We know: the pandemic is transforming the global economy. In terms of production, safety is becoming almost more important than efficiency. What are the next changes?
The coronavirus won't go away anytime soon. The hopes of a return to normal are vain, misleading. Awareness of the dangers will also change our habits, and the future of the economy.
Social distancing will continue to guide our interactions, restaurants will change their face, open space offices will be partitioned and much less will go by elevator. Companies are trying to make themselves more resistant to sudden economic shocks, resilience will be the new guiding principle.
Industrial machine manufacturers have started shifting priorities from making the supply chain as cheap as possible to making it as secure as possible. Salespeople have used video chats instead of traveling around the world. The Zoom video conferencing platform today it is listed as the 7 major airlines in the world.
For months, perhaps for years, the States will resume a leading role, or at least of direction, also for the industrial economy. They will have to face the pandemic, reduce its economic consequences and support the restart. Give emergency aid, cheap loans, economic incentives. Guarantee a minimum wage, and fight speculation. A titanic task.
Welcome to Earth in the 20s
A world where security and governments will be central. Some think that many things will change for the better, that by slowing down the economy and increasing the principles of solidarity, society will be better. Someone else thinks that people never learn from disasters, proof of this is the first speculations on health products and bank loans.
However you see it, this crisis gives us no alternative: we have to trace different paths from the past. Global trends, after all, are the ones that have somehow produced this state of affairs. Mobility, excessive urbanization, devastation of the environment: we must put all of this on trial to build the future of the economy.
What will be the sentences?
Globalization and public debt are the main culprits. Two elements whose persistence will limit society's choices for years, perhaps decades to come. Technology will play an even more important role, hoping that abuse is replaced by a culture of its good use. Actually we need to build a healthy relationship with technology, it's not a question of quantity: we don't currently abuse technology. We are abused by technology, it's different.
Those who had remained behind in terms of globalization, keeping their production cycle within the company as much as possible, have suffered less from the effects of the pandemic and are preparing for a faster recovery. Being able to count on a local induced rather than relying on a distributed production on a planetary scale is a keystone in this period.
In addition to the need to make oneself “impermeable” from the crisis that can derive from excessive outsourcing, security is also fundamental for the supply chain. At the moment, its pre-eminence over price is total: both companies and customers know that it is better to have things a little cheaper, as long as they are safer. Another blow to globalization, with the need to have the supply chain under control and not take parts from the other side of the planet to be assembled thousands of kilometers away.
Companies that have a habit of producing only 5% internally (for example, Adidas) are preparing to face a period of intense storm.
The perception gained from this pandemic is profoundly transformative for the forty-year-olds, a category to which I belong. People like me, while growing up in a "two-bloc" planet, have experienced a constant process of globalization and the opening of borders since the fall of communism.
Today we are witnessing a profound turnaround, imagined even before implemented.
In lean times, putting hay on the farm is the primary instinct. But the world economy has long been going in the opposite direction, making capital circulate very quickly. Flexibility, agility, no warehouses, production on demand, or as they say "just in time". It was a dream for many, today it is a nightmare (Bianca Stancu spoke masterfully about it in this post on Futuroprossimo a few weeks ago). Warehouses are about to come back into fashion.
Internalising again will increase security and also prices, reducing profit margins. And how will the production system limit the damage? Probably with strong automation. Another likely player in the future of the economy.
Industrial robots do all kinds of jobs that were previously occupied by workers. Before the pandemic, the industry was preparing for the big leap in pushed customization, creating completely customized products (including cars) at mass-produced prices.
Robots can be used all day, they don't get sick and they don't have to go on vacation. They must not respect any social distancing. In short, they allow production to continue.
In summary, the future of the economy
De-globalization, high automation, localization pushed, state support for citizens left without work, incentive for the movement of knowledge and the conversion of working skills, digitalization of processes.