The Month Coronavirus Unraveled American Business | A WSJ Documentary
(lively music) - Davos was the scene. Everybody was there. You have CEOs from some of the biggest companies in the world, heads of state, the president was there.
I don't remember anyone taking coronavirus seriously. Everyone's always enthusiastic at Davos. No one makes friends there by predicting doom and gloom. - This seems to be the decade of shared success. - [All] Together we can. Together, we will.
- I was hesitant to say anything because being a scientist, driven by facts and data, the absence of facts and data, I didn't want to make any conjecture. So I remember in retrospect, I probably made statements that were perhaps too neutral. I think all the right things are happening.
I mean, you've seen some of the actions the Chinese government has taken. I know critical disease control agencies around the world are getting really active. So we all have to wait and see there's a lot we don't know. I don't think I was pressing it in saying the economic trajectory of the US economy would continue in 2020. People are relatively confident that global growth will sustain through 2020. The chance of an economic slowdown barring some sort of an exogenous event.
We had an exogenous event. I guess I was right about that. - I remember watching CEO of Goldman Sachs on the DJ booth at a Salesforce party, just like 10 deep, shoulder to shoulder.
It all feels like a totally different planet now. These are people who should have had the best sight lines in the world into what was going on. These companies that have operations in China, where this virus had been circulating for weeks. And in retrospect, it probably should have informed how we approach things here 'cause we were, what, about two months behind them. There was a sense that the economy was just too strong and America was just too resilient.
Even as some parts of the economy are showing positive signs, what happened during the month of March will fundamentally reshape American business for the next decade. March started on a very high note and it ended with the economy just incomplete taters. And that 31 days where just everything changed. (orchestral music) - [Woman] The coronavirus- - [Man] Is fanning out across Asia and Europe. - [Woman] There may be additional cases that we identified. I do want to be imperative of that.
- [Man] Stocks, they fell hard again today. Economic fears, many unknowns rattling investors. - [Man] All non-essential businesses shall close to their physical workplaces, - [Woman] Police were called after some customers started fighting over toilet paper and water. - [Man] This is our new reality right now.
It is absolutely staggering where we find ourselves. (indistinct) - How'd you get that? - Happy to do it. Happy to do it. I want to be able to get back and look at it for posterity's sake. We're really good at opening hotels but if you were to ask me in the 36 or seven years I've been doing this, how many hotels have I actually presided over closing, it would be a very, very short list.
- I'm currently sitting actually in the Baccarat lounge at Bellagio. This building is vacant. It's a bit surreal. It's very different.
- This is our trading desk. So for our agricultural commodities and you can see that it is empty. Typically it's very busy.
It's very noisy. - We designed this headquarters campus in which I'm sitting for about 5,000 people. Right now, there are roughly 300 people on a good day. - I started putting out a Friday note to employees on Friday the 13th, which was most people's last day in the office. It said Friday, March 13th, I will stop comparing this week to last week.
We are in unchartered territory. First, take care of yourselves and your families as we run our business. Follow company and local guidance. Use judgment and humanity with individual situations.
Show leadership with people who are worried. And remember, we have a company to run. - I'm Chris Nassetta, CEO of Hilton. - I'm the senior vice president of corporate affairs at 3M.
- I'm the head of manufacturing for Toyota Motor North America. - I am the CEO of Novartis. - I'm JetBlue's president and chief operating officer. - CEO and chairman of Proctor and Gamble.
- Chief executive officer of IMAX Corporation. - I am chairman and CEO of Cargill. We're in the privileged position of making food. - Chairman and CEO of Goldman Sachs.
- Acting CEO and president of MGM Resorts International. - CEO of US Wealth Management for JP Morgan. - Deputy commissioner and chief operating officer of the NBA. - So coming into 2020, the US is in year 11 of the longest economic expansion since World War II.
Millions of jobs have been added to the economy. The stock market keeps hitting record heights. It looked like 2020 was gonna be another good year. - [Crowd] Three, two, one. - New years going into 2020 felt like any other new year's. We were seven months into our fiscal year and things were going well.
