TO DATE, COVID-19 HAS SPREAD TO 215 COUNTRIES, INCLUDING SPAIN. IN EARLY MARCH, THE OECD (ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT) PREDICTED THAT GLOBAL ECONOMIC GROWTH WOULD DECLINE BY ONE HALF IN THE EVENT OF A SEVERE, PROLONGED CRISIS.
According to the Coronavirus report: with the global economy threatened, a longer lasting and more intensive coronavirus outbreak could cause global economic growth to slump to 1.5%, compared to 3.2% last year. In all cases, government response and coordinated action will be key.
On 23 April we attended the digital conference hosted by the Smarthlighting publishing company, wherein the CEO of Prilux, Carlos Alberto Pretel, offered his assessment and reflections about the new economic situation. He stressed that the recovery “will likely come in the shape of the Nike Swoosh. However, measures will be needed to stimulate the economy, just as they have been introduced to suspend it. It is very important that people feel safe, but stimulus must also be activated. If governments do nothing, recovery will be slower. I don’t think it will be an L-shaped or a V-shaped recovery, but if no measures are implemented, recover could take two or three years.”
“In a few months, when we have a vaccine, practices like social distancing, and wearing masks and gloves will pass. In my mind, we are mammals: we like to touch and engage in gestures of affection. My hope is that this will be like a nightmare we wake from, though not for those who have lost loved ones; they will never forget,” he added.
Since the State of Emergency was declared in Spain on 14 March with the publication of Royal Decree 463/2020, the government has implemented new sanitary and economic measures, many approved on weekends, forcing CEOs and executives to work non-stop—Saturdays and Sundays included—to stay abreast of the new decrees and take action for their companies.
“With the exception of the two-week suspension in March, coinciding with the Easter holiday, our sector has been able to continue its activity. In a country like Spain, tourism bears the brunt of the hardship because of its contribution to GDP. The sector is suffering considerably, not only from the closure of establishments but from the different messages issued by the government that do not help inspire confidence. I hope that soon, in the rebuilding phases, we will join forces while measures and initiatives are implemented, so all sectors, including tourism, can begin functioning. It’s essential! Stop equivocating and start building initiatives and communicating them nationwide to encourage and inspire us, so we can begin to make plans around them,” explained the Prilux CEO.
After 40 days of confinement, companies in general and the lighting sector in particular are thinking about returning to work. “It looks like we will have more concrete measures in May, but they may not have a substantial effect until June or July. We have a difficult summer in store as we wait for activity to return to pre-14 March levels. Public entities must take the initiative and drive the economy. If things are left in private hands or if obstacles appear, the recovery will be slower and more complicated,” Carlos Alberto Pretel pointed out.
The dysfunctional pace of other world economies
International companies, like Prilux, have the advantage or disadvantage that every country progresses at its own pace and operates according to its own schedule. While China was affected early in the year, Latin America is beginning to see the effects of the pandemic now. “When there were problems in China in January and February, we were concerned about supply, but now the problem has switched to demand, which we hope will reactivate as soon as possible.”
He added that “internationalisation gives us more muscle and capacity because, although the world is globalised, some countries are doing better than others. In our case, we focus on the nearest markets: in France there has been a sharp cessation, Eastern Europe (where the virulence of the virus is milder) is functioning rather well, Portugal acted very quickly and is working better than Spain, and Morocco is also doing quite well. Spain continues to be our most important market and we see activity gradually declining with no new projects underway. Right now, in manufacturing, we are still working flat out on orders in our portfolio, but we’ll see how things evolve in a few weeks… if new orders arrive.”
Government measures and the lighting sector
With regard to the economic and tax-related initiatives launched by the government, the head of Prilux feels that many were necessary and well-targeted, such as cash facilities through ICOs, but the volume of requests has overwhelmed the state and funds have not been released. “Tax measures are necessary but they fall short, especially if we compare them to those of other countries in Europe, for example, where they have been more effective,” adding that, “More measures should be applied.”
From Prilux, Carlos Alberto Pretel maintains that globalisation is here to stay, but progressively we will see local production stimulated, especially in basic industries. Local production will accelerate and will become a mainstay. “Of course, ‘Made in China’ will persist, but countries will be self-sufficient in many ways.”
In the lighting sector, “Spanish industry must offer innovation, creativity, and added value. They are very competitive products but they cannot compete with Asian prices. There are customers for every product: some seek a good price while others seek added value. We must listen to customers and propose solutions to surpass the Chinese. We have be the first to propose them,” said the Prilux CEO.
As a final reflection, Carlos Alberto Pretel asserted that “strength lies not in muscle, but in the ability to adapt. Companies that adapt will emerge stronger than before. New niches will appear and we can even reinvent ourselves, provided we adapt to what comes.”