger waiting spaces. In motor vehicle care, for example, one ­popular U.S. auto repair chain allows customers to stay in their cars while getting an oil change. Competitors might need to match the feature.

Images: Getty Images; Adobe Stock; Tim Herman/Intel Corporation; ZUMA Wire/imago; imageBROKER; Adobe Stock