A discussion with:
Thomas Bossert
Homeland Security Advisor (2017-2018), The White House; Distinguished Fellow, Scowcroft Center for Strategy and Security, Atlantic Council
Leland Miller
Chief Executive Officer, China Beige Book International;
Nonresident Senior Fellow, Asia Security Initiative, Scowcroft Center for Strategy and Security, Atlantic Council
Chris Snider
Manager, Risk Services – Property & Interim Head Risk Services Canada; Technical Lead, Business Resilience, North America, Zurich North America
James Murley
Chief Resilience Officer, Miami Dade County
Moderated by:
Kathy Baughman McLeod
Director, Adrienne Arsht – Rockefeller Foundation Resilience Center, Atlantic Council
As the coronavirus continues to infect patients at a rapid rate, global markets have been jolted and local communities are being forced to take extraordinary measures to limit the spread of the virus. What is the latest on the US response? How will China’s economy—the world’s second largest—be impacted in the short- and long-term? What do businesses need to be thinking about as they confront a possible pandemic? And how are local communities in the US preparing?
Thomas Bossert, Leland Miller, Chris Snider, James Murley, and Kathy Baughman McLeod unpack the latest on the response to the coronavirus and its deepening impacts.
Transcript:
Note, this is an automated transcript.
Operator: Welcome to the Atlantic Council Members and Press Call – The Global, Domestic and Local Impacts of the Coronavirus on Economies, Risk and Communities.
Please be aware that each of your lines is now in listen-only mode. We will open the lines for questions following the speakers’ opening remarks. Please press “star” followed by the number “1” key on your telephone to ask a question. Questions will be taken in the order in which they are received.
I would now like to turn the call over to the Atlantic Council, who will introduce the call and begin our discussion. Ms. McLeod, please go ahead.
Kathy Baughman McLeod: Good afternoon. Thank you very much. My name is Kathy Baughman McLeod, and I am the Director of the Adrienne Arsht Rockefeller Foundation Resilience Center at the Atlantic Council. And this series of calls is being brought to you buy a collaboration of the Resilience Center and the Center for – the Scowcroft Center for Strategy and Security.
We are joined today by four speakers. We have with us Tom Bossert, Homeland Security Advisor from 2017 to 2018 at the White House, Distinguished Fellow of the Scowcroft Center for Strategy and Security at the Atlantic Council; and Leland Miller, Chief Executive Officer of the China Beige Book International, the non-resident Senior Fellow Asia Security Initiative, Scowcroft Center for strategic – for Strategy and Security at the Atlantic Council; Chris Snider of Zurich Insurance Group, one of the largest insurance companies in the world. He is the Manager of Risk Services Property and Head of Risk Services in Canada, the Technical Lead of Business Resilience for North America Zurich – and Jim Murley, the Chief Resilience Officer of Miami-Dade County, Florida.
Thank you all for being here. I wanted to provide a bit of an update, and then we’ll come back to the speakers to make opening remarks. In terms of what’s happening today, we have seen that the U.S. Congress has reached an $8.3 billion deal to combat and address coronavirus. The World Bank has promised more than $10 billion in support to developing countries to help them contain the spread of the virus.
We’re seeing cases surge in South Korea, Malaysia, and India. Italy has closed all of its schools and universities for two weeks. We’ve seen more than 94,000 cases worldwide in more than 70 countries, and more than 3,200 people have died.
The Chairman of the Federal Reserve, Jerome Powell, said that the virus and measures being taken to contain it will weigh on economic activity here and abroad for some time, and we’re seeing cases across the U.S. in Oregon, New York City, California, Illinois, Wisconsin, New Hampshire, Georgia, Rhode Island, Texas, Arizona, and Florida.
And lastly, a quote from Professor Benjamin Cowling, and Infectious Disease Expert at Hong Kong University, saying it’s very clear that the actions taken in China have almost brought to an end their first wave of infections. The question is what will happen if there’s a second wave because the measures that China has implemented are not necessarily sustainable in the long-term.
So to give you a sense of what’s happening today on this issue, The Atlantic Council is sponsoring a series of calls to frame, identify the issues and conditions on the ground in addition to the implications of the coronavirus and the experience from a human perspective in communities around the world.
