1 00:00:05,080 --> 00:00:10,360 Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's day thirty four 2 00:00:10,640 --> 00:00:15,400 Speaker 1: since coronavirus was declared a global pandemic. Our main story 3 00:00:15,440 --> 00:00:20,720 Speaker 1: today what the coronavirus outbreak means protect giants Apple and 4 00:00:20,880 --> 00:00:25,439 Speaker 1: Amazon with hundreds of thousands of employees globally and a 5 00:00:25,560 --> 00:00:29,080 Speaker 1: complex supply chain that's spread around the world. The fate 6 00:00:29,120 --> 00:00:32,040 Speaker 1: of these companies tells us a lot about the world economy. 7 00:00:32,960 --> 00:00:48,960 Speaker 1: But first, here's what happened today. The shape of the 8 00:00:49,120 --> 00:00:52,920 Speaker 1: long term damage coronavirus has done to the global economy 9 00:00:53,320 --> 00:00:57,480 Speaker 1: is starting to come into view. The International Monetary Fund 10 00:00:57,560 --> 00:01:01,000 Speaker 1: said that what they're calling the Great law Down Recession 11 00:01:01,280 --> 00:01:05,679 Speaker 1: will be the steepest in almost a century, and if 12 00:01:05,720 --> 00:01:09,560 Speaker 1: the virus lingers or returns in waves, things could be 13 00:01:09,600 --> 00:01:13,279 Speaker 1: even worse. The i m F predicted in its World 14 00:01:13,319 --> 00:01:17,160 Speaker 1: Outlook report that the global economy would shrink by three 15 00:01:17,200 --> 00:01:21,280 Speaker 1: percent this year. It would be the deepest dive since 16 00:01:21,319 --> 00:01:26,360 Speaker 1: the Great Depression. In the US, White House Economic advisor 17 00:01:26,480 --> 00:01:30,000 Speaker 1: Larry Cudlow said that the three hundred forty nine billion 18 00:01:30,040 --> 00:01:33,440 Speaker 1: dollars that had been allotted to help rescue small businesses 19 00:01:33,480 --> 00:01:36,320 Speaker 1: in trouble because of the outbreak will run out of 20 00:01:36,360 --> 00:01:41,000 Speaker 1: money as early as this Thursday. The money was part 21 00:01:41,080 --> 00:01:44,319 Speaker 1: of the two point to trillion dollar stimulus package that 22 00:01:44,440 --> 00:01:48,360 Speaker 1: Trump signed into law late last month. A plan to 23 00:01:48,400 --> 00:01:51,160 Speaker 1: add an additional two hundred fifty billion dollars to the 24 00:01:51,240 --> 00:01:56,920 Speaker 1: Small Business Association program has stalled in Congress, and a 25 00:01:56,960 --> 00:01:59,880 Speaker 1: new report from McKinsey adds to the growing evidence that 26 00:02:00,080 --> 00:02:04,919 Speaker 1: COVID nineteen is taking a disproportionate toll on America's black population. 27 00:02:06,000 --> 00:02:09,720 Speaker 1: The disease is more likely to kill Black Americans, and 28 00:02:09,880 --> 00:02:13,440 Speaker 1: for those who survive, the pandemic will take a devastating 29 00:02:13,480 --> 00:02:18,840 Speaker 1: toll on their jobs and future earning potential. Black Americans 30 00:02:18,880 --> 00:02:21,960 Speaker 1: are more likely than white Americans to have underlying health 31 00:02:22,000 --> 00:02:26,000 Speaker 1: conditions that exacerbate the effects of the virus. They're also 32 00:02:26,160 --> 00:02:34,880 Speaker 1: overrepresented in high contact essential services. And now for today's 33 00:02:35,040 --> 00:02:41,800 Speaker 1: main story, big tech versus the virus. The coronavirus has 34 00:02:41,840 --> 00:02:45,520 Speaker 1: dealt a severe blow to the global supply chain, with 35 00:02:45,760 --> 00:02:48,960 Speaker 1: fewer workers to produce certain goods and a sudden surgeon 36 00:02:49,040 --> 00:02:52,600 Speaker 1: people demanding them. There have been shortages of everything from 37 00:02:52,720 --> 00:02:57,320 Speaker 1: life saving equipment like ventilators two household staples like toilet 38 00:02:57,360 --> 00:03:01,720 Speaker 1: paper two of the world's big guest companies, Apple and 39 00:03:01,760 --> 00:03:05,440 Speaker 1: Amazon rely on a supply chain for electronics and goods 40 00:03:05,560 --> 00:03:09,040 Speaker 1: that is spread all across the world in many countries 41 00:03:09,040 --> 00:03:12,520 Speaker 1: that have been hardest hit by the coronavirus. The Czech 42 00:03:12,600 --> 00:03:16,240 Speaker 1: giants employ hundreds of thousands of people, so their fate, 43 00:03:16,400 --> 00:03:20,000 Speaker 1: in many ways is the fate of the global economy. 