Speaker 1: Welcome to Prognosis. I'm Laura Carlson. It's day thirty four
Speaker 1: since coronavirus was declared a global pandemic. Our main story
Speaker 1: today what the coronavirus outbreak means protect giants Apple and
Speaker 1: Amazon with hundreds of thousands of employees globally and a
Speaker 1: complex supply chain that's spread around the world. The fate
Speaker 1: of these companies tells us a lot about the world economy.
Speaker 1: But first, here's what happened today. The shape of the
Speaker 1: long term damage coronavirus has done to the global economy
Speaker 1: is starting to come into view. The International Monetary Fund
Speaker 1: said that what they're calling the Great law Down Recession
Speaker 1: will be the steepest in almost a century, and if
Speaker 1: the virus lingers or returns in waves, things could be
Speaker 1: even worse. The i m F predicted in its World
Speaker 1: Outlook report that the global economy would shrink by three
Speaker 1: percent this year. It would be the deepest dive since
Speaker 1: the Great Depression. In the US, White House Economic advisor
Speaker 1: Larry Cudlow said that the three hundred forty nine billion
Speaker 1: dollars that had been allotted to help rescue small businesses
Speaker 1: in trouble because of the outbreak will run out of
Speaker 1: money as early as this Thursday. The money was part
Speaker 1: of the two point to trillion dollar stimulus package that
Speaker 1: Trump signed into law late last month. A plan to
Speaker 1: add an additional two hundred fifty billion dollars to the
Speaker 1: Small Business Association program has stalled in Congress, and a
Speaker 1: new report from McKinsey adds to the growing evidence that
Speaker 1: COVID nineteen is taking a disproportionate toll on America's black population.
Speaker 1: The disease is more likely to kill Black Americans, and
Speaker 1: for those who survive, the pandemic will take a devastating
Speaker 1: toll on their jobs and future earning potential. Black Americans
Speaker 1: are more likely than white Americans to have underlying health
Speaker 1: conditions that exacerbate the effects of the virus. They're also
Speaker 1: overrepresented in high contact essential services. And now for today's
Speaker 1: main story, big tech versus the virus. The coronavirus has
Speaker 1: dealt a severe blow to the global supply chain, with
Speaker 1: fewer workers to produce certain goods and a sudden surgeon
Speaker 1: people demanding them. There have been shortages of everything from
Speaker 1: life saving equipment like ventilators two household staples like toilet
Speaker 1: paper two of the world's big guest companies, Apple and
Speaker 1: Amazon rely on a supply chain for electronics and goods
Speaker 1: that is spread all across the world in many countries
Speaker 1: that have been hardest hit by the coronavirus. The Czech
Speaker 1: giants employ hundreds of thousands of people, so their fate,
Speaker 1: in many ways is the fate of the global economy.
Speaker 1: To take a close look at how badly hit these
Speaker 1: companies will be by the virus and what they're doing
Speaker 1: about it, here's Bloomberg's head of Global Tech coverage, Brad Stone.
Speaker 1: The tech industry is caught in the middle of the
Speaker 1: chaos at COVID nineteen is unleashed on the global economy.
Speaker 1: We spend a lot of time here on the tech
Speaker 1: team covering Apple and Amazon and the other big tech companies,
Speaker 1: and they once seemed invincible, and now they too are
Speaker 1: swaying under the pressure of this global pandemic. I'm here
Speaker 1: with one of our stellar reporters to break it down,
Speaker 1: Mark German. Let's start with Apple. Apple supply chain is
Speaker 1: often hailed as one of the best in the world.
Speaker 1: Old Tim Cook, Apple CEO, really made his name over
Speaker 1: the course of two decades assembling a network of manufacturers
Speaker 1: in China that could mass produce products like the iPhone.
Speaker 1: And so when the coronavirus first hit China in December,
Speaker 1: you know, how did Apple and its manufacturing partners respond.
Speaker 1: Right when coronavirus hit, you know, Apple supply chain immediately
Speaker 1: came into focus, and you know, it was nearly decimated
Speaker 1: depending on how hard this was gonna hit the area
Speaker 1: where Apple's factories are across China and other parts of Asia.
