Lessons learnt from Europe’s Industrial Sector during Covid-19

Looking at European economic examples, many lessons can be applied for the Lebanese Industrial sector.

Since the beginning of the pandemic and even in complete lockdown scenarios, European countries have allowed basic sectors, especially industry and services to work to secure life supplies and consumer goods for citizens.

This research aims to highlight the importance that has been given to the industrial sector in France, Germany, Italy and the UK and the measures that have been implemented by those government to keep the industrial sector operating normally.

Case Study: France

France registered its first Covid-19 case on November 12, 2019. Since then, the total number of cases has reached 3.2 million people, forcing the government to implement drastic measures such as lockdowns, curfews and total shut-down of non-essential businesses and other venues open to the public retail stores, shopping centres, and restaurants.
During, the first two weeks of the lockdown in March 2020, the industrial sector has operated at 50% of its capacity resulting in slow recovery in the following months. Some industries have never stopped operating such as Agri-food, Energy, Health and Water & Waste.

Considered essential and vital for the economy (12% of the GDP) and for the battle against the pandemic, the industrial sector has been supported by the government with tax and financial measures and kept operating even during the second lockdown.
France has chosen this political approach to ensure a self-efficiency for the country for health supplies, food and other
“essential to the life of the nation” industries.

1- Data from INSEE
2- Covid-19 Safety Measures from the French Ministry for Labour and Employment

Case Study: Italy

Government imposed a lockdown in the whole country between March’20 till end of May’20 and over Christmas and New Year yet some industrial sectors were exempted such as: plastics, paper, aluminium, chemical producers…

Measures were implemented to safeguard the manufacturing companies: tax exemptions for companies with revenues up to EUR250Mn in the fiscal year 2019; non-repayable of loans; ban on firing employees for economic reasons.
Italy is expected to receive 3.4m doses of Pfizer vaccine in the second half of January’21 and a significant number of Italians who want to be vaccinated will receive their shots by next September as declared the Italy’s special commissioner for the virus emergency.

1- Data from Statista
2- Covid-19 Safety Measures from the International Labour Organization

Case Study: Germany

The industry is at the heart of Germany’s strong export performance. The country is a world leader in many sectors, such as vehicle manufacturing, mechanical and plant engineering, and chemicals and pharmaceuticals. The 1st lockdown that began on the 22nd March and ended on 19th April 2020 was less restrictive than other European countries.

During the 1st lockdown, German authorities gave all factories the option to stay open through the pandemic. A partial lockdown was announced on the 2nd of November and is still going on until today. Hotels, theaters, opera houses, concert halls, sports facilities, sporting events, restaurants, pubs, bars, clubs, beauty salons were all closed. Factories are still operating. Employers ensure a safe working environment for the employees. As of January 20th, 1.297.430 persons were vaccinated since December 27.

1- Data from Destatis
2- Covid-19 Safety Measures from the German Federal Ministry for Labour and Social Affairs

Case Study: United Kingdom (UK)

The UK confirmed its two first 2019-nCoV (now COVID-19) infection cases, following France and Germany, on 31 January 2020 and has since then been witnessing an increase in coronavirus cases.
On 30 March 2020, the UK Department of Health has declared the Wuhan coronavirus outbreak as a serious and imminent threat to Britain given the number of confirmed COVID-19 global cases rising across the world with 19,784 cases reported in England, Scotland, Wales, and Northern Ireland and 1,228 deaths.

The UK government being on alert has taken several forceful measures such as: adding Italy to Category 2 countries so that travellers coming from Italy must self-isolate, announcing several nation-wide lock-downs (all non-essential stores, places of worship, gyms, libraries and playgrounds were closed). Regarding the impact on the UK economy, across all industries of business currently trading, 48% experienced a decrease in turnover as of end November 2020.

1- Data from Office for National Statistics & Labour Force Survey
2- Covid-19 Safety Measures from Her Majesty’s Government

Case Study: Lebanon

At the beginning of the pandemic in Q2 & Q3 2020, Lebanon handled well the crisis having low daily cases reported (between 0 to 100 cases). The government had imposed a total lockdown from March’20 to April’20.
At the beginning of this first lockdown, measures included the closure of all businesses (except some of the vital industries) and all public location such as universities, sports clubs and restaurants. Following this total lockdown, the Government approved a set of recommendations put forward by the
Association of Lebanese Industrialists, relating most notably to allow this sector to continue to function during the lockdown, conditional upon abiding by COVID-19 health and safety guidance and national curfew hours.

After, the Beirut port explosion in August 2020, cases started to increase with more than 1 000 daily cases. Following the Christmas holidays, and a controversial decision to keep everything opened, COVID-19 cases highly increased (peaking at +4750 daily cases) which resulted in the announcement of a total lockdown beginning of 2021 to prevent the collapse of the healthcare system.

1- Data from AIO, IMF, World Bank and Lirrate.com
2- Covid-19 Safety Measures from the United Nation Industrial Development Organisation & Ministry of Industry

What are the takeaways to be applied in Lebanon?

To save our industrial sector, we propose the following action plan:

  • Implement the UNIDO guidance on safety for the industrial sector
  • Respect the standard guidance of health safety such as mandatory face masks for employees, frequent cleaning and disinfecting surfaces, equipment and furniture or physical distancing measures between workers;
  •  Prepare the sites and offices to host employees safely;
  • Implement organizational measures such as: avoiding crowded spaces by staggering working hours;
  • Encourage remote working and manage the flow of employees within the working space; and
  • Suspend shared moments for employees, avoid the use of shared tools and ensure the conformity and proper functioning of ventilation systems.
  • The industrialists, at their expense, will carry out periodic PCR examinations for the workers of their factories and secure vaccines for them when the conditions for importing the vaccine permit;
  • On top of mandatory medical masks, the use of medical gloves whenever possible, as well as alcoholic gels for frequent disinfection of hands;
  • In function of the threat level (red, orange, yellow), the Industrialists will adapt their daily production capacity within ranges from 30% to 40% to 50%, 24/7;
  • Aprons, gowns, coveralls to be worn by employees when applicable; and
  • For Financial/Admin employees: work from home while implementing “data on cloud” to allow access to all files from everywhere. Printers and Internet bandwidth paid by employer, whenever possible.
  • Usage of the digital onboarding platform by potential borrowers, allowing them to submit their financing application and documents at the click of a button on CedarO2 online platform;
  • All files that are completed will then be reviewed and approved/rejected on a weekly basis by CedarO2 investment and credit committee and financing lines made available immediately after the legal documentation is completed and contracts signed electronically;
  • During the onboarding process on its digital platform, Cedar Oxygen will support remotely the finance/admin industrialist teams to implement “data on cloud” processes and allow access to all files from everywhere.

In conclusion

The multiple crisis Lebanon is facing since 2019 have led to a GDP collapse (-25% in 2020) and burgeoning unemployment and poverty (49% of total population is currently unemployed and 50% of the population is expected to live under the poverty line).
The economic contraction and reduction in global supply and demand as a result of the pandemic is likely to affect Lebanon’s ability to overcome and recover from the multiple crisis it is grappling with, not only in the short term but in the medium term as well.
In this context, the Industrial Sector stands as the sole value creator for the Lebanese economy and should be considered as the key foundation for its recovery, providing +190 000 jobs which consists of 24% of local work force in 2019 and generating in 2018 +$5bn added value to the GDP.

Press on this link to access this research in greater details