44 00:03:20,800 --> 00:03:23,160 Speaker 1: To take a close look at how badly hit these 45 00:03:23,160 --> 00:03:25,880 Speaker 1: companies will be by the virus and what they're doing 46 00:03:25,919 --> 00:03:30,480 Speaker 1: about it, here's Bloomberg's head of Global Tech coverage, Brad Stone. 47 00:03:33,400 --> 00:03:36,120 Speaker 1: The tech industry is caught in the middle of the 48 00:03:36,200 --> 00:03:39,840 Speaker 1: chaos at COVID nineteen is unleashed on the global economy. 49 00:03:39,920 --> 00:03:41,760 Speaker 1: We spend a lot of time here on the tech 50 00:03:41,760 --> 00:03:45,040 Speaker 1: team covering Apple and Amazon and the other big tech companies, 51 00:03:45,400 --> 00:03:48,640 Speaker 1: and they once seemed invincible, and now they too are 52 00:03:48,680 --> 00:03:51,960 Speaker 1: swaying under the pressure of this global pandemic. I'm here 53 00:03:51,960 --> 00:03:54,040 Speaker 1: with one of our stellar reporters to break it down, 54 00:03:54,360 --> 00:03:58,160 Speaker 1: Mark German. Let's start with Apple. Apple supply chain is 55 00:03:58,200 --> 00:04:00,000 Speaker 1: often hailed as one of the best in the world. 56 00:04:00,000 --> 00:04:04,040 Speaker 1: Old Tim Cook, Apple CEO, really made his name over 57 00:04:04,040 --> 00:04:07,280 Speaker 1: the course of two decades assembling a network of manufacturers 58 00:04:07,280 --> 00:04:10,760 Speaker 1: in China that could mass produce products like the iPhone. 59 00:04:11,200 --> 00:04:14,520 Speaker 1: And so when the coronavirus first hit China in December, 60 00:04:14,920 --> 00:04:18,280 Speaker 1: you know, how did Apple and its manufacturing partners respond. 61 00:04:19,160 --> 00:04:22,680 Speaker 1: Right when coronavirus hit, you know, Apple supply chain immediately 62 00:04:22,720 --> 00:04:25,640 Speaker 1: came into focus, and you know, it was nearly decimated 63 00:04:25,720 --> 00:04:28,599 Speaker 1: depending on how hard this was gonna hit the area 64 00:04:28,600 --> 00:04:31,560 Speaker 1: where Apple's factories are across China and other parts of Asia. 65 00:04:32,080 --> 00:04:35,200 Speaker 1: And what really slowed this down was this hit during 66 00:04:35,240 --> 00:04:37,560 Speaker 1: the Lunar New Year holiday, where lots of workers and 67 00:04:37,600 --> 00:04:40,320 Speaker 1: Fox On other facilities or elsewhere in China and in 68 00:04:40,320 --> 00:04:42,840 Speaker 1: the world visiting family. So what they had to do 69 00:04:42,960 --> 00:04:45,400 Speaker 1: was they had to quarantine for about two weeks or 70 00:04:45,440 --> 00:04:48,320 Speaker 1: maybe more in some cases upon return, which slowed down 71 00:04:48,360 --> 00:04:50,880 Speaker 1: the return to work process. But as we sit here 72 00:04:50,880 --> 00:04:54,440 Speaker 1: today in early April, Apple supply chain in China is 73 00:04:54,480 --> 00:04:56,920 Speaker 1: nearly back up to speed. I mean, do you think 74 00:04:56,960 --> 00:04:59,920 Speaker 1: Apple and and companies like Fox Con were in part 75 00:05:00,160 --> 00:05:03,440 Speaker 1: fortunate that workers weren't crowded into those factories where they 76 00:05:03,440 --> 00:05:05,479 Speaker 1: could have spread the virus. Yeah, you know, bred that 77 00:05:05,480 --> 00:05:08,200 Speaker 1: that's a good point that they are fortunate in that sense. 