Speaker 1: And what really slowed this down was this hit during
Speaker 1: the Lunar New Year holiday, where lots of workers and
Speaker 1: Fox On other facilities or elsewhere in China and in
Speaker 1: the world visiting family. So what they had to do
Speaker 1: was they had to quarantine for about two weeks or
Speaker 1: maybe more in some cases upon return, which slowed down
Speaker 1: the return to work process. But as we sit here
Speaker 1: today in early April, Apple supply chain in China is
Speaker 1: nearly back up to speed. I mean, do you think
Speaker 1: Apple and and companies like Fox Con were in part
Speaker 1: fortunate that workers weren't crowded into those factories where they
Speaker 1: could have spread the virus. Yeah, you know, bred that
Speaker 1: that's a good point that they are fortunate in that sense.
Speaker 1: That people were elsewhere. They weren't all crowded together hundreds
Speaker 1: of thousands of people in dorms and inside the factory floors,
Speaker 1: versus the spread that would have come into place if
Speaker 1: you had those hundreds of thousands of workers all there
Speaker 1: together at the same time for the entire period of
Speaker 1: the virus. This probably did end up saving a lot
Speaker 1: of lives just by the fact that this was during
Speaker 1: that holiday period. So I think in the popular imagination,
Speaker 1: Apple supply chain is sort of concentrated in China, but
Speaker 1: really it's spread out, and now, of course the pandemic,
Speaker 1: unfortunately has spread out. So how has Apple fared elsewhere
Speaker 1: in the world. Yeah, that that's true, Brad. China is
Speaker 1: basically the the engine for final assembly, but a lot
Speaker 1: of the components are sourced from all over. You see
Speaker 1: Apple being very impacted in places like Israel and South
Speaker 1: Korea and Italy and London and other parts of Europe
Speaker 1: and Middle East that are hit by coronavirus. So this
Speaker 1: is going to take some time to to smooth through.
Speaker 1: But you know, it's really hard to take hold of
Speaker 1: the situation because Apples a global company and this is
Speaker 1: a global pandemic and Brad, You're the expert on all
Speaker 1: things Amazon, so I should really ask you, how is
Speaker 1: this global giant being impacted in terms of being that
Speaker 1: logistics company that can bring anything to your home? How
Speaker 1: is that being changed because of the coronavirus. Yeah, I
Speaker 1: would say everything has changed, and they've made some difficult,
Speaker 1: perhaps impressive, but very controversial choices in their fulfillment centers.
Speaker 1: These are the hundreds of warehouses really across the world
Speaker 1: at store and then ship products to people's homes. The
Speaker 1: first thing that Amazon did was they really prioritize the
Speaker 1: shipment of essential products, so groceries and medical equipment. You know,
Speaker 1: you used to end the good old days be able
Speaker 1: to get everything within a day if you're a Prime member,
Speaker 1: and now it takes sometimes days or even weeks if
Speaker 1: you're ordering something like say a book, you know, the
Speaker 1: original item that Amazon used to sell. But of course,
Speaker 1: Bred being a company with tens of thousands of workers
Speaker 1: in these warehouses, dealing with these new requirements in the
Speaker 1: middle of a global situation like like the coronavirus, they
Speaker 1: might not all be happy. Right. What's the union, the
Speaker 1: labor the whole pr situation that everyone's talking about around that. Yeah,
Speaker 1: there are a couple issues. I think the biggest one
Speaker 1: is safety. You know, Amazon, like a lot of other companies,
Speaker 1: wasn't able to get ahold of the personal protective equipment
Speaker 1: like like masks that it really needed to ensure the
Speaker 1: safety of its workers. And those workers have to come
Speaker 1: into some you know, sometimes very crowded facilities, work shoulder
Speaker 1: to shoulder, and they're taking a big risk. And you know,
Speaker 1: they asked Amazon to do more. You know, Amazon, to
Speaker 1: its credit, you know, raised that it raised their wages
Speaker 1: by a couple of dollars. It offered things that it
Speaker 1: hadn't offered in the past, like paid sick leave or
Speaker 1: workers who had signs of the virus and unlimited unpaid leave.