Let me now turn back to the speakers and ask them to make three-minute opening remarks and analysis. I’ll start with Tom Bossert. Thank you for joining us, Tom, and over to you.
Tom Bossert: Hi there. Sorry for my mute button there. Good morning. Thanks for having me on this call. I think I’ve got really one message today. It might not take an entire three minutes.
The message is about framing the objective here. A lot of people are asking questions at a personal-preventive level, and those are important questions for our public health community to answer, but there’s a separate and more community (safeing) or systemic effort afoot right now and I’d like to address it.
That systemic effort has to be framed against the notion of delaying and spreading over a greater distance of time or greater period of time the spread of this disease so that we don’t overwhelm our healthcare system. The idea is not to introduce panic here. The good news is even if we hit the 30 percent attack rate, the 98 million infected people in the United States that (actuated to) yield over the next year, many if not the super majority of those cases will be a mild case of what feels like the seasonal flu, so I don’t want to introduce panic.
However, if the numbers told from the cruise ship experience, from Italy, and from other countries now, we’re also going to see a large but not panic-level, but certainly shocking-to-our-system number of deaths.
What we want to do as a community, as a whole for the greater common good is take aggressive measures to prevent and delay. We’re not going to fix this problem. We’re past the containment inflection point. At this stage, the objective is to, as I said on our previous call, reduce the amplitude of this spread curve. Shift it down into the (right in time).
And so, I don’t want communities to take steps unduly and fatigue our system, but I would like to deliver this message. As a community, (cease) evidence of human-to-human transmission, not someone that flew in with the disease. They must then and only then without overreaction pull the trigger on aggressive community interventions. The last message on that point, those include school closures and isolation and cancellation of large events.
Time matters. That’s the last point. Two weeks of delay is the difference between success and failure. History guides us on this. If we fail to correct the message and change it to what I’ve just said, we could watch our healthcare system be overwhelmed.
So the public health message here, even with respect to children, is being misunderstood. If this was an outbreak of a seasonal influenza, we might recommend closing schools to save the kids and to prevent community transmission. In this instance, we’re going to recommend closing schools when communities see human-to-human transmission not just to prevent community transmission but to save the grandparents of those kids.
And so, the communities are getting a mixed message because this disease has properties of transmission that appear long after. In other words, this 14 to 18-day delay is creating a situation in which, let’s say by comparison, Italy went from zero cases from February 20th to just a little over a week later, having well over 1,000 cases. That’s not a rapid transmission of the disease. It is a lag in reporting and the appearance of symptoms in patients.
So, that’s my message, and we’ll take questions later, and thank you.
Kathy Baughman McLeod: Great. Thank you Tom. Let me move to Leland. Thank you for being here. Over to you. Leland Miller.
Leland Miller: Sure. So many of the world’s questions boil down to what is happening inside China, and the problem with the coronavirus, as well as the problem with some of theses other issues that pop up, is that nobody really knows what’s going on inside China at any given one time.
A few weeks ago, it was – people didn’t understand the extent to which the economy was shut down, to which the virus was spreading, but we got some very bad economic numbers last week, and the government has sort of changed its tune and said that things are recovering and that people are back to work.
And the world is more or less taken that message for granted. You’re seeing traffic indicators suggesting that factories are back on, are – the people are still computing and lights are back on at factories and et cetera, et cetera.
So, at this point, the message seems to be that China has dealt with the vast majority of the problem from a medical standpoint, and that the economy has bottomed out and is now on a recovery trajectory.
Now, that very well may be right, but the medical side of this is – will be very difficult to look into. I know WHO is there, other people have an opinion, I’m not a doctor, and so I won’t comment on the possibility the viral outbreak will take longer to contain than the other one – that some of the current projections.
But, I can talk a little bit about what’s happening with the economic recovery. And what’s happening right now in China is something – if you read the headlines, China is getting back to work. And we surveyed economy, surveyed thousands and thousands of corporates in China, domestic firms, foreign firms, big, large, small, private, state, et cetera. And two weeks ago I think it was oversold, the extent to which the Chinese economy was online.
We had about 30 percent of firms operating normally, but a full, nearly 70 percent of firms were either still shuttered or they didn’t have their C-suite showing up for work, or they didn’t full workforces or they didn’t have inputs to run their business, or they didn’t have logistical chains to get their products to market. Basically, 70 percent of the economy wasn’t working as normal.