78 00:05:08,240 --> 00:05:11,080 Speaker 1: That people were elsewhere. They weren't all crowded together hundreds 79 00:05:11,120 --> 00:05:14,200 Speaker 1: of thousands of people in dorms and inside the factory floors, 80 00:05:14,360 --> 00:05:16,920 Speaker 1: versus the spread that would have come into place if 81 00:05:16,960 --> 00:05:19,240 Speaker 1: you had those hundreds of thousands of workers all there 82 00:05:19,240 --> 00:05:21,800 Speaker 1: together at the same time for the entire period of 83 00:05:21,800 --> 00:05:24,360 Speaker 1: the virus. This probably did end up saving a lot 84 00:05:24,400 --> 00:05:26,960 Speaker 1: of lives just by the fact that this was during 85 00:05:26,960 --> 00:05:30,119 Speaker 1: that holiday period. So I think in the popular imagination, 86 00:05:30,520 --> 00:05:34,320 Speaker 1: Apple supply chain is sort of concentrated in China, but 87 00:05:34,480 --> 00:05:36,960 Speaker 1: really it's spread out, and now, of course the pandemic, 88 00:05:37,040 --> 00:05:40,080 Speaker 1: unfortunately has spread out. So how has Apple fared elsewhere 89 00:05:40,120 --> 00:05:43,039 Speaker 1: in the world. Yeah, that that's true, Brad. China is 90 00:05:43,080 --> 00:05:47,040 Speaker 1: basically the the engine for final assembly, but a lot 91 00:05:47,080 --> 00:05:49,840 Speaker 1: of the components are sourced from all over. You see 92 00:05:49,880 --> 00:05:53,960 Speaker 1: Apple being very impacted in places like Israel and South 93 00:05:54,080 --> 00:05:57,720 Speaker 1: Korea and Italy and London and other parts of Europe 94 00:05:57,760 --> 00:05:59,839 Speaker 1: and Middle East that are hit by coronavirus. So this 95 00:05:59,920 --> 00:06:01,960 Speaker 1: is going to take some time to to smooth through. 96 00:06:02,400 --> 00:06:05,159 Speaker 1: But you know, it's really hard to take hold of 97 00:06:05,160 --> 00:06:08,919 Speaker 1: the situation because Apples a global company and this is 98 00:06:08,960 --> 00:06:13,640 Speaker 1: a global pandemic and Brad, You're the expert on all 99 00:06:13,720 --> 00:06:16,479 Speaker 1: things Amazon, so I should really ask you, how is 100 00:06:16,520 --> 00:06:19,440 Speaker 1: this global giant being impacted in terms of being that 101 00:06:19,560 --> 00:06:22,560 Speaker 1: logistics company that can bring anything to your home? How 102 00:06:22,600 --> 00:06:25,080 Speaker 1: is that being changed because of the coronavirus. Yeah, I 103 00:06:25,120 --> 00:06:27,640 Speaker 1: would say everything has changed, and they've made some difficult, 104 00:06:28,040 --> 00:06:32,159 Speaker 1: perhaps impressive, but very controversial choices in their fulfillment centers. 105 00:06:32,440 --> 00:06:35,880 Speaker 1: These are the hundreds of warehouses really across the world 106 00:06:35,960 --> 00:06:39,520 Speaker 1: at store and then ship products to people's homes. The 107 00:06:39,600 --> 00:06:42,840 Speaker 1: first thing that Amazon did was they really prioritize the 108 00:06:42,839 --> 00:06:47,839 Speaker 1: shipment of essential products, so groceries and medical equipment. You know, 109 00:06:47,920 --> 00:06:50,719 Speaker 1: you used to end the good old days be able 110 00:06:50,760 --> 00:06:53,640 Speaker 1: to get everything within a day if you're a Prime member, 111 00:06:53,880 --> 00:06:56,720 Speaker 1: and now it takes sometimes days or even weeks if 112 00:06:56,760 --> 00:06:59,880 Speaker 1: you're ordering something like say a book, you know, the 113 00:07:00,000 --> 00:07:03,440 Speaker 1: original item that Amazon used to sell. But of course, 114 00:07:03,440 --> 00:07:06,160 Speaker 1: Bred being a company with tens of thousands of workers 115 00:07:06,200 --> 00:07:09,359 Speaker 1: in these warehouses, dealing with these new