Companies face the unforgivable economics of corona virus

Companies from major retailers and package carriers to local restaurants and hairdressers are awakening to a new economic reality in the new coronavirus era: being open to business is hard to close.
With an indefinite period of high costs and suppressed demand to keep workers and customers safe, businesses are navigating the ever-narrow path to profitability. To do the math, some businesses cut services and jobs. Others are raising prices, including the imposition of coronavirus-related fees, with the goal of getting customers to share costs.
For large companies, the cost and risks of operating in a pandemic are already under consideration.


Walmart Inc., Target Corp. and Home Depot Inc. have realized more than $ 2 billion in wages, bonuses and additional expenses for workers in the early months of the pandemic. McDonald’s Corp. stipulates that franchisees who clean bathrooms once every half hour and have digital kiosks after each order reopen their dining rooms. Ford Motor Co. The company opened its American assembly plants for the first time in two months this week, and employees were forced to put the useless factories in Michigan and Illinois immediately after testing positive for Kovid-19.

Read :- The Covid surcharge

The stakes are high for small businesses, which operate on thin profits and small cash reserves. When they reopen weeks after the closure, they are facing a cost-to-earnings ratio that is most likely to be hit.

Food and other commodity prices have gone up. Employees need protective equipment at work. Increasing unemployment, security issues and restrictions on the number of customers allowed to serve a business are limiting sales. Some have tried to raise prices to ease the divide, but greeting customers staying at home with high costs is a delicate proposition.


Billy Youzar saw the addition of extra fare to diners’ tabs as a simple way to offset the high food prices at his West Plains, Mo., restaurant, Kiko Japanese Steakhouse & Sushi Lounge. This is more convenient than raising menu prices, because Mr. User said the fee can be updated at one point in the business’s point-of-sale computer.


Regular customers are supportive, but when a photo of Kiko receipt showing the Kovid-19 surcharge appeared on social media, people who had never been to his restaurant started calling to complain.
“People in this community and my actual customers don’t care,” Yujar said. “The backlash I get from these tweets.”

Read :- Corona Virus Lays Remake Silicon Valley Job Market


Mr. Yujar removed the surcharge and increased the menu prices.
Other small businesses are embroiled in a surcharge strategy.
Harman Halisi, owner of Dawn’s Super Subs in Woodland Hills, California, said the cost of meats such as pastrami, grilled beef and corn beef has gone up by up to 60%, and new policies mean employees spend 25% more time cleaning. In response, the store added a 75 cents surcharge to the $ 1 sandwich. Most customers understand that, Mr. Halisi said.

Corona Virus Lays Remake Silicon Valley Job Market

A few hours after Uber Technologies Inc. fired Joe Taylor, a hardware engineer began looking for a new job as part of the ride-sharing company’s far-reaching cost. What he sees is the Silicon Valley job market, which has lost its spark.


The tech industry was one of the most resilient sectors of the economy during the Kovid-19-induced recession. Microsoft Corporation and Amazon.com Inc. Reported strong sales growth in the first quarter. But major layoffs at large companies, including Uber and Airbnb Inc., and a host of smaller startups, have stirred up the notion that the tech industry has been prevented from widespread job destruction — and for many, the prospect of losing jobs could be easily replaced.


“Everyone is a little wary,” said Mr. Taylor, 38, who left earlier this month. There are fewer recruiters involved than in the last job hunt, and he has seized opportunities in companies large and small. The message from many recruiters is: “I don’t have anything right now, but stay in touch.”

deliveroo job cuts


During his 15-year career, Mr. Taylor has seen major ups and downs in the Silicon Valley job market, including during the 2008 financial crisis, at big companies such as Microsoft and San Bruno, the startup that manufactures California-based, sportive and wireless chargers. During its boom, companies offered great pay and benefit packages in the race to gain talent. Now, however, Mr. Taylor and other tech workers are signaling that the race has significantly cooled.

Read :- Global Business Activity Steadying

Earlier, Mr. Taylor said he would set his LinkedIn profile to show that he was open to opportunities, and recruiters would be flooded. “You flip that switch and you get 10 chances a week or something like that”. “This time, you flip that switch and you get two or three hits.”
Two weeks after the announcement of nearly 3,700 job cuts, Uber announced Monday that it would lay off another 3,000 people, making up a quarter of its total workforce. In recent weeks, Rival Lift Inc. said it would cut its staff by 17%, and Airbnb said it would cut jobs by 25% after bookings on its site declined with people unable to travel.

