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Memories of Extraordinary Events, the Economy and Employment

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Memories of Extraordinary Events, the Economy and Employment- Back of the Envelope Thoughts From Right Recruiting

Sometimes during a 24-hour news cycle, it is hard to put things in perspective. Let’s take a trip down memory lane and try to give you a balanced viewpoint on the Coronavirus and its potential effects. Let’s compare previous situations to what is happening now:


The best starting point is 9/11. This was an unpredicted event that literally shut down a significant part of the economy for weeks and months, depending on location and industry. Sounds similar to now. Here are the things to remember:

1) The economy was already in a recession at that time. The 9/11 attacks prolonged the recovery significantly.

2) Right or wrong, it entangled the US in events thousands of miles away, which in also had unpredictable results and lengthened the recovery.

3) The unknown about how this would all play out in the future was the key factor in slowing business decisions. I started Right Recruiting in 2003. That was 1 ½ years after 9/11. The fear of the unknown lingered till about 2004. Remember the word unknown as we go through this analysis.


Our first worldwide epidemic in the era of a modern integrated economy. This happened within a few years of 9/11 and was the first warning shot about the dangers of a supply chain relying on one cheap but marginally reliable country. From both an economic and health perspective, the impact went away in 3 months.

In the US, SARS occurred in an economy still weakened by a soft economic recovery and 9/11. But there was less general health concern about SARS outside the supply chain world. Not sure why. Maybe a less intense news cycle minimized the urgency. It had minimal effect on the general public and certainly did not stop the headlong rush of businesses to outsource their supply chains to save costs. I think in general this never reached a national crisis point because there was no real fear – we knew what the flu was and what it does. There was confidence the problem would be solved and would go away. The future was predictable. There was no unknown.

The Second Iraqi War

Another 2003 event. Boy did I pick a year to start my business! I remember my first month in business listening to the war news on the office radio. It felt weird. While war was raging, it was odd to be making prospecting calls to find clients. Things slowed down for a few months as people got distracted but a quick end to the war generally got businesses back on track. Within 3 months things were headed to normal since the unknown had basically evaporated. The war over with minimal damage.


Another disease that affected our supply chain. This happened in 2009 in an economy already weakened by the 2009 recession. Did it have any societal effect? I don’t think so. Why? It was predictable. There was no unknown. It would run its course and go away, and a vaccine would be developed. We had seen that with SARS. It was Version 2.0. Most people do not even remember it.


I am no scientist – that’s for sure. But I remember similar situations like the ones above vividly and can draw some lessons from them.

There is no medical unknown with the Coronavirus. Like SARs and H1N1, it will be solved and solved quickly. Most knowledgeable people that I have read in the media and who I know personally talk about weeks. It’s not a question of if we will we solve the problem. It’s a question of how soon.

On the economic side, this is happening at a time of full employment and a booming economy. It is not happening in a recession. That is a HUGE plus. Once again, my contacts and most media commentators see a hit in Q1, a flattening in Q2, and a quick and large uptick in Q3 and 4. It will be interesting to see how our enforced abstinence from spending and socializing will end. My bet is a flurry of catch up activity. It’s not whether that happens. It’s how soon that happens.

There is no unknown with the Coronavirus. And it is happening in the midst of a strong economy, not a recession. It will end and people will make up for lost time. Damned up demand bursts out eventually.

Loser / Winners

I do think this will scramble supply chains. Candidly, it should. As with any disruption, there will be winners and losers.

Losers – any country or supplier that has risk, either politically or medically. For over a decade supply chain people have minimized that risk. Not anymore. Cost savings are meaningless if you can’t get a product to sell.

As an example of a tough calculation, from a medical risk standpoint, Mexico should be a large beneficiary of the supply chain scramble. But how do you factor the political risk of investing there? Does your new plant get nationalized in 2 years?

Winners – any small/mid-sized domestic manufacturer with the gumption to grab business. These are companies that have seen business and market share flow out for so long that they have almost given up hope. Now is the time for them to strike.

Puerto Rico – you may not remember but 20 years ago the island had a large pharma presence and most US pharma companies got tax breaks for putting manufacturing plants there. The argument can be made that, as those tax breaks were eliminated, those plants were closed and moved to Asia because of cheaper costs. That decimated to island’s economy AND put a critical industry supply chain in demonstrably unreliable hands. It’s time to think strategically, not just economically.

For 40 years, through recessions, disasters, wars and calamities we’ve been here to help businesses grow and we expect to continue that for years to come. Stay safe. Stay upbeat. Stay focused on the future. It’s closer than you think.