Now, we’re tracking this on a daily basis, and just checked the data very recently and we are seeing many more firms back to work. But, I think there’s a very important distinction to make here, and that is back to work does not mean back to growth.
We are seeing firms turn the lights on, we are seeing extraordinary measures being taken to get factories up and running, to get workforces in place to be able to run these factories. So, we are seeing what looks like an economy back to work.
But, we’re also looking at data from thousands and thousands of firms, and the data, in terms of output, in terms of other metrics, are not improving. And it’s not that they’re weak in one area of the economy, they’re weak everywhere. We’re seeing all the major national metrics still in contraction. We’re seeing every sector in contraction. We’re seeing every region still in contraction.
So, I would caution now, that while it looks like, and this story very well may be right, that China has contained the outbreak and it is on the path to recovery on the human side and on the path to economic recover on the economic side. I think we need to not go overboard until we actually see the economy up and running. Right now there are – the economy is going back to work, but again, we’re not seeing growth return to China just yet.
So, March is going to be a very important month, but this is – this is something that may get lost a little bit in the messaging, because people have shifted their focus from China, which they see is on the mend, to the global economy, which is now the weaker, and this is – this is going to be a very important connection to watch going forward.
Kathy Baughman McLeod: Great. Thank you very much, Leland. Over to you, Chris Snider from Zurich North America. Thank you Chris.
Chris Snider: Thanks Kathy, and thanks for having me on to sort of give a perspective from the insurance risk management angle.
So, I’ll be talking a little bit about the supply chain and business resilience. And one of the things that we need to sort of keep in mind is that our traditional approach or understanding to business resilience and supply chain transcends that original though process of a location base event that interrupts a supply chain.
We can now see with a globalized economy that supply and business resilience can easily be impacted by several different types of events, not necessarily related to a property loss. This can be through natural hazards that impact the surrounding area, even liability issues such as product recall, having to bring back products in order to recall faulty products and bring them out. But also, now we can see infectious disease can have a tremendous impact.
One of the things that we want to keep in mind with business resilience and supply chain, is organizations have spent the last few decades moving down towards lean operations and a globalized operation, this is done to maximize their profits, to minimize expenses, to allow them to operate in a just in time, just in sequence world and to make sure that products are flowing to customers on a quick basis.
But, what happens sometimes is that when you’re leaning down the organization, you might miss the fact that you’ve actually increased your risk to supply interruption or resilience interruption.
There’s an intersecting point that you can find, where you’ve leaned down your operation, where you’ve maximized the ability to go global and solidify your supply and be with inside an acceptable risk tolerance. That intersecting point, organizations have to be looking for that intersecting point and then keeping an eye on it, because it’s going to change daily and it’s going to change from different types of events.
With an event like this, not only is it impacting shipping lanes, ports, locations, but it’s also impacting the people that would be with inside those buildings making the product for the organizations.
So it’s a very unique situation. And keeping an eye on the bigger picture of business resilience and supply chain is definitely an area where we have to progress into. Those organizations that have now had somewhat of a mature view of this are typically the ones that are going to be making a quicker recovery versus those that are sort of in their infancy stage understanding the supply chain.
And as the economy ramps up, as production ramps up you’re going to have the larger, more secure companies being the first to those suppliers to get the products. So they’ll be able to make that recovery, even faster than some of the other more immature organizations when it comes down to resilience and that can have an impact.
If we think of potential losses from an organization, they – there’s a heavy tail from the start of an event to the recovery phase. As an example, an event where it takes you one week to recover, you might have a tail that would run a few weeks longer. If it takes you a few more weeks, that tail exponentially grows longer in that recovery phase. So the faster you can recover then the better it is for the organization.
And back to you now, Kathy.
Kathy Baughman McLeod: Thank you very much, Chris. That’s – thank you.
Now, let’s move over to Jim Murley, who’s the chief resilience officer of Miami-Dade County, a huge county of 2.75 million people, gateway to Latin America. Jim, share a little bit of your perspective. Thank you.
Jim Murley: Thank you, Kathy. I guess as a government official, we’re watching everything that the gentleman has just spoken about very closely in order to scale that down, if you will, to our local situation. I suspect we’re like one of hundreds of large coastal metropolitan areas all over the world that are very acutely aware of the 24-hour business cycle that we operate under.