- I was two weeks into my job as a first time CEO. - We had record Box Office of over a billion dollars. - You know, when we look back, we see an auto market that was pretty high actually. - Our sales for plus 6%, our earnings were plus 18%. - We were looking forward to bringing on a new aircraft type.
Now the Airbus 220. - How we would evolve the presentation of our game digitally. - We were all sort of having a similar conversation about like, gosh times are good, but there's just sort of this haunting feeling like something's out there. - The pandemic showed that strong economy that it was thin, it was a veneer of shrink in that companies were profitable, making a lot of money and unemployment was low. But it really exposed these weaknesses where wages had not really moved.
People are not by and large wealthier than they were 10 years ago. - The jobs that we saw grow the most tended to be of the alternative variety. There's contingent work, part-time work, independent work, gig work. And that also brought with it a certain moment of fragility. - Companies have spent trillions of dollars over the last decade buying back their own stock and paying dividends. - Profits were growing.
But you might've worried about, for example, the rate of which companies are not reinvesting into their businesses or into the economy. The classic case of a lot of short-term orientation without kind of big investments into the future. - The modern economy, it's powered by technology and it's this just in time, it's perfectly efficient. And in some ways it is, and in some ways that's been really good for consumers in particular, but the flip side of efficiency is resiliency. If there's no fat baked in, there's no cushion for when things get bad. - [Reporter] A mysterious respiratory illness has healthcare workers on alert.
At least 45 people have contacted the virus believed to be connected to animals at a market in central China. P&G has people all over China. We don't have plants in Wu Han, we have a distribution center. So as soon as this happened, our first concern was making sure we took care of our employees.
- We knew there was some sort of emerging viral issue in December. Our health and safety team had flagged in Wu Han because we have five hotels in Wu Han, something's going on. - It felt like a just China issue for us because a lot of what we make is for domestic consumption.
And so certainly the impacts that we looked at, implications that we looked at were largely limited to China and perhaps parts of Southeast Asia at that time. - I don't think anybody thought even when this was impacting Macau in China, that it would distance itself, this close to us here and end up in our ultimate shutdown. - So there's this disconnect between the sort of bad rumblings out there and the bad headlines coming out of China and across Europe and the US suffered. It just keeps going up. I mean, it hits record high after record high. In February looking back, it seems like hubris, but investors often don't see what's right in front of them.
- Coronavirus was on the horizon, but our investor day was one of the most bolish and exciting that we've ever had. - I remember talking to a very, very prominent investor Superbowl weekend down in Miami, where we had a discussion with both of us said, "Boy, it seems like there's a lot more risk "in this virus becoming a bigger issue "than the market's pricing." - On on February 11th, we've been asked to participate in the opening bell ceremony for NASDAQ in celebration of our 20th anniversary. - Happy 20th to JBLU. - I had the pleasure of appearing on Squawk Box in the morning and was specifically asked whether or not we were seeing any impact from the coronavirus.
- You want to start with coronavirus? - Sure. - Is it really impacting things in here in United States right now? - For JetBlue, it's not impacting JetBlue in any meaningful way. Boy was I wrong? And there a headline that I think will live with me until I retire from this industry. - The Chinese government basically shut the country down and put the entire populace under quarantine. (tense music) Now, that had an immediate impact on Toyota's operations there. We couldn't make cars, we couldn't sell cars.
- We have over 700 screens now, which is 1% of the screens in the country. And Chinese new year is the biggest film going week for us of the year in China. We typically do 10% of our year in one week. And then we heard every theater in China was closed. And then a day later, they said none of the big Chinese movies would be released. What was the biggest part of our year was reduced to nothing overnight.
- We produce about 70 billion doses of medicine a year in over 150 countries. We had to make the decision to send all of our China operations home, which is over 10,000 people. I think I began to wonder now, this is something really big.
- Movement around China, especially around the Ubed province was being restricted. So we had to let both our employees know, and more broadly we communicated that this could have a ripple effect through other supply chains. And it wasn't clear at that time how significant it would be. - We started having meetings almost every other day to really understand how do we pull together the right teams, assessing the demand, the supply chain challenges. We work together for everything, from sourcing, making sure that we had the critical raw materials available in order to be able to manufacture respirators, gearing up the equipment so that we could run 24, seven everywhere around the world. - By the end of February, we had mobilized a crisis management team.
