Economic Impact and Photonics Industry Responses to COVID-19
Businesses around the world are reeling from the impact of the global COVID-19 pandemic. Disruptions to supply chains, demand, international trade flows, and travel, along with lockdowns and collapsing stock prices, have dealt a heavy blow to the global economy.
According to analyst IHS Markit:
• The United States, Europe, and Japan are headed for recession.
• The IHS Markit forecast for world real GDP growth in 2020 has been revised down to 0.7% in response to the spread of the virus. Growth below 2.0% is classified as a global recession.
• The number of active world cases is assumed to top out by the third quarter.
• Nevertheless, the result will be a U-shaped rather than V-shaped cycle, as a sharp reduction in near-term growth is followed by a slow recovery.
• Forecast risks are overwhelmingly on the downside and depend crucially on how governments respond.
• Central banks have already taken emergency actions, but the fiscal response is more uncertain.
• The recent sharp drop in oil prices will help energy consumers and hurt energy producers. The net effect on global growth is likely to be negative, but small.
Public Responses from the Photonics Industry
Public covid-19 responses from some of the largest SPIE exhibiting companies in the photonics industry are rounded up below. Every single company emphasizes the importance of protecting the health and safety of their employees, and those statements are not repeated here.
Raytheon, a US company that specializes in defense, civil government, and cybersecurity solutions, issued a memorandum to suppliers addressing the Defense Industrial Base (DIB), including these highlights: The DIB is identified as a critical infrastructure sector by the US Department of Homeland Security. Companies aligned with the essential critical infrastructure workforce definition are expected to maintain their normal work schedules.
Corning Optical Communications, US, announced donation of safety supplies to hospitals fighting COVID-19.
UK-based defense technology company BAE Systems is working to minimize impact to its operations. They referred to robust and evolving business continuity plans, and they are increasing support to existing charity partners.
Jenoptik AG, Germany, is reviewing their proposed dividend payment of €0.35. The Executive and Supervisory Boards will review the appropriation of profit and issue an updated proposal to the Annual General Meeting, if appropriate.
Applied Materials has withdrawn its business outlook for its FYQ2, due to COVID-19 impacting the company's supply chain and manufacturing operations. The company has manufacturing operations in multiple countries including the US, China, and Taiwan.
US-based KLA Corporation announced the KLA Foundation is creating a $2 million fund to focus on global relief efforts benefiting nonprofit organizations in regions with the highest number of individuals affected by COVID-19, and locations with high-risk populations. The two-phase charitable funding initiative will provide support for food banks, elderly communities, public hospitals and medical units, and educational infrastructure.
TRUMPF UK defined a "business resiliency plan" that describes their efforts to maintain their supply chain, which includes spare parts stock value of £1.5 million and the ability to procure any out-of-stock items from the central logistic center in Germany. They do not expect acute supply bottlenecks in the short term, since few of their suppliers are in China. However, this may change as US and Europe-based suppliers experience increasing movement restrictions.
FLIR, US, has experienced minimal disruption to the supply chain, and has contingency plans in place to mitigate potential disruptions as the situation evolves. They announced strong demand for their thermal cameras to be used in elevated- body-temperature screening, and are working to ensure that governments, first responders, and entities working to mitigate the spread of the virus have all appropriate resources.
Intel Corp., US, provided one million units of personal protective equipment, including masks, gloves, and face shields, from their factory stock and emergency supplies and donated them to healthcare professionals. Intel allocated $10 million for coronavirus relief, to be distributed to community foundations and organizations that are focused on food security, shelter, medical equipment, and small-business support. Intel also pledged an additional $50 million in a pandemic response technology initiative.
II-VI operates in over 60 locations in 18 countries. Their website notes that II-VI plays a key role in the supply chain for polymerase chain reaction (PCR) genetic sequencing instruments that are helping to determine the outcome of patient testing for COVID-19.
OptoSigma, US, supplies several critical infrastructure sectors that are required to maintain operations, including transportation, defense, energy, healthcare, water, and public works. OptoSigma will remain open only to provide the critical product and technical support needed for those businesses to effectively conduct operations.
ThorLabs, US, believes they have sustainable inventory, sufficient to support the continued availability of their products for the foreseeable future. Current lead times are reflected on their website and communicated by customer service teams at time of order placement.
Coherent has not yet experienced supply delays and has a business continuity plan in place to help mitigate supply issues. Manufacturing in California and Connecticut is impacted by stay-at-home mandates. Additionally, service in Italy, France, Spain, Indonesia, and the Wuhan area of China have limited ability to help customers due to government rules prohibiting movement of personnel for nonessential industries. Service for essential industries will continue.
* Due to the rapidly evolving situation, product availability could change. Check company websites for up-to-date information.
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