Read :- Job Market Long Road Back

Three accounts lost more than 10,000 positions earlier this month, more jobs were lost across Silicon Valley, and in the weeks following the Kovid-19 outbreak, the U.S. added nearly 36.4 million applications for unemployment benefits. Tech startups have seen more than 56,000 layoffs since the coronavirus pandemic, according to job-tracking site Layoffs.fi.

Many tech companies that have avoided job cuts have openly or quietly set up a hiring slowdown. Microsoft is among those in relief, which has temporarily suspended recruitment for certain roles while maintaining recruitment in strategically important areas, a spokeswoman said. Google, the search giant owned by Alphabet Inc., publicly announced a slowdown in hiring last month.

corona virus job cuts

Unraveling now could change the long-term prospects for job seekers in Silicon Valley. Recruiters and some executives have said they don’t expect tech hiring to rebound once the economic recovery begins. “I don’t think you see us re-entering the same level,” Nelson Chai, Uber’s chief financial officer, said recently.

Job Market Long Road Back

Many people who were fired this spring were expected to return to their jobs very soon. For many, it is now becoming increasingly clear that this is a wishful thinking.


While states encourage the return to normal before the Kovid-19s, restaurants, factories and other businesses say they will not open or do so with reduced staffing, when most allow. Federal Reserve Chairman Jerome Powellhaus warned the U.S. economy would take more than a year to recover.

april-unemployment-rate


The closures were sudden and rapid. In February, the unemployment rate hit a 50-year low of 3.5%, and many employers were concerned that it could attract workers. Weeks later, the biggest mass layoffs since the recession have taken place.

Read :- When It’s Time to Go Back to the Office?


The signature feature of this crisis is the blizzard of its chaos. States and employers facing uncertainties of the new disease have taken the placeholder action they deemed temporary. Government programs encourage employers to keep workers on their payroll. Now, by some estimates, of the more than 21 million workers laid off in March and April, only half will be able to return to their old jobs.


It took a while for the mood to sink into the new landscape.

Lockdowns were initially short-lived. Although they expand, most companies prefer furry workers rather than permanently cutting relationships. Unemployed workers usually do not feel very enthusiastic about getting their jobs back. But the Labor Department said that in April, 88% of the unemployed were temporarily quoted because of job losses, meaning they would return to the same job within six months.

In normal times, most laid off workers do not expect to return to the same job. With businesses suddenly shutting down this spring, most of them have only seen their job losses as temporary, and now the hopes are up.

April’s reading, which has been very promising since records began in 1967, indicates that many have quit their jobs with the promise that they will return.

Read :- Coronavirus Case Counts in 50 States Indicate Vast Differences


Since then, many national retailers have filed for bankruptcy protection. JC Penny Co, which closed its stores on a temporary basis in March, said it would permanently close 240 locations, or about 30%, on Monday. Pier 1 Imports Inc. The plan was to reopen some stores by June 1, instead shutting down good stores. Goodyear Tire & Rubber Co. After the recent suspension of the Alabama plant, and other U.S. operations in March.


Permanent layoffs will result in more factories as consumer spending decreases. Airlines have warned employees this fall could be slowed, with signs suggesting a strong recovery may take years. And in communities across the country, restaurants and other small businesses are closing shop for good.

Corona virus is rapidly spreading in rural communities with an aging population

The coronavirus is spreading from pandemic cities to rural communities, which make up a large proportion of older, at-risk residents, which puts pressure on local health care systems and many governors to easily reopen financial limits and reopen for business.

A Wall Street Journal analysis of data compiled by Johns Hopkins University shows that in the two weeks between April 20 and May 4, newly confirmed Covid-19 cases in non-metropolitan areas outperformed those in metro areas by 30%.

The virus has spread to nonmetropolitan areas, where resources for testing and medical care are in short supply, creating new dilemmas for state officials who decide when and how much to relax rules at home.

April 4 to May 4

An analysis of the Carsey School of Public Policy at the University of New Hampshire shows that rural areas often have higher rates of elderly residents who experience high mortality rates when exposed to coronavirus.