I was meeting with my CFO on a regular basis, thinking very long and hard about liquidity. We were modeling every weekend, looking at these numbers that I think look horrific, that looked like nothing I've ever seen only to be outdone by the numbers that I saw the next weekend, which only got outdone by the numbers I saw the following week, as it went further and further into the abyss. (mellow music) - I remember the management team meeting that I had with my team on March 4th, where we all sat in the same conference room together. Jamie came and spoke to us for an hour and he said to us, "You should go read the history "of the Spanish flu pandemic in 1918." It was a early brush fire in the spring summer of that year.
It kind of went away, and then in the fall it came back and it killed 50 million people. And he said, this is going to be severe. - 35 fatalities are linked to the life care center in Kirkland, that is the hardest hit facility.
- When I saw pictures of that nursing home outside of Seattle, where families couldn't get to see their family members inside the nursing home, because the virus had essentially taken that facility over, the heartbreaking pictures of people with their noses pressed up against the window to try and communicate with their loved ones, that struck home with me. - Airlines is where you first started to see the disruption from the virus. - As we stepped into March, we started seeing a fairly rapid decline of customer bookings, an increase in customer no-show rates and just overall changing customer sentiment. We knew we were in something very different than what we'd experienced before. Very different than SARS, very different than Zika and quite frankly, very different than nine 11.
- Our occupancies so quickly from the third week in February to the first week in March, almost fell in half in some of our luxury brands. But it was really where our group business was, because of the international visitation that was impacted. - That time was a hectic time. Early in March, government started putting restrictions on large gatherings. That's when we started in that early March timeframe, really thinking about, we may have to play games without fans.
- I sat down with my CFO and I said to him, "If the world shuts down, what do our financials look like? "What's our burn rate? "How do we stop spending money?" We called all our managers and we said, "Cancel all costs." We just said, stop it right now because we don't know what the future entails. - We pulled all our levers on liquidity early because the reality is cash is king. I don't know how deep it's going. And so to protect the business, I've got to make sure that we have enough cash.
We have a billion 750 credit facility. We pulled it. (crowd cheering) - I think this event for us and the realization of probably where we were going hit the weekend of March 8th, 9th and 10th. We were fortunate, we were hosting 15,000 people for a UFC fight. We had Bruno Mars at the park theater, but the reality was over at Mirage, we were hosting a women's leadership conference.
One of the guest speakers was sick and contracted COVID-19. A guest speaker at an event of scale, about eight or 900 ladies was in VIP receptions, went to several restaurants, went to several shows, met many people, shook a lot of our employees' hands. It became a little daunting into thinking about, how are we going to handle this going forward? - When investors do finally pull their head out of the sand, they do it really quickly and the market starts to tank fast.
So on March 9th, the market barely gets open. - [Woman] Trading has stopped. Trading has stopped. - Stocks fall so fast that it triggers what we call a circuit breaker, which is basically a time-out. It was put in place after the 1987 crash. And it's basically an automatic halt.
Everyone go back to your corner, think about what you've done. Take a deep breath and we'll try this again in 15 minutes. And it hadn't been traded in 20 years.
It was a sign that people were panicking. Investors were running for the exits and they couldn't get out fast enough. March 11th for a lot of people is the day that this became real, very real, very quickly. - We have the format the assessment that COVID-19 can be characterized as a pandemic.
- To keep new cases from entering our shores, we will be suspending all travel from Europe to the United States for the next 30 days. - On March 11th, we had a board meeting. And the topic of that board meeting was how we were gonna deal with the coronavirus. There was an understanding that yes, we might actually have to play some games without fans.
And at the time, it seemed unthinkable. And then of course that night is when we got our first confirmed positive with Rudy Gobert and we knew right then that we had to suspend the season. - The game tonight has been postponed.
You're all safe and take your time in leaving the arena tonight and do so in an orderly fashion. - What brought a lot of that home for people was that they watched it happen in real time. There's still games happening. - [Man] This is crazy. This can't be true. I mean it's not within the realm of possibilities, it's just the seem more like out of a movie than reality.
