The South African Aerospace, Maritime and Defence (AMD) Industries Association has cautioned that the novel coronavirus (COVID-19) poses a major threat to the South African defence industry through restricted travel, cancelled or postponed trade shows and difficulties exporting.
In a letter addressed to the South African defence industry, AMD and the AMD Export Council (SAAMDEC) said “we can now safely say the world is grappling with what appears to a pandemic in the making – in the form of COVID-19. The full economic impact of this virus on various countries, and the global economy at large, are yet to be fully understood. However, everyone agrees that no country will be spared from this impact.”
The Coronavirus has killed more than 2 800 people and infected about 83 000 worldwide. The first case has been reported in Sub-Saharan Africa, in Lagos, Nigeria and another in Senegal. “This then makes this a truly global challenge, with the only continent to be yet affected by the Coronavirus being Antarctica.”
The rate with which this epidemic has spread has made it quite difficult to manage and control. The experts have warned that the cure for this virus may only be available 18 months from now. “This then means, we must all prepare for the worst, at least in the medium to long term,” AMD said.
“The economic impact of this epidemic will affect all sectors and the South African Defence Industry will not be spared. All economic global regions will also be affected. With our reliance on exports (as a sector over 65% of our revenues are generated from exports), it therefore stands to reason that we should be preparing ourselves for the reality that we will soon be confronted with.
“At a practical level we need to reconsider our annual business and marketing plans, as they will be surely affected – one way or another. There is a high possibility that most international exhibitions that were to held during the year 2020 will be cancelled or postponed. This also affects or may affect Africa Aerospace and Defence (AAD) 2020,” AMD warned.
With the movement of people being the biggest transmitter of this diseases – most governments have as a rule restricted the movement of people within and across their borders. “Unlike other sectors, our business is mostly done over many meetings and we rely quite heavily on people to people interaction to conduct our business. This will surely be affected.”
“The interlinks in global manufacturing and supply chains also means delivery of our current projects (be they for the local customer or international customer) may or will be affected. How do we respond to this, as a Sector?
“Business travel of our employees is also another issue that we need to seriously consider, as the health of our workforce is paramount.”
AMD said it will engage with the South African Military Health Service (SAMHS) and NICD (National Institute for Communicable Disease) in order to get proper advice on the issue. “The AMD and SAAMDEC (South African Aerospace, Maritime and Defence Export Council) Board, will as a matter of urgency discuss this matter in order to come up with a coherent strategy for the South African defence industry.”
COVID-19 has already claimed its first defence event in South Africa. A US military delegation was due to visit South Africa between 9 and 13 March, with the US delegation learning about the capabilities that exist within the South African defence industry.
However, US Army Futures Command on 2 March said “we have been directed to postpone our upcoming visit to South Africa. US Army Africa has ordered cancellation of travel to several locations, including the continent of Africa until further notice as a precaution to the evolving situation with the Coronavirus.”
The American team apologised for having to postpone and hopes to visit later in the year once authorised to travel again.
According to The European Sting and the World Economic Forum, since the virus emerged in December 2019, businesses are dealing with lost revenue and disrupted supply chains due to China’s factory shutdowns, tens of millions of people remaining in lockdown in dozens of cities and other countries extending travel restrictions.
The International Energy Agency (IEA) has predicted the first drop in global oil demand in a decade. Many trade shows and sporting events in China and across Asia have been cancelled or postponed and the travel and tourism industries were hit early on by economic disruption from the outbreak.
Global airline revenues are expected to fall by $4-5 billion in the first quarter of 2020 as a result of flight cancellations, according to a report from the UN’s International Civil Aviation Organization (ICAO).
All countries need to prepare to combat the coronavirus, the World Health Organization said on Thursday, as authorities raced to contain the epidemic’s rapid global spread and Wall Street looked set for its biggest weekly fall since the 2008-2009 financial crisis.
With new infections reported around the world now surpassing those in mainland China, World Health Organization (WHO) Director General Tedros Adhanom Ghebreyesus said even rich nations should prepare.