Older people are more likely to experience a more serious case of the virus, which requires intensive care and ventilator use, says Kenneth Johnson, a demographer at the University of New Hampshire. Combined with other factors, such as a lack of access to more advanced medical care and a higher prevalence of underlying conditions, the virus can cause damage if it spreads in rural counties.

“If the disease spreads in these places, age will be counterproductive,” Mr Johnson said. “Pile on other factors, which will only make it worse.”

Mr. Johnson used age-specific mortality estimates from new research on the Kovid-19 pandemic in China. The results were applied to each county using age estimates from the entire U.S. population age structure and the Census Bureau. His mortality estimates are based solely on age and do not include other risk factors such as pre-existing conditions or access to health care.

Local health systems in rural areas are more vulnerable to stress than metropolitan areas. According to an analysis by the Kaiser Family Foundation, there are about 10 times more intensive care beds in metro areas than in rural areas not adjacent to the metro area.

Nonmetropolitan areas also have older and sicker populations. More than 26% of those living in these areas are 65 or older, compared to 21% in metro areas.

Of the 2,200 counties reporting new coronavirus cases for the week ending May 10, 80% supported President Trump in the 2016 election. The epidemic first occurred in urban areas, which voted overwhelmingly for Hillary Clinton. The virus has increased in many places, including New York City, and in the past week, new cases have dropped 12% in Clinton counties.

When It’s Time to Go Back to the Office?

Someday the coronavirus pandemic will leave a grip on our lives and we will return to office. The question is, will the office be able to return when all of this is over?

The changes in the business world are seriously considering rethinking the space that is central to corporate life. Large cities have fewer offices and more hybrid schedules that allow workers to be part of a weekly home and have more elbow room, as companies free up space for social distance. Smaller satellite offices can also pop up in less expensive areas, as the workforce becomes less centralized.

In San Francisco, Twitter Inc. This week employees were told that they could continue working from home indefinitely. Canadian information-technology provider OpenText Corp expects to close more than 120 of its offices worldwide. And New York Media Company, Skift Inc., is leaving its Manhattan headquarters when the lease expires in July.

These amendments could have a profound effect on the millions of workers who define their work as “office” rounds daily, the consequences of which are not yet known. Some workers in coastal cities can take their current wages to live on less. But those workers can easily be replaced offshore, where costs are even lower. Employees gain flexibility, but they may lose temporary relief from domestic responsibilities and exchange ideas in more effective ways. If traditional offices, such as free food and bike storage, are no longer needed, big companies save on real estate costs, but they may struggle to outperform smaller firms for the best talent.

The excitement for the new definition of a traditional office is diminishing, as companies seek new ways to reduce costs during the recession, which is expected to be the worst since the Great Recession. Many executives also point to the success of the unprecedented experiment, and how low productivity is affected after millions of employees in technology, media, finance and other industries are forced to work remotely for months.

“I mean, if you say three months ago that 90% of our employees work from home and the company is doing well, I say I’m ready for the test because the trouble is that Morgan Stanley chief executive James Gorman said on the bank’s earnings call in mid-April.

The biggest disadvantage of the reimagineing office is the commercial real estate market and the large institutional investors who invest heavily in it. Pension funds, insurance companies and other companies have spent billions of dollars to buy large city office towers in cities. They rely on constant tenant demand, which now appears to have slowed.

This does not mean that town offices will soon disappear. Leases are difficult to tear down, and some companies want to completely ditch the office. There were other periods in the late 20th century when the center-city office building was mistaken, as some companies saw suburban office gardens and the decline of the post-9/11 trauma. The centralized office building has proven surprisingly flexible every time.

Many people associated with the real estate industry still say they have no choice but to put all employees under one roof. Will Silverman, managing director of real estate, says, “One of the most important aspects of American business over the past few decades is establishing a culture of vision – the idea that proper corporate culture can make your company a success.” Investment banking firm Eastdill Secured LLC. “I don’t know how you establish a culture in people who only get together a few days a week.”

“I think groups cannot solve conflicts and problems on productivity,” said Scott Wynn, CEO of Polaris Inc., maker of snowmobiles, motorcycles and other vehicles. He added that 80% of Polaris engineers currently work remotely in jobs that require cooperation. “Engineering is a hiccup, we can’t even repeat it here at home. You can’t really share your screen,” said Mr Vine.