- And then very quickly people are looking at back at a press conference that Rudy Gobert had given where he makes a joke out of the whole thing and is touching all these microphones. It just starts to sink in that this is not a joke. - I remember thinking, wonder what they're gonna talk about on ESPN.
It's a sports network and sports are shutting down. And then thinking we sell food, whether everything from whether it's ground beef or sweeteners that go into the sodas that are served for these stadiums. What's this gonna mean for our customers? And you quickly go to start thinking about second and third order consequences as stadiums and restaurants and places of public gathering start to close. What does that mean for our customers for their business? What does it mean for our business and what does it mean for our employees? - And March 12th was the last day I've been in the office. March 12th also was the day that the market took a severe downturn. And for our 5,000 advisors, the average industry age of an advisor are in their mid 50s and they've seen many of these cycles and many people remember 08 and 09.
But we also have a number of advisors who were in their 30s and they don't remember 08 and 09 and that likely was the worst day of their career and they hadn't seen volatility like that. We also have a number of clients who had probably never seen volatility like that. First-time investors. - I was surprised at how hard IMAX's stock got hit 'cause we were incredibly crushed. Our stock had been trading generally in the $20 range and it went down to six or seven dollars and within a matter of days.
When I was allowed, I actually went into the market and I bought some stock, but I thought I would also be sending a message to our shareholders that I believed in the company and I believe we could survive this. - March 12th stands out and so far as I was on a flight to Boston visiting with our crew members on a pre-planned trip. The questions being asked changed almost overnight. The questions our crew members started asking were not just about my health, but am I going to have a job? What's this going to do to JetBlue? Can we survive this? It all came to a crescendo at that point in time when you realize that this is a much bigger thing than anybody expected. - We saw many of our advised clients move and de-risk and get into cash or short term cash like strategies, not surprisingly, particularly our clients who are nearing retirement just wanted to play it safe. The advisors were still going into the branches because we were trying to stay open for our clients as long as possible.
Markets were super volatile. People wanted to meet with their advisor. - New York state on pause. - A statewide order for people to stay at home.
- We must enact an immediate stay-at-home order for the sake of Illinois. - So there's a whole group of companies whose business models just don't make sense when there's a pandemic going on. Bars, restaurants, movie, theaters, sports stadiums, casinos, anything that involves having lots of people in close quarters just doesn't work.
So those shut down basically overnight. - I made a lot of phone calls and I said, we should be leaders in this. Let's not wait. We should be upfront that it's the right message that we're really concerned about the health and safety of our customers.
To be fair to the people I was talking to, blockbusters were scheduled to open soon. They had pre-sold tickets to theaters and this lunatic is saying shut down. - What happened in the early into middle part of March was we were constantly adjusting to see if we could maintain production, but there was a point in time in that timeframe where a number of jurisdictions basically said, we're shutting down. Our pipelines by design are pretty thin.
We don't carry a lot of inventory. That's the Toyota way. Inventory is waste. When our production stopped, it had the impact of almost drying up the typical 90 to 120 days worth of inventory that we might have for certainly for some of our more popular models. Now it's much less than that in ways where we are living hand to mouth, to make sure that we satisfy the demand of customers.
We got one more bad news as you know, the market went to heck. Our occupancies were going down. At one point, our forecast for this building Bellagio was like single digit.
It became clear to us that we were gonna have to close. In this state, we are the largest employer, largest payer of taxes. We are this community's economy.
We had made a decision on the 14th to close everything. We notified the governor on Sunday afternoon. And by Sunday at six o'clock that night, he had gone here in Nevada on the television and mandated a closure. - The most effective course of action is to direct all Nevadans to stay home and for non essential businesses to close to the public for 30 days.
- We find ourselves in a closed mode. For us, that means about 270 million a month in expenses. It's our burn rate.
- There was no choice. There was no business. There were no revenues, there was no demand. Even if you'd been able to reduce your workforce, you still have to pay your debt service, you still got to pay utilities and taxes and all of these costs. No business is built for zero revenues.
It's just not done. - The Dow has its worst single day of history. I mean, just hundreds and hundreds of billions of dollars of stock market value is just evaporating. - We were watching changes in markets. We were watching companies borrow more aggressively. And one of the things that we started talking about was there always been a stigma associated with borrowing from the FED window.
