Now: focusing on liquidity
We see the impact as we talk with our clients: cash is king right now. Only essential spending is happening, and other than deals that might have already been in flight or were near closing, M&A in general is on hold. In some cases, even those close to completion are being tabled. We are, however, starting to see an increase in distressed M&A in the current and near-term environment.
The virus also affected the CCB itself: the initial survey for the report was in the field for several weeks as the impact of the virus went from regional to global and stock markets were hitting record highs. Our focus here is on results after 19 February 2020. Even so, there is still uncertainty as to the lasting impact on the global economy and the advanced manufacturing sector.
Governments, advised by medical experts, will decide when factories will open. Their combined efforts will also help determine what shape the economic recovery will take. More than half of advanced manufacturing executives (53%) expect a “U-shaped” recovery, with slower economic activity extending into 2021, in line with results from all industries.
The post-recovery period will almost certainly be a “new normal,” which will likely include higher unemployment, a smaller economy, changes to the supply chain, industry consolidation and a smaller manufacturing footprint. There will also be more of a focus on technology and a change in the way that people work.