JSR’s Global Pandemic Response to COVID-19
I am grateful to report that, to date, our JSR family has not suffered any serious health impacts from the Coronavirus outbreak. Also, thanks to the exceptional efforts of our global pandemic committee, in concert with each group company’s superb local response actions, all of our operations continue to support our customers across the globe. It seems clear though, that we are only at the beginning of this crisis and I ask that each of you redouble your efforts and remain vigilant.
As CEO I am seeing the impact of this crisis from many different perspectives. Each region seems to be following particular cycles and responses and, commensurate with this, different mental states and attitudes. Each business also has specific challenges for operations, supply chain and market impact
China has hopefully seen the worst and now is trying to return to some new sense of normal, albeit with continued severe restrictions and monitoring. Europe, especially Italy and Spain, has seen a terrifying increase in mortality and most regions are implementing stringent controls on movement and gatherings. Japan was impacted early and instituted some controls but nothing as strict as China or Europe. In the face of new data however, Japan may now need to take more aggressive measures.
As I write this, we in Silicon Valley are entering our third week of sheltering in place. We were the first region in the US to do this. Our health care resources are preparing as best they can for an anticipated surge, but so far, we have not seen a spike in deaths. By comparison, New York, which implemented controls only a few days after California, is seeing their health systems overwhelmed. We each may be experiencing this crisis differently, but some things are certainly shared. Each of us now understands how quickly our veil of normalcy and security can be shredded. It is, however, at times like these when we need to turn to each other and trust one another.
Personally, it feels uncomfortable not to be able to move freely to all of our different sites, but in reality, our executive team is in constant communication and our global infrastructure is serving JSR so well. For example, our colleagues in China were able to share their experience quickly with the other sites so as to better prepare them practically and mentally. Also, Kawahashi-san and I exchange emails and phone calls daily. In addition to the response efforts, we are finalizing our new MTP and working with each department on the FY2020 budget. In short, we are adapting, and business continues.
个人而言，不能自由的到我们各个公司去视察是件非常可惜的事情。但是，事实上， 我们的行政团队正不断的与全球基础服务部门进行良好的沟通。 与此同时，我和Kawahashi-san每天都会通电话和发邮件。除了疫情工作，我们正落实我们新的中期计划。并与各部门定制2020财年的预算。言简意赅，我们正在适应改变，并正常运作中。
Regarding FY2020, no one knows what the economic impact will be, but we do anticipate that at least the first half of the year will see a global recession. In the US I’ve seen predictions of a 25- 30% contraction through the third quarter. The question then is how long will the downturn last and how quickly will we see a recovery? Most all of the regions’ governments have committed massive economic support which will certainly help. I believe each business will follow a different trajectory and the keys will be to gain as much visibility and to maintain as much optionality, as possible.
In the petrochemical sector, we already know automobile and tire markets have been hit extremely hard and we expect a significant drop in demand for an extended period. I should also note the extreme volatility we are seeing in the energy sector. The cost of oil is in the mid-20 USD range reflecting both a big drop in demand, as well as tensions between Saudi Arabia and Russia on how much oil to produce. For Semiconductor, some customers are actually noting an increase in business as demand surges in support of so many people working from home and relying on electronic entertainment. We do expect a significant slowdown in this sector, however, for at least the first half of the year. Yet there is a very real possibility that demand will snap back quickly, so we need to make sure we do not fundamentally damage our ability to support our customers. The Life Sciences market has historically held up very well during downturns and, consistent with this our specific businesses’ forecasts still look strong. One bit of news that we all can be proud of is MBL’s development and release of reagent kits used to test for the virus.
In summary, we are facing huge uncertainty. In this environment, we will be asking each unit to act as prudently as possible, especially until we have better clarity. The pressure on the budget will be real. We cannot, however, sacrifice our mid- and long-term business prospects. Proper balance is crucial.
In closing, I want to thank you all again for your tremendous efforts in the face of our many on-going challenges. JSR is demonstrating resilience in action and I am so proud to be part of this organization. Please don’t hesitate to reach out to me and let me know how you are doing. And, most importantly, please take care of yourselves and of each other.
CEO, JSR Corp.