So collectively the CEOs of the eight large banks got on a call together and we said, does it make sense for us to all just borrow a nominal amount to show that we're all in unison, that this is not something that should have stigma. And if it's necessary to keep the banking system functioning smoothly for our clients, we're all prepared to do it. - [Bill] And Hilton is the Canary in the coal mine.
This is an incredibly well capitalized, amazing dominant global company that actually doesn't own many hotels. It just collects royalties. Down from like 120 to 50. Okay, it's going to zero along with every other hotel company. - Bill Ackman is a well-known hedge fund investor. He buys vixen companies, and is pretty vocal about his opinions on them.
He's positioned in Hilton. And he went on CNBC and said, among other things that stock might go to zero. - You say Hilton is going to zero, I mean. - [Bill] 'Cause no business can survive a period of 18 months without revenue. - And as he's talking, the market is just falling and falling and falling and it eventually triggers another circuit breaker. - I think he was trying to make a point, which was, people should be taking this COVID-19 thing very seriously because it could have a devastating impact.
And reality is, he was right. - We saw our revenue go from nearly $20 million a day to zero and even negative almost overnight. A number of states were putting into place travel quarantines.
You had governors and others talking about flying only for a central travel. In March, our cash burn was about $15 million a day. When you start doing the math, you realize very quickly that there's an end point where you just frankly, run out of money. And the questions that we had to address for our crew members were what are we doing to cut costs? Standing down projects, freezing hiring, I'm looking at any lever we could pull to try to reduce our cash burn.
It became very apparent that the amount of flying that we were doing was going to have to be reduced significantly. And the operational complexity of doing that, it's not just limited to changing people's shifts. We have this fleet of over 260 aircraft.
And where do you park all those planes? We needed to park them out in the desert. - [Reporter] It was a record breaking fall for US retail sales in March. - And then there are companies that are forced to shut down, but like they don't have any customers anymore. There's just a total collapse in demand.
People stopped shopping. They just stopped going to stores. - [Reporter] This is the biggest decline in retail sales since the government started keeping track at 1992. - There were a lot of companies that don't have the option of shutting down.
They make things that people need. - We are being asked by global governments to stay open, to make sure that food could get to the consumers. The food supply chain is complicated. There's a lot of steps in the process from the cattle ranchers and poultry farmers and the feed producers that make the feed for the livestock and the farmers that tend to the livestock and then to the production facilities, and then ultimately to the transportation system that bring them to the stores. - [Reporter] The number of coronavirus cases in the United States is growing exponentially.
- [Reporter] Store shelves nationwide are dwindling or totally empty. - People start panic buying anything and everything. It starts to feel a little bit like in times. - Pre-loading their panic buying increased consumption beyond what we could make in any given week and so inventories were drawn down.
That did put a lot of pressure into the system for us to maximize production. What we wanted to do is get the assets that we had running 24 hours a day, seven days a week and they increased production by several million cases across our total system. - These companies have to stay open. Their first priority is keeping their employees safe and keeping the business operating. - We moved quickly early on to get as much PPE as we could.
Personal protective equipment to take temperatures amongst people going in and if anyone showed any symptoms, they could not go back in. We added plastic shields in between the workers on the line. In the back of your mind, you hold that optimism. Maybe we'll get through this with nobody getting impacted, nobody getting infected. But when you have 160,000 employees that are out and about not only in our facilities, but in their own communities, you realize the odds of that are very low. - And then there are the companies that we're all turning to, to fix this.
You've got companies making masks and respirators. You've got pharmaceutical companies who are getting to work on treatments. So these are companies that not only do they not have the option of shutting down, the entire world is looking at them and saying, this is not just a business question for you.
This is an existential thing that we need you to do. You have to do a better job than you used to do and do it under unbelievably trying circumstances. - We have a few late stage phase three clinical trials, of repurposing medicines.