We’re a community, as you mentioned, with a large port – actually, the largest cruise ship port in the world. And the movement of people and the goods that supply those ships is key to our economy, along with our airport.
Though, we’re also obviously, first and foremost, thinking about our resident population. And we approach something like this, when the threat of an incident occurring that might impact our community, it starts sort of from an emergency management perspective, where we have an in-place process of communicating between governments, horizontally and vertically.
Federal and state government working with our local county and all of our cities, our civic society, our business community, we’re tuned into incident management as you would think of a hurricane approaching us from the Atlantic Ocean. That’s, of course, not what we’re dealing with here. So we have to modify that and look for ways to keep our operations moving but be aware of any of the triggering devices, the human-to-human contact that was talked about earlier.
We have in place a regional resilience strategy that we were fortunate enough to prepare with the assistance of the Rockefeller Foundation as part of their 100 Resilient Cities program. And that’s kind of a more sophisticated way of looking at the issues than our emergency management operations perspective. And we’re using all of the things we’ve learned in developing those strategies to prepare ourselves.
Of course, our concern besides the health impacts would be in the revenue side, where we are dependent on sales taxes that come from transactions necessary for the movement of people and goods through our community. We think that’s where we’ll see some of the impacts, cancellation of large events at our convention center, a reduction in (rooms).
All that would have an impact in a – in any government in terms of their ability to anticipate revenues and to not only take care of day-to-day costs but additional ones from this event.
That’s where we are today, Kathy. We are constantly monitoring this in anticipation of fine-tuning our approach.
Kathy Baughman McLeod: Great. Thank you, Jim. Thank you. We’ll get into that a little bit more.
Tom, I want to come back to you. You talked about some numbers on last week’s call, I wanted to revisit those. You mentioned them in the opening, just talk about what they mean. You might recite them but also talk about what they mean.
And then I wanted to also understand the conditions around U.S. testing. The CDC has now announced that they will – there will be a test for everybody that has a doctor’s referral to take the test. That’s good but I wanted to hear your thoughts on the U.S. testing and its role in the diagnoses numbers that we’re seeing.
Tom Bossert: Yes, thanks. So I want to frame this a little as I answer your question. What I’m trying to do, consciously trying to achieve here is to give our political leaders and our public health leaders the courage. I’d like to convince them of the utility of the interventions that I’m suggesting but also to give them the courage to act.
And so, I want to convey the numbers so as to frame what I think we’re about to see and to give them an understanding of why I’m recommending these actions, not to get individuals to hear them and panic.
And so, as I know there are reporters on the line, please think about how you might use what I’m going to read and how you’re going to couch it because it’s incredibly important that this message be given in a way that conveys that this is a bigger deal than the normal flu season, but that you shouldn’t go out running around crazy.
So here it is. The basis for the numbers I cited last week is what a lot of epidemiologists are calling a gift. A gift was, kind of paradoxically, this cruise ship. The cruise ship gave us a denominator and a numerator to run this disease against, so that we could start taking percentages and applying them to our populations. Now I should say that we’re starting to see real life spreads all around the world that are matching these trend predictions.
In fact, I’m so confident and they’re so confident now that this is no longer science; this is just math. And so here are those numbers, and remember that we didn’t just take this cruise ship number and these percentages – for instance, the case fatality rate, the CFR, or the R0 rate, the reproduction of this disease – and apply them directly.
They first diluted the numbers on the cruise ship to account for the fact that there weren’t as many children on the cruise ship as there are in our U.S. demographics. They adjusted them downwards to account for some of the other artificial conditions. So these are slightly adjusted, they presume a 30 percent attack rate or spread rate, throughout the populace of this disease and lastly, they are not accounting for a timeframe. This could play out over a period of a year.
But those numbers, with those dilutions and adjustments and net times caveat, and assuming that this disease is not sensitive to seasonal changes and weather, would yield in the United States approximately 98 million people infected. It would yield 12 to 15 million of those hospitalized, 2 to 3 million of them requiring some form of critical care and 500,000 disproportionately, but not entirely (weighted) to the elderly and the infirm, dead.