requirements in the 116 00:07:09,400 --> 00:07:13,000 Speaker 1: middle of a global situation like like the coronavirus, they 117 00:07:13,120 --> 00:07:15,600 Speaker 1: might not all be happy. Right. What's the union, the 118 00:07:15,720 --> 00:07:20,280 Speaker 1: labor the whole pr situation that everyone's talking about around that. Yeah, 119 00:07:20,280 --> 00:07:22,320 Speaker 1: there are a couple issues. I think the biggest one 120 00:07:22,360 --> 00:07:25,280 Speaker 1: is safety. You know, Amazon, like a lot of other companies, 121 00:07:25,600 --> 00:07:30,160 Speaker 1: wasn't able to get ahold of the personal protective equipment 122 00:07:30,240 --> 00:07:34,200 Speaker 1: like like masks that it really needed to ensure the 123 00:07:34,200 --> 00:07:37,040 Speaker 1: safety of its workers. And those workers have to come 124 00:07:37,040 --> 00:07:40,720 Speaker 1: into some you know, sometimes very crowded facilities, work shoulder 125 00:07:40,760 --> 00:07:43,680 Speaker 1: to shoulder, and they're taking a big risk. And you know, 126 00:07:43,720 --> 00:07:46,280 Speaker 1: they asked Amazon to do more. You know, Amazon, to 127 00:07:46,360 --> 00:07:48,840 Speaker 1: its credit, you know, raised that it raised their wages 128 00:07:48,880 --> 00:07:51,320 Speaker 1: by a couple of dollars. It offered things that it 129 00:07:51,400 --> 00:07:54,840 Speaker 1: hadn't offered in the past, like paid sick leave or 130 00:07:54,920 --> 00:07:59,160 Speaker 1: workers who had signs of the virus and unlimited unpaid leave. 131 00:07:59,600 --> 00:08:02,640 Speaker 1: And yet you know, we saw workers really um you know, 132 00:08:02,720 --> 00:08:05,120 Speaker 1: asking them to do more and making their voices heard. 133 00:08:06,000 --> 00:08:08,480 Speaker 1: So what is you know, Amazon doing about these efforts 134 00:08:08,520 --> 00:08:12,800 Speaker 1: to organize unions in these facilities. There's a developing situation 135 00:08:12,840 --> 00:08:16,000 Speaker 1: that really illustrates how Amazon is thinking about it. There 136 00:08:16,080 --> 00:08:20,040 Speaker 1: was a longtime Amazon worker named Christian Smalls who organized 137 00:08:20,120 --> 00:08:23,520 Speaker 1: a protest at the Staten Island facility, and actually a 138 00:08:23,600 --> 00:08:26,520 Speaker 1: day after the protest, he announced live on Bloomberg TV 139 00:08:26,920 --> 00:08:29,280 Speaker 1: that he had been dismissed by Amazon. He said the 140 00:08:29,320 --> 00:08:33,680 Speaker 1: company accused him of exposing other workers to the virus. Well. 141 00:08:33,720 --> 00:08:37,320 Speaker 1: A couple of days later, a memo leaked to the 142 00:08:37,320 --> 00:08:40,600 Speaker 1: news organization Vice And this was a memo that was 143 00:08:40,640 --> 00:08:43,439 Speaker 1: written by a senior executive at Amazon, a lawyer named 144 00:08:43,520 --> 00:08:46,840 Speaker 1: David Zapolski, and Zapolski, in a senior meeting with Jeff 145 00:08:46,840 --> 00:08:51,520 Speaker 1: Bezos and other executives, wrote that Smalls was not smart 146 00:08:51,800 --> 00:08:55,200 Speaker 1: or articulate, and he talked about an effort to paint 147 00:08:55,240 --> 00:08:58,640 Speaker 1: Smalls as really part of a deliberate pr strategy to 148 00:08:58,720 --> 00:09:02,400 Speaker 1: make him the quote face of the entire union organizing 149 00:09:02,440 --> 00:09:05,480 Speaker 1: movement end quote. So what does that mean? You know, 150 00:09:05,559 --> 00:09:08,120 Speaker 1: it shows that they're really trying to undermine the movement 151 00:09:08,400 --> 00:09:11,760 Speaker 1: to take this one situation and maybe a perceived safety 152 00:09:11,840 --> 00:09:14,880 Speaker 1: violation on the part of Smalls, and to undermine the 153 00:09:15,040 --> 00:09:19,760 Speaker 1: entire union, you know, organizing effort that now threatens Amazon 154 00:09:19,920 --> 00:09:24,200 Speaker 1: really for the first time and its twenty five year history. So, Brad, 155 00:09:24,240 --> 00:09:26,760 Speaker 1: this begs the question, how bad is this for Amazon? 