The Impact of COVID-19: Diverse Expectations Facing a Single Reality in Latin America
Responses to the survey conducted by Mundo PMMI reaching 432 entrepreneurs and professionals from various CPGs in Latin America reveal uncertain and contrasting views of the COVID-19 pandemic.
RIO DE JANEIRO, BRAZIL - JULY 03: Health Surveillance Inspectors with the support of the Municipal Guard inspect bars and restaurants amidst the coronavirus (COVID-19) pandemic on July 3, 2020 in Rio de Janeiro, Brazil. The agents stepped up their operations after reports of agglomeration and non-compliance with security rules during the easing and reopening of commerce in the city of Rio de Janeiro.(Photo by Andre Coelho/Getty Images)
A few weeks after implementing confinement measures adopted by Latin American countries to counter the COVID-19 emergency, Mundo PMMI carried out a survey amongst its readers throughout Latin America asking them about the impacts those would have on their operations.
Now, after a second inquiry that included managers and directors (100), sales personnel (80), operations and manufacturing chiefs (77), engineers (49), package designers and developers (31), logistics and supply chain managers (24), plus other forty professionals from purchasing and control departments, we wanted to know what the expectations facing the return to a “new normal” were.
Participants represent the work of industry sectors for which packaging is fundamental to supply and towards satisfying the basic needs of the general population, such as companies that produce food and beverages, health-care products, cosmetics and personal care supplies, and other mass consumption packaged goods.
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Initially, we looked for information about what areas within companies were the most impacted by the pandemic, and the answers overwhelmingly showed that operations and manufacturing areas were most impacted, followed by issues regarding labor and the provision of supplies and raw materials.
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But perhaps first-hand opinions might better describe the situation currently facing CPGs. On the subject of operations and manufacturing, the impacts vary in magnitude as witnessed through observations ranging from “we had to shut down the plant, initially in response to the pandemic and then due to lack of orders” to “actually, the pandemic has not impacted us and everything is within the normality”, with “sales have been reduced and as consequence manufacturing has slowed down” in the middle.
But the fact remains that this world-wide health crisis has negatively affected Latin American CPGs, although they are enduring it with determination and taking innovative actions. At first, as the data from the first survey conducted in March showed, nearly half of participating companies (42%) reported considerable supply chain interruptions, which generated availability difficulties for ingredients, packaging materials, spare replacements parts, among other elements essential to their operations. Nowadays, according to more recently obtained responses, issues with supply chain occupy the third place among their concerns, being operations and labor the leading subjects dragging their attention.
From statements made by respondents to the most recent survey, the weight that labor exerts over a company’s performance can be inferred: “We now require personnel in all areas”, mentioned a Mexican entrepreneur, in addition to confirmed infectious cases or the reduction of the workforce due to some having to stay at home because of preexistent health conditions or a higher vulnerability.
Perhaps, what best summarizes the impact that labor has on the reduction of manufacturing rates of some companies is the claim of one of the interviewees, who said that “we were unprepared for such a situation, where all the weaknesses that create a chain of capacity deficiencies from personnel, lack of technology and scarceness of resources to face such a crisis come to light”.
Three Scenarios after the Pandemic
The COVID-19 pandemic, with its resounding effects over the dynamics of all aspects of everyday life, has also acted as a thermometer of organizations’ and businesses’ health. Among them, companies in the packaged mass consumption goods manufacturing sector.
When we asked survey participants about the foreseeable future of their businesses in a post-pandemic environment, the widespread answer was “worse than before the COVID-19 surge”. The outcome makes sense and the reasons that explain it have a solid base on reality: “Demand will be slow at reaching those levels previous to coronavirus; purchasing power is largely depressed and many unemployed consumers will acquire only indispensable goods. Our costs follow an upward trend and it will take time for the supply chain to normalize”, was what summarized the horizon after overcoming the crisis, as seen by one of the entrepreneurs.
These consequences are not by themselves the framework of pessimism within companies; the general deterioration of the economy and the lingering threat of recession, the relegation of new product development to a secondary stage, as well as the interruption of technological modernization plans, are also components of this uncertain climate for the majority of participating companies.
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Although the facts confirm that disruptions to the normal flow of manufacturing and commerce are the main factors defining a general panorama, it is also interesting to watch how expectations of a post-crisis landscape include points of view that put aside pessimism to evaluate the future with realism, and even with the anticipation of new opportunities.
For 26.7% of respondents, expected conditions are no different from those previous to the coronavirus outbreak: their reasons are clear and encompass a variety of considerations and fields of action, as the following testimonies show.
“We are part of the essential industrial chain, so at any time we will resume business as usual”, one businessman stated, reaffirming the role that many sectors play in warranting the citizens’ livelihoods. “Along with the reactivation of economic activities, workers will gradually return to their jobs, and in a short time the situation might return to normal”, is the vision of another participant in the Mundo PMMI survey. “Probably, sales will remain within the recent years’ average”, another entrepreneur pointed out as the backend of his expectations of continuity of normal operations, a forecast complemented by one of his colleagues with a more emotional argument: “things will reassemble because people will be anxious to work and get by”.
The impact of the COVID-19 pandemic has been diverse among companies and, thus, expectations that industry leaders might hold are not comparable in an environment in which the emergency has been resolved. Still, it might also be a matter of confidence, the capacity to face adversity or mere optimism, what has led a wide number of participants in our Mundo PMMI survey to suggest the idea that, in the near future, things might be better than before.
The arguments for the expectation of a positive outcome are diverse and encompass conditions that may allow for the surge of new business niches; as this crisis has imposed the obligation to work other resources and in new manners; a reduced competition, in some cases; considering the situation as a kind of re-start; or the use of new and alternative ways of production and commercialization. “Crisis are opportunities to optimize resources and to point them towards a higher output. We have learned to do things in a more efficient manner”, answered with conviction one of the interviewees to the question of his company’s future, once all current difficulties have been left behind.
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