At the moment, he is not re-examining the office space of the Madin-based Medina. In a video that he shared with 14,000 employees this week, Mr Vine personally praised the benefits of exchanging ideas. “A lot of people haven’t been in office for two months and embraced it, but that’s not something I want to keep forever,” he said in an interview.

Other companies are trying to find a middle ground between working from home and working from a large corporate office. They are also looking to open small satellite offices where employees live. He said workers would like to get out of the house but not start a long train to the city, which is of great concern as employees prepare to go back to work.

Some brokers and analysts say the epidemic could resurface suburban offices that have been struggling with overcrowded space for years. The rise in remote work will ease pressure on the country’s hottest property markets and lead to economic growth in remote areas.

Opening small offices in leafy suburbs saves considerable cost. According to Moody’s Analytics REIS, suburban fare is on average 40% lower than cities.

The congestion in the suburbs has reversed the trend of the past two decades, with more and more companies moving to city centers to attract job opportunities. For example, General Electric Company opened its headquarters in Fairfield, Conn., In 2016 to attract partially talented young employees in Boston. Announces changing from. Cities have invested heavily in their centers, built public transportation, and provided tax breaks for companies. By appealing to the millennial workforce, neighborhoods like Brooklyn have become workplace destinations.

James Ritman, executive vice president of brokerage Newmark Knight Frank, which specializes in office leases in the New York suburbs, says Sunburn is receiving daily inquiries from Manhattan-based companies that want to open the office because their officers are not trained. I don’t want to take it anymore in the city. “In my 18 years in Westchester and Fairfield counties, I don’t have this kind of speed when looking at crowds from Manhattan,” he said.

Access Management Company Acta Inc. It gives more employees the option to work remotely, and plans to open smaller offices in different cities to allow their employees to enter the workplace without having to travel long distances. This will enable more employees to move to cities where the cost of living is lower, said Armen Vartanian, senior vice president of Global Workplace Services.

Acta encourages leaders to hold daily virtual meetings so that employees can interact. The company has a fitness app where employees can login, move and compete with each other and win prizes for crossing certain milestones. In the long run, the company is considering hosting a speaker series or learning events to encourage its employees to come together.

“I think companies are going to transition to this model, where there is still space to negotiate in the workplace, but the real estate sectors will be cut,” Vartan said.

This is bad news for many big developers. Over the past decade, these companies have built up expensive new skyscrapers, such as the Hudson Yards in New York and the Salesforce Tower in San Francisco, which have pension funds and debt. Between 2010 and 2019, investors spent nearly half a trillion dollars on office assets in central business districts, according to data firm Real Capital Analytics. With tech companies moving to bigger and bigger offices and leasing young professionals to cities, the demand seemed endless.

Now, it’s drying up. According to research firm Moody’s Analytics REIS, the vacancy in the US office is currently 16.8%, up from 19.4% by the end of the year. This surpasses the previous record set in 1991, as the business shut down shutters and workers. Big city office rents are falling as companies drop workers and sign leases.

A more permanent change to remote work means the office market will not fully recover from the recession. “This is a national setback,” Mr. Kalonog said.

In a survey of corporate real estate users in late April by trade group Core Net Global, 94% of respondents said they would spend more time working remotely even after the epidemic ended. 69% said they use less than 51% of real estate in March as a result of remote work.

New York City-focused office owners are already under pressure as investors are angry over rent payments and declines in property prices. Shares of SL Green Realty Corp and Vornado Realty Trust have declined 59% and 47% since the beginning of this year, while the S&P 500 Index has declined 11%.

“The supply and demand of office space can change significantly,” Warren Buffett said at the Berkshire Hathaway Inc. annual meeting earlier this month. “When the world changes, you adjust it.”

Traditional offices have been around for 1,000 years and are no longer disappearing, Vernado chief executive Steven Roth said in a recent call with analysts. He said the workplace cooperation is a “winning ticket” and some people want to work in pajamas with their children.

“Please don’t be too comfortable working from home,” the analysts said at the end of the call. “We want you to pay rent in the office and in our buildings.”