Now the idea here is to frame this and not terrify people. Remember, the super majority of that 98 million infected over the next year are going to experience essentially mild flu symptoms. So what I don’t want to do is leave the impression that they should run around very upset and then lose trust in me or the public health authorities when they wake up at the end of the week and say, boy, that was it? I got a little – I got a little cold or serious flu for a couple days, and now I’m better?
What I want them to understand is that those are macro numbers, and what it’s going to do is potentially, if not certainly, overwhelm our healthcare system at that macro level if we don’t take steps, portent measures and aggressive ones to collectively, not individually prevent each one of us from getting ill, but collectively, act to reduce those overall numbers and statistics so as to reduce this strain on our healthcare system. That’s it.
Kathy Baughman McLeod: Great, thank you. That’s clear as a bell. Thank you very much. Now let’s shift over to Leland, and I wanted to ask about you. You’ve gone on the record as saying that the affects on the Chinese economy so far are much worse than the markets and the mainstream think they are. Can you say more about that, and can you comment on the knock-on effects of what happened to the global economy and to the U.S. economy please?
Leland Miller: Sure. So a number of weeks ago, we’ve been – we’ve been (inaudible) for three weeks straight. A number of weeks ago, it became very clear to us that China’s economy was in severe contraction.
We kept seeing predictions coming out of different institutions that China was still in mediocre positive growth, which would seem completely implausible, considering there’s nobody who’s growing right now. There’s now area of the economy that’s growing right now. But I think that the most important thing to identify is that even as the firm’s are going back to work right now, we’re actually seeing some of our results worsen.
There was a very good article in a Chinese publication (inaudible) today about how the auto factories are turning on the lights and turning on the machinery in order to look like they’re up but they’re not really up. A lot of that seems to be happening right now in order to give the idea that the economy is back, but again, we’re not seeing it.
I mean, every one of our headline metrics, we’re talking national revenue, profits, domestic orders, export orders, output; everything is in contraction, period. Every thing is in contraction period, every – is in contraction territory. Every sector is in contraction, every region is in contraction.
And so the idea here is not whether China is going to be in positive growth in the first quarter, really no matter what happens in March, no matter how swift the recovery is, you’re going to be seeing a contraction in growth. The question is how severe the contraction will be in Q1. Now that does not mean that China, that Beijing is going to acknowledge that number, as a matter of fact they almost certainly will not.
But the real numbers on this are pretty horrific; they are far and away the worst data we’ve ever seen in a decade of tracking the economy. So there should be no question right now that the economy is in contraction, will be in first quarter regardless of what type of recovery signs Beijing sends to markets over the next month.
The other thing I think is important to point out is the credit environment. There’s a lot of headlines out there talking about how millions of firms in China are on the brink of default and technically this is probably true.
But one of the great benefits of having a command economy is if it’s a policy priority for you not to let that happen then it doesn’t really happen. And the advantage that the Chinese system has over Western commercial financial systems is that the state controls all the counter parties. You have state banks loaning to state owned enterprises, you have state banks who can be ordered to lend to small, medium sized enterprises.
So if the government is willing as a policy priority to simply encourage or actually restrict the levels of bankruptcies and economic problems then they can take these non-performing assets off of their balance sheet and make the – extend the problem into the future.
So on the stimulus side people have been awaiting big news (of) monetary policy, awaiting big news of a fiscal response; but really the most powerful stimulus the government has is ordering banks not to call in loans and not – and to keep lending out enterprises money as they need it.
And this is already happening, it’s one of the ways that China has been able to roll through this seemingly catastrophic slowdown, but not – but to keep going and to minimize the fallout. There’ll be long term economic consequences to this, of course, but right now this – the government is prioritizing, making sure the economic dislocations are minimized, and that’s how we are progressing into March.
Kathy Baughman McLeod: That’s, wow, that’s stunning. Could I ask you to comment on all of that and its implications to the U.S. economy?
Leland Miller: Right. So, with China on the track to recovery, whether it’s a little recovery or a long recovery or a short recovery, the major issue here is less what’s happening in China’s economy and more what’s happening around the world. There is a demand and supply shock happening in China right now. It’s quite severe, but as the Chinese economy emerges from this, what it will need is global demand.