Speaker 1: And yet you know, we saw workers really um you know,
Speaker 1: asking them to do more and making their voices heard.
Speaker 1: So what is you know, Amazon doing about these efforts
Speaker 1: to organize unions in these facilities. There's a developing situation
Speaker 1: that really illustrates how Amazon is thinking about it. There
Speaker 1: was a longtime Amazon worker named Christian Smalls who organized
Speaker 1: a protest at the Staten Island facility, and actually a
Speaker 1: day after the protest, he announced live on Bloomberg TV
Speaker 1: that he had been dismissed by Amazon. He said the
Speaker 1: company accused him of exposing other workers to the virus. Well.
Speaker 1: A couple of days later, a memo leaked to the
Speaker 1: news organization Vice And this was a memo that was
Speaker 1: written by a senior executive at Amazon, a lawyer named
Speaker 1: David Zapolski, and Zapolski, in a senior meeting with Jeff
Speaker 1: Bezos and other executives, wrote that Smalls was not smart
Speaker 1: or articulate, and he talked about an effort to paint
Speaker 1: Smalls as really part of a deliberate pr strategy to
Speaker 1: make him the quote face of the entire union organizing
Speaker 1: movement end quote. So what does that mean? You know,
Speaker 1: it shows that they're really trying to undermine the movement
Speaker 1: to take this one situation and maybe a perceived safety
Speaker 1: violation on the part of Smalls, and to undermine the
Speaker 1: entire union, you know, organizing effort that now threatens Amazon
Speaker 1: really for the first time and its twenty five year history. So, Brad,
Speaker 1: this begs the question, how bad is this for Amazon?
Speaker 1: How bad is this labor and union situation going to get?
Speaker 1: I think this is a setback I think the leaked
Speaker 1: memo gives some momentum to efforts to organize Amazon's workforce,
Speaker 1: but in the end, I don't think it's that much
Speaker 1: of an impediment to the company. You know, Amazon's uh force,
Speaker 1: it's like utility in our lives right now. We rely
Speaker 1: on it. It's one of the few retailers that's even
Speaker 1: operating right now. So this is a setback for sure.
Speaker 1: I don't think it's it's any sort of existential threat.
Speaker 1: And Mark, that leads me to the last question for you.
Speaker 1: I think it was a famous general who said supply
Speaker 1: chain haines win wars. So who has the most durable
Speaker 1: supply chain here? And who's going to be flexible enough
Speaker 1: to get through this global pandemic? You know? I mean
Speaker 1: you've seen Apple. You saw Apple bounce back very quickly
Speaker 1: from coronavirus in terms of their final assembly line in China,
Speaker 1: and with two hundred billion dollars in the bank in cash,
Speaker 1: it would be really hard to bet against them. But
Speaker 1: it would be also pretty difficult to bet against Amazon,
Speaker 1: which has shown a very strong ability to also roll
Speaker 1: with the punches. Mark German, thank you so much, Thank
Speaker 1: you for having me this is brad Stone signing off
Speaker 1: from my closet just north of San Francisco. That was
Speaker 1: Bloomberg's Global tech editor Brad Stone with tech reporter Mark German.
Speaker 1: And that's it for the Prognosis Daily Edition. For more
Speaker 1: on the pandemic from our bureaus around the world, visit
Speaker 1: bloomberg dot com, slash Coronavirus and one Small favor. If
Speaker 1: you like what we're doing, please take a second to
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Speaker 1: Podcasts or Spotify. It helps more listeners find our global reporting.
Speaker 1: The Prognosis Daily Edition is hosted by me Laura Carlson.
Speaker 1: The show was produced by me Seawan Wen Tover foreheads
Speaker 1: Jordan Gaspoure and Magnus Hendrickson. Today's main story was reported
Speaker 1: by Bradstone and Mark German. Original music by Leo Sidrin.
Speaker 1: Our editors are Francesca Levi and Rick Shine. Francesca Levi
Speaker 1: is Bloomberg's head of Podcasts. Thanks for listening.