156 00:09:26,840 --> 00:09:29,320 Speaker 1: How bad is this labor and union situation going to get? 157 00:09:29,880 --> 00:09:32,080 Speaker 1: I think this is a setback I think the leaked 158 00:09:32,120 --> 00:09:36,439 Speaker 1: memo gives some momentum to efforts to organize Amazon's workforce, 159 00:09:36,720 --> 00:09:39,400 Speaker 1: but in the end, I don't think it's that much 160 00:09:39,440 --> 00:09:43,240 Speaker 1: of an impediment to the company. You know, Amazon's uh force, 161 00:09:43,320 --> 00:09:45,760 Speaker 1: it's like utility in our lives right now. We rely 162 00:09:45,880 --> 00:09:48,280 Speaker 1: on it. It's one of the few retailers that's even 163 00:09:48,320 --> 00:09:51,199 Speaker 1: operating right now. So this is a setback for sure. 164 00:09:51,520 --> 00:09:54,320 Speaker 1: I don't think it's it's any sort of existential threat. 165 00:09:54,840 --> 00:09:57,040 Speaker 1: And Mark, that leads me to the last question for you. 166 00:09:57,320 --> 00:09:59,640 Speaker 1: I think it was a famous general who said supply 167 00:09:59,800 --> 00:10:03,080 Speaker 1: chain haines win wars. So who has the most durable 168 00:10:03,120 --> 00:10:06,040 Speaker 1: supply chain here? And who's going to be flexible enough 169 00:10:06,080 --> 00:10:09,080 Speaker 1: to get through this global pandemic? You know? I mean 170 00:10:09,120 --> 00:10:12,040 Speaker 1: you've seen Apple. You saw Apple bounce back very quickly 171 00:10:12,080 --> 00:10:15,120 Speaker 1: from coronavirus in terms of their final assembly line in China, 172 00:10:15,600 --> 00:10:18,600 Speaker 1: and with two hundred billion dollars in the bank in cash, 173 00:10:18,760 --> 00:10:20,920 Speaker 1: it would be really hard to bet against them. But 174 00:10:20,960 --> 00:10:23,240 Speaker 1: it would be also pretty difficult to bet against Amazon, 175 00:10:23,320 --> 00:10:26,160 Speaker 1: which has shown a very strong ability to also roll 176 00:10:26,240 --> 00:10:30,440 Speaker 1: with the punches. Mark German, thank you so much, Thank 177 00:10:30,440 --> 00:10:33,400 Speaker 1: you for having me this is brad Stone signing off 178 00:10:33,440 --> 00:10:41,800 Speaker 1: from my closet just north of San Francisco. That was 179 00:10:41,840 --> 00:10:46,160 Speaker 1: Bloomberg's Global tech editor Brad Stone with tech reporter Mark German. 180 00:10:47,120 --> 00:10:50,240 Speaker 1: And that's it for the Prognosis Daily Edition. For more 181 00:10:50,320 --> 00:10:53,360 Speaker 1: on the pandemic from our bureaus around the world, visit 182 00:10:53,400 --> 00:10:59,440 Speaker 1: bloomberg dot com, slash Coronavirus and one Small favor. If 183 00:10:59,520 --> 00:11:01,720 Speaker 1: you like what we're doing, please take a second to 184 00:11:01,800 --> 00:11:04,400 Speaker 1: rate the podcast and leave us a review on Apple 185 00:11:04,440 --> 00:11:08,600 Speaker 1: Podcasts or Spotify. It helps more listeners find our global reporting. 186 00:11:09,440 --> 00:11:12,720 Speaker 1: The Prognosis Daily Edition is hosted by me Laura Carlson. 187 00:11:13,360 --> 00:11:16,839 Speaker 1: The show was produced by me Seawan Wen Tover foreheads 188 00:11:16,960 --> 00:11:22,560 Speaker 1: Jordan Gaspoure and Magnus Hendrickson. Today's main story was reported 189 00:11:22,559 --> 00:11:26,959 Speaker 1: by Bradstone and Mark German. Original music by Leo Sidrin. 190 00:11:27,800 --> 00:11:32,120 Speaker 1: Our editors are Francesca Levi and Rick Shine. Francesca Levi 191 00:11:32,440 --> 00:11:35,720 Speaker 1: is Bloomberg's head of Podcasts. Thanks for listening.