Yahoo Finance’s Akiko Fujita and Worldwide Managing partner of Bain and Company, Manny Maceda discuss the state of global business amid the coronavirus pandemic.
AKIKO FUJITA: Well, a new wave of corporate layoffs is threatening to stall the US economic recovery. All the major airlines, Under Armor, retailer Ralph Lauren, Coca-Cola, real estate giant Brookfield Properties all among a growing list of companies that have announced cuts to their global workforce so far. So are the job losses likely to accelerate, or are companies positioning themselves for a bounceback in 2021?
Let's bring in Manny Maceda. He is the Worldwide Managing Partner of Bain and Company, and he joins us from Palo Alto today. Manny, it's great to have you on. You know, we saw the immediate cuts in the early days of the pandemic, particularly in jobs in the services industry, hospitality and leisure, but it feels like we're now starting to see that wave in more the white collar jobs, and you've got a pretty good visibility given how many companies you work with. I'm curious what you're hearing in internal conversations about how they're viewing the outlook right now, now that we're looking at several months out from the end of the year?
MANNY MACEDA: Sure, Akiko, and thanks for having me. I'm happy to be here. Number one, if you think about this as you started with layoffs in labor. This pandemic has hit the industries in many different ways, starting with core demand in some. So you've mentioned if you're an airline or hotel, some retail, the immediate impact has been down on underlying volume for what your business does.
Let's not forget, there are other industries that are also up. You know, if you're a testing company, a hand sanitizer company, a video conferencing company, et cetera, so there is job growth elsewhere. And so most companies after the first quarter where they dealt with this had to first figure out what is the impact or the underlying demand for business. Many of them said, let's wait this year before taking actions, also because of the impact of your corporate responsibility and keeping your workforce employed for as long as possible. As it's progressed, there's more clarity on how much of the underlying demand change might be permanent or how much might it bounce back as you talk about next year or the years to come based on all these other factors we're talking about. That's sort of the core where you think about jobs.
Now the second part, which everyone is also thinking about, is because we have all pivoted to doing work, the interviews like this, independent of the underlying demand of your product, the nature of work is also changing because of our ability to do stuff from home, technology, perhaps there's efficiencies there. And so there's a separate the wave of thought process on how would that affect our workforces and our labor forces given the rise of being able to do technology doing work in a virtual world. And so those two factors are affecting every company differently, and they're thinking about it for sure.
AKIKO FUJITA: Yeah, and no question there is some real fundamental restructuring. It seems like that's happening on the corporate front. Let's talk about how you're seeing things from a macro standpoint. We've talked a lot in this hour about the recovery picture in the US, but you've got a good pulse on what's happening globally. You look at a place like China, they have had more of a steady recovery it seems. GDP growth of 3.2% in the recent quarter. Retail sales getting that positive footprint for the first time this year. Should investors be looking in that direction to see who can lead the global economy out of this recession? I mean, how are you seeing the growth picture, the demand picture in the global context right now?
MANNY MACEDA: Well clearly, Akiko, it's affecting each geography somewhat differently as a function of lots of different variables, including the state of the pandemic and policies. But what's happened this time around compared to past downturns is that you start thinking about each geography also as an aggregation of industries in that geo. And so it's not necessarily about what's happening in China or Korea or Japan or Western Europe or the Americas, it's that, you know, is China made up of export markets or domestic markets? What is the mix of industries that are being hit by COVID going up or going down?
And so I would say that all over the world, this is clearly a recession, and the question you're posing are some geos going to lead us out faster than others? I think that's a function of where the pandemic is in control. And yes, in a place like China, where it's control in place like here. That's one variable. The other thing is which countries or geos are made up of industries where there's actually upward demand because of how pandemic is affecting industries so differently, and that's arguably even more important that you than the geographic differences.