As the COVID-19 pandemic moves across the globe, Dow Inc. CEO Jim Fitterling looks to what's happening in China for clues to what is coming in the U.S.—and when the economy could start picking up again.
He said things could begin returning to normal in the second half of the year, but added that broad U.S. economic growth might not happen until 2021.
Another question: What will be the outlook for far-flung global supply chains when the crisis is over? Right now, economies around the world have effectively shut down, as governments urge people to stay inside and practice social isolation.
"We've seen good economic indicators coming out of China," Fitterling said in response to a question from Plastics News Editor Don Loepp on March 30, the first day of Antec 2020: The Virtual Edition. They sat in front of computers, communicating remotely. Fitterling was a keynote speaker for the virtual Antec, organized by the Society of Plastics Engineers.
"China really started into this in the middle to the end of January, around the Chinese New Year time, and obviously was slow to come back out of that," Fitterling said.
Midland, Mich.-based Dow has operations around the world.
Fitterling said production power for Chinese industry is starting to come back after bottoming out at the peak of the crisis. He said the service sector remains relatively weak because people still aren't going out to movies or shopping.
"I think they will stay low for awhile. But you're starting to see traffic pick up in the biggest cities in China as a sign that people are getting back to work," Fitterling said. "And so, I think what you can expect to see is, typically, it takes two to three weeks in this containment phase, while the number of cases that get diagnosed ramps up. It takes another couple of weeks before you see the number of hospitalization cases kind of peak. And then, probably two to three weeks after that, until you see the number of mortality or death cases, start to peak out. So kind of 45 to 60 days through this, is starting to come out of it."
Society then will begin returning to normal, as many people leave behind the all-virtual lifestyle. So what does Fitterling foresee for the U.S., after work resumes?
"I would say the next phase after that will be, hopefully, some kind of a return to normal. And then the phase after that will probably be some kind of return to growth," he said.
"My sense is by mid-year, we're returning to work. By the third quarter, hopefully, or the fourth quarter we're starting to return to normal, but my guess is returning to growth is probably something that'll be more of a 2021 time frame."
Right now, in the heat of the spread of COVID-19 in the U.S., Fitterling noted that some industries are still doing well: health care, of course, and food packaging.
"Basic household items, those things are still strong," he said. "The automotive sector is very slow, I think. Durable goods varies. It's going to be slow, and it's going to take a lot of time for that to pick up after we get back to work."
The other Antec keynote speaker, Tom Salmon, CEO of packaging giant Berry Global Group Inc., joined with Fitterling in discussing supply chain issues and the future of a global economy.
"Well, you know, clearly this is a global pandemic right now. A lot of companies are trying to make certain that they're understanding if there's a supply/demand dynamic that that is going to be left after this crisis," Salmon said. "They're looking, for now, at how you ultimately can truly act as a global economy, because there may be circumstances that there's capacity in other regions of the world that could be important to us or vice versa, to help solve the problems."
That's why Salmon said an interconnected global economy will continue—with some caveats.
"I think it's going to increase the reality that we are a global economy. But people are clearly going to want to make certain that they tighten their supply chain and they've got line of sight, to diversified suppliers that have redundant capability," he said.
Fitterling said there will be a renewed emphasis on domestic sourcing of medical supplies because of the experience of the rampant coronavirus.
"It's highlighted something that was happening, I would say even before COVID-19. There are questions around the sovereignty of medical care. How strong is a country, and how is the country able to be able to respond to a medical situation like with one we've got, if 90 percent of their generic pharmaceuticals are made in China or made in India?" he said.
Some other important parts of the economy, like automotive, also will keep analyzing the global supply chain, Fitterling said. A lot of components for vehicles are made in China.
"But ultimately, there will be an economic part of the equation that comes into being, unless there's a reason for people to shift from the outsourcing model that they have today," he said.
"I do think for some critical items, some things that we want to make sure that we can have to protect our own country, things like food safety, and like we've been trying to do with energy security. Also medical security. Those things will probably continue to be at a high level of discussion after we get through this," Fitterling said.