And this is happening just as the virus is spreading and hitting some of its largest baskets of demand growth. Japan is an underrated story, but it’s being hit relatively hard by coronavirus, even though the numbers of people who have caught it have not – is nowhere Korea, for instance. Korea obviously being very hard hit, parts of the E.U., it’s now spreading to the United States.
So to the extent that the Chinese economy is on a recovery path, it’s going to make it that much harder if all of these economies that are fueling are not up and running at full capacity. And I think the next several weeks will be absolutely critical for the United States from an economic point of view.
The Fed cut rates, it’s not clear at all what cheaper credit can do in the case of a viral outbreak. But I think over the next several weeks it will be very critical in terms of how this is gauged. Is this going to stop consumption behavior for the medium term as opposed to just a few weeks? To the extent it does, then you’re going to seeing a much, much more difficult recovery pathway for China, and certainly it’s going to affect the entire global economy like dominoes.
Kathy Baughman McLeod: Great. Thank you for that. Chris, let’s shift over to risk and supply chain risk, and just generally let me ask you, how to date has the COVID-19 effected the global supply chain? And then – well, I’ll ask you two questions. Let me just ask that general question to start.
Chris Snider: OK, so the COVID-19 outbreak is actually, I don’t want to say it’s been unique, I think that the reaction from a supply chain perspective is actually born from a lot of lessons learned from the past. Now whether some of the actions were more on the extreme side or not is to be determined. But, there several nodes that have changed over the years.
If we go back and take a look in 2003 when we had SARS outbreak much different than we are today. The reaction by governments from different countries have had an impact that unless you had a really mature supply chain resilience program (inaudible) would not have been anticipated from a default 14-day quarantine process, which can impact workers, which can impact supply lines, impact (inaudible).
Kathy Baughman McLeod: Chris?
Chris Snider: Anticipated with. Yes, sorry, can you hear me?
Kathy Baughman McLeod: You dipped out for a just a second, you’re back.
Chris Snider: OK, sorry about that. So I was just saying the reaction from different countries and the governments with quarantine levels that would not have been anticipated necessarily from a lot of organizations. And then of course the speed at which these events have unfolded across the globe. And I’d act on Leland’s comments.
You know we’re seeing a rippling effect, we’re seeing a wave effect that impacting supply chain as it spreads out from the epicenter that we know of. And correct in the assumption that you may have organizations that are from the epicenter that are back up online and operating and producing products and can start shipping out. But if they don’t have anywhere to ship to because all of sudden the focus has changed to where the buyers of that supply are mainly North America, Europe all of sudden that’s still going to have an impact on the supply chain.
And again from there we talk about that heavy tail. One week at the beginning of a supply interruption can result in multiple weeks recovery. Each additional week it exponentially grows. And we’re going to see that effect across our global supply chain as things start to come back online. It is going to take a long time for companies to be able to recover and to be able to get back up to where they were before the event occurred.
Kathy Baughman McLeod: That’s great. Thank you. I think we’re going to press on. We’ve got some pressing questions I wanted to quickly move to Jim and ask if you could talk about what’s happening on the ground? And any relationship to the Zika response that you had in Miami Dade County? And anything else that you’re foreseeing particularly as it relates to the schools? That’s come up and lots of coverage about the importance of the schools. And then we’ll, after Jim, we’ll move to Q&A for media.
Jim Murley: Well, thank you, Kathy. Just yesterday our mayor convened a meeting of our elected county commission, the head of our public hospital, which is partnershipped with University of Miami and also a representative of the State Health Department, which now is one, houses one of three labs certified to do the testing in the state.
And there was an open discussion that of course was on TV that could have been monitored by our population and with the information we had what 24 hours ago, I think it mirrors what I’ve been hearing on the phone call about taking action at that person to person level, at the organizational level. Making sure that the hygiene effort is facilitated by stocking the supplies that we need. But then we move to particularly vulnerable populations we have a large elderly population that we are particularly concerned about, as verified by your information again shared on the call.
So specific actions are being directed towards our public and privately run long term care facilities where we have elderly housed in one location, and obviously it’s like a cruise ship at a dock. And so we need to – we’re focused on that.
Our schools, we have the fourth largest school system in the country – luckily it’s a county-wide system, so the organization of the system allows pretty prompt response once the superintendent and the school board have the information that would lead them to decide anything from closure to additional activities.