And then we have a very large drug discovery effort trying to see, can we find what we call a pan-coronavirus drug that requires new scientific discoveries, new scale up new clinical trials. And that is a much bigger challenge because now you're asking clinical trial sites that are now focused on trying to respond to a pandemic to get a trial up and running. Can you still enroll patients into the study if healthcare systems are closing down? - A number of cases soaring just today. More than 24,000 now nationwide New Jersey today becoming the sixth state to close all nonessential businesses. - [Reporter] The president invoked the Defense Production Act to prioritize production of items under government contract and to allocate scarce items where they are needed most. - The order authorizes the head of FEMA to acquire as many N 95 masks from the company, 3M as is deemed necessary.
- We had significantly increased the production rate for respirators here in the US, we'd gone from maybe 22 million in January to more than 35 million in March. We could see that this was really coming at us pretty fast here in the US. So not only are we looking at how do we continue to drive up manufacturing of our own products, but also what else can we do from other parts of the world? - So it doesn't take long before you start hearing talk of bailouts. - The airline industry alone, seeking a $50 billion bailout, but should these companies get relief with no strings attached. - The industry as a whole came together in a remarkable way. CEOs from every airline were down in Washington, trying to make sure that all the decision makers understood how vital and critical the airline industry is to this economy.
- We were number one, really reinforcing with the administration that the employment situation was gonna be dire, that our industry was gonna lose millions and millions of jobs, and we needed the federal government to help take care of those teams. - The employees are the ones most hit by this. When you lay off 62,000 employees, it's meaningful. But I will give the federal government credit. The Cares Act came together fairly quickly. - Thank you all very much.
It's a very important day. I've signed the single biggest economic relief package in American history and I must say, or any other package by the way. - So on March 27th, President Trump signs, the $2 trillion coronavirus aid package, the Cares Act into law.
This dwarfs any kind of stimulus that was handed out during the 2008 financial crisis. So it includes billions of dollars for airlines, for hospitals, for state and local governments. It has a large, small business lending program that's meant to sort of keep paying people who would otherwise have been laid off. This is a massive amount of government spending, and it's meant to put a band-aid over this broken economy.
Part of what we've had to take a very hard look at is how we make the payroll dollars under the Cares Act, work well for us and really be clear with our crew members about what we expect the future to hold. - We have not ever advocated for any sort of help from the government for Hilton. And so what we were advocating there on behalf of our owners, many of whom are small medium-sized, entrepreneurially based businesses was, we needed to help create a bridge of liquidity to help them get to the other side. - One of the things that's so interesting about the monetary and fiscal policy is it's really created liquidity and support for large businesses.
It's allowed large businesses, even those that are in distress to finance forward, very, very actively. But small businesses and especially very small businesses are just devastated by this crisis. - And the worst part is by late March, it's clear that this isn't over and that it's time to start packing sandbags. - We had around $380 million in cash, and we looked at our burn rate and we concluded that without massive layoffs and things like that, we probably spend about $10 million a month.
So we looked at it and we said, we have about two and a half years and a zero revenue environment. And that was a really important element for us, because at that time, the street and constituencies were really focused on how long companies could survive and would they be going out of business? And I think that was a really important message for us, that we had the money to survive. - We were fortunate last year, we sold off about $8 billion worth of real estate.
With that $8 billion, we sold down some debt, but between what we left and a bond offering we just did for 750 million, we're sitting on about 4.6 billion in capital and liquidity. So we have money to sustain us and it will guide what we do going forward. - The thing that's really different about this pandemic is that it is global and that the demand has been so high. Quadrupling of capacity or output from 3M is still not sufficient. The increase in manufacturing from even some of our competitors is still not sufficient to meet the demand.
- A lot of focus came on the meat production industry because so many facilities had been shutting down. - Union officials now say 164 of the nearly 900 workers at the Cargill meat packing plant have tested positive for the coronavirus. - The facility we closed in Pennsylvania came back on after 17 days and is back running again. So I think that's the best thing we can do as an industry is get adequate testing, continue to have adequate PPE, but get the plants up and running as quickly as possible so that store shelves can stay stocked. - There's really no way in a pandemic to keep everyone safe if people have to be gathering.