We’re open for business both at the government level and at the school board today, but we’re constantly monitoring this. And as you mentioned, Kathy, several years ago we awoke to a shock that a (here to foreign) known but not very famous mosquito-borne disease called Zika, was impacting a vulnerable population in our community in a way (that it) did not in the past.
And it was a real threat to our business model, based on tourism and other things in this community. And we immediately responded, and mobilized, and took the actions we could to prevent it. Now it’s a different thing – we knew fairly quickly we were dealing with a mosquito that was limited in geographic area and we could spray. And we were one of the few places that was able to bring that particular outbreak under control. But that shock for us, (if I could) has now become a stress.
We understand that these kinds of incidents that come from being a crossroads community internationally, we (can) anticipate them, we (can) anticipate this virus – so we have to sort of be prepared and ready to activate the kind of long-term responses that are needed in our community.
We also need to (deal with it as it’s long-term stress), which for us means bringing in the community and the (inaudible) times, bringing in our universities to do the research involving our (inaudible) organizations to do education. But right now we’re in the very much mode of reacting to the information we get from the experts. We’ve had direct contact – Governor DeSantis has been down to our region to communicate the importance of what’s going on state-wide and obviously nationally.
So it’s a – when you’re in government, you know, you’ve got day-to-day services that are – you have to try to (be sure are) taken care of from health, to water, and treatment of all sorts of goods and services that our community depends on us provide.
And we’ll get – (absolutely) we’ll go ahead doing business, but also you know, we’ll react as we should to any new information. Thank you.
Kathy Baughman McLeod: Great, thank you Jim. So we’re going to shift to the Q&A now, and it’ll take a minute or two while the operator queues up those questions and those folks asking questions.
So we have – I’d like to ask one more question while we get those questions teed up. I – this is a question about supply chains and thinking about from a business perspective, for business strategists is the – is this a permanent reset to supply chains? And so that maybe most likely for Chris.
And then, how would we think about those – the things that businesses can do to better prepare for and respond to what we’re experiencing now and getting ready for the next one as Jim said?
Chris Snider: I would say that – I wouldn’t say it’s going to be a permanent reset, but I would suggest that organizations look at resetting their supply chain analysis and their approach to supply chain.
We’ve had enough evidence over the last 20 years to know that virus outbreaks may continue to happen. There’s enough trending to sort of make that assumption, and making sure that it’s brought (with inside) the organizational response and recovery planning, and utilizing the history and the reactions – the change in reactions of organizations, governments, different types of entities as that time has changed – to bring it in to that new level of planning.
One of the things that organizations have to understand is that there’s an investment to be made in preparation, in making sure that there’s enough protection (with inside) their supply chain and their resilience, but there’s enough evidence to be shown that that investment and the resilience on the front-end pays out tremendously on the back-end and puts you in to a better position as an organization for that recovery.
Whether you happen to be a business to make a profit, a nonprofit, or a governmental organization – preparation is key and investing in that preparation is going to be more important as we move in to the next decade or two.
Kathy Baughman McLeod: Great, thank you, and …
Operator: If you have a question for our panel please press, “star” “1” on your telephone keypad. Again, if you have a question for our panel, please press “star” “1” on your telephone keypad.
Kathy Baughman McLeod: So, Leland, I want to ask you a quick question and just let everybody know, Jim Murley had to drop from the line and so did Tom Bossert. I wanted to ask about the notion of the – you said that this is – let me find it here, back to work does not mean back to growth.
You know, Jim Murley equated this, in Miami-Dade County to a hurricane in preparing and responding. When you see hurricanes hit communities – I mean, knock GDP back for decades, is this what we’re facing with this virus?
Leland Miller: Are we talking China, or are we talking about elsewhere?
Kathy Baughman McLeod: China.
Leland Miller: Well, it’s a very different universe in China for two reasons. First is that the Chinese can make workers go back to work. And so they can make sure those lights are on. And second that no matter what the growth numbers are, they can announce whatever growth numbers they want when – when the time comes to release data.
So it’s a very different sort of situation in China. I think that we can all be optimist for the time being and assume that China probably hopefully has the containment under – under wraps that the – that the sort of Draconian quarantine measures worked and that the economy has hit its low point and that the death count is trailing down considerable and won’t have a relapse.
We can (hope all this) but I think that what the – what the government is doing right now is creating a plausible story so that one; hopefully they do get the growth as people go back to work. But even if they don’t, they have the – the appearance of the economy being up and running so that the growth numbers can be reported in at a relatively reasonable rate.
Not this – for someone who doesn’t spend a lot of time doing China, this can sound a bit conspiratorial, why would the Chinese be manipulating this. Why would – why would Beijing have a goal of reporting something that’s not so. It – it’s very clear from some of the early announcements by Xi Jinping and his inner circle that returning the economy to growth after the initial couple weeks of quarantine is the core policy priority.
And heading growth numbers is still a major if not the core policy priority as well. So there has to be a movement, the party has based this legitimacy for a long time on being able to crank out certain economic numbers and I think that’s the path we’re on.
I think I share the sentiment of everybody that it – that hopefully this is – has actually happened. And hopefully the Chinese people are on the mend. The Chinese economy is on the mend as well. And then where we’ve seen the worst go past. But I think that the scene is being set or presenting a more rosy picture regardless of what they’re underlying realty is no matter what happened.
Kathy Baughman McLeod: Great. Thank you very much. I think we’ve got some questions in the queue.
Operator: Yes, we do. If you’d like to ask a question please press “star,” “1.” Andrew Scott with the Open Mind Project, your line is open.
Andrew Scott: Hi. I’m just curious how – are we mobilizing as far as the CDC or have the U.S. spoken publically. My understanding is that people are having a hard time getting the test.
And so I’m just wondering how we’re organizing at sort of a fundamental level to – obviously we can’t mobilize the way China did. So what proactive measures are being done to contain the spread in the early stages?
Kathy Baughman McLeod: I think Tom Bossert was our resident expert in that area and he has – had to leave the call early. So we may not have a solid answer for you on that. I think there are different sources of information saying what the U.S. government is doing and the CDC has made some announcements and so let us move to the next question.
We don’t have just what we need for that one but I do think there are sources available that we could point you to. Any other questions in the queue, Operator?
Operator: Again, if you’d like to ask a question, please press “star,” “1.” Stephen Keenan with the Atlantic Council, your line is open.
Stephen Keenan: Thank you for a very good conversation. It’s going to be a challenge to have the community of America staying fearless while we’re facing this – this might be a question for Tom but maybe for the gentleman from Miami Bay.
I’m hearing that we’re expecting 19 million people to be effected by this in the next 12 months. What are we expecting is going to happen with China? Are we thinking that their peak is over and there’s not going to be a second wave?
And if we wanted to for business, how many of these test kits could we provide for businesses in America if we – if we put that as a priority? Thank you.
Kathy Baughman McLeod: So I would kick it to the Leland on the China question of wave one and wave two. I – our experts – two experts to answer the second part of your question have left the call. So let’s go with the first part and then we’ll move to another question. Thank you, Stephen.
Leland Miller: In terms of China, the consensus thinking is that the growth – the expansion of this has decreased, the number of deaths are slowing down and so we – they have conquered it wave – they’ve conquered wave one and we’re hoping not to see wave two.
I think that there’s every reason to believe that but again, this was handled so poorly at the very beginning with an outright cover-up in the early – not just weeks but the early couple of months. And then a changing of methodology along the way in terms of how they (counted a candidate) that you always have to hold out the possibility that we’re not getting the whole story.
So I think that the understanding is right now and it’s supported by what the WHO is saying coming out of China is that we have seen wave one dealt with. It’s being dealt with effectively at this point. That we’re not expecting a wave two.
But again, the question is just how much do we not know either because we don’t know enough about coronavirus at this point or there’s some – there’s something that the Chinese government hasn’t let us in on quite yet.
So we’re – we can remain confident but there’s still that – that mystery that – that we can’t get away from.
Kathy Baughman McLeod: OK. Great. Thank you, Leland. So I think that concludes the questions and concludes our call and I extend a sincere thanks to our guest and our experts who joined us. Thank you, Leland Miller and Chris Snider. And thanks to Jim Murley from Miami Bay County and Tom Bossert.
Thank you for joining us here at the Atlantic Council and will be back with us (in future call) to continue to frame theses issues and identify solutions and best practices for communities and thank you very much for your time today.
Operator: This concludes today’s call. We thank you for your participation, you may now disconnect.
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