If they have to be working in a factory or working in a retail store, there's always risk. - What kept us up at night was figuring out if there was in fact, a safe and healthy way to return to play. There was no guarantee that you can do it in 100% safe way. And so this is literally matters of life and death. And so that weighs on you because you don't want to put anybody at risk. That is what makes the weight of these decisions so heavy.
- We lost an Empire casino, one of our places back in New York, we lost the horseman. And so it was actually the first death within our family. It just took on a different context from that point and you began to realize the responsibility of you're not only accountable to a business, but at this point, you're accountable for lives. - And we lost our first crew member, that frightened so many crew members, but also brought home the reality of this pandemic and that it wasn't going away. - One of the stories that that really hit me was the first death we had at one of our production sites.
I think this was a moment where it became very real that we have this difficult balance to walk. We make these medicines that hundreds of millions of people depend on and yet at the same time, we want to protect the people who come bravely into the office, into the manufacturing sites or our clinical trial sites, where the healthcare workers were working bravely to keep the hospitals running. - There's no magic bullet. There's no magic vaccine or therapy. It's just behaviors. - On March 31st, last day of the month, the US overtakes China in the official death count.
Total number of confirmed cases at that point are 160,000, which is the most of any country in the world. American business comes into March riding an 11-year economic expansion. By the end of the month, the economy is in tatters, 10 million people had lost their jobs. - Unemployment numbers are at unprecedented levels. - [Reporter] The drive-through, a symbol of America's capitalist invention now being used to process its millions of unemployment. - Literally, about a third of American workers were vulnerable, vulnerable either to being laid off, vulnerable to furloughs, vulnerable to reduced work hours.
Now that's clearly a much larger number than actual unemployment. - The 500 largest companies in the US are worth $3 trillion less than they were before the month began. The market, which has just been at all time highs in February is officially in a bear market territory, 20% off from the peak. - The pandemic closed the book on one chapter for American business. The decade that proceeded it was one of the most successful in history and it ended quickly.
That's a lot of whiplash for business to absorb. - Given our access to information because we have such a big footprint in Asia why did all of us and by the way, not just all of us, but so many feel that the chance of this spreading into a global pandemic was low? We all tend to look at things through a lens of the experiences that we've had. - The difference is we are much more globally connected from air travel, the way supply chains work now than perhaps 10 or 12 years ago when SARS and MERS were really taking place. We've seen the market hit record high after record highs since March, but there's a lot of rebuilding to do. And companies are now grappling with what kind of foundation they're rebuilding on.
- What might prove to be features of the economy coming out of this, one is the idea of what do we think of as essential infrastructure, essential capabilities for our company? We've now all rediscovered that in fact, the probably the most essential infrastructure in this moment, as I said, digital infrastructures. I don't think you're going to see investments in digitization slow down, actually. I think they may continue to accelerate. - One of the things that we're thinking about is how do you continue to engage fans? How do you continue to engage people who love your sport, who can't actually there physically? And this is why technology, I think and the integration of that technology, those are the kinds of innovations that have come out of this pandemic. - I think one of the capabilities that I think companies are going to now have to think hard about and build for, which is how do we build resilience, even if it comes at the expense of some efficiency.
- The Toyota way of production, including just in time supply of parts or more rigorous focus on very efficient manufacturing, that's not going to change. What may change within that is how we support our partners, our suppliers, to be resilient in order to provide just in time parts and production. - It takes in a place like this, in Bellagio about 70% normally just to break even. Even these are large ships, if you will. And so to the extent we're not in that mode, we're probably not making money.
Our principle is going to be, it's going to be some time before we get there. And so how can we look at this operation? How can we look at this business and regear it so that we can do that much more effectively at a much lower occupancy rate? - I think there's been some other different kinds of changes at the level of society and the economy is becoming even more apparent about the often the disconnect that happens between successful corporations and successful parts of the economy and the parts of society that get left behind. Those might've been abstract kind of conversations in a kind of theoretical abstract way, but I think most business leaders have come into personal direct experience with that in this moment.
- This won't last forever and some companies will be better for it. Some will be stronger for having sort of planned and been flexible and gotten through it and some will just never come back. - As an investments business, we teach our clients to look at the long-term goal, and I think that's how you run a business. You run a business for the long-term. You're prepared for the worst. This was the worst.