Virus Spreads Havoc on Businesses

[Dave Farber <dave () farber net>]

Virus Spreads Havoc on Businesses

April 3, 2003
By KEITH BRADSHER 




 

HONG KONG, April 2 - As the highly contagious respiratory
disease that began in China continues to spread, its impact
on business activity is stretching from Hong Kong around
the globe, disrupting complex supply chains and forcing
industries from airlines to banking to adjust their
operations. 

UBS, the Swiss bank, is ordering employees returning to its
European offices from trips to Asia to stay home for 10
days before reporting to work. Intel is canceling two major
conferences in Asia for suppliers, customers and computer
programmers. And KLM Royal Dutch Airlines has warned that
the disease, known as severe acute respiratory syndrome, or
SARS, is hurting international air travel more than the war
in Iraq. 

Further disruption seemed probable after the World Health
Organization yesterday urged travelers to avoid Hong Kong
and Guangdong Province in China, the first time the W.H.O.
has ever issued a global warning against travel to an area
because of an infectious disease.

The warning from the W.H.O. came as the Centers for Disease
Control said there were 85 suspected cases in 27 states,
and China admitted yesterday that it had 1,190 suspected
cases, not 806, and 46 deaths instead of the 34 it had
previously acknowledged.

Health officials still do not know if SARS will spread
further throughout the world or burn out on its own. At the
moment, the number of cases is relatively small compared
with some other respiratory diseases.

During an average year in the United States, influenza
kills about 36,000 people, most of them elderly or with
underlying diseases. As far as health officials can
calculate at the moment, the death rate from SARS is about
3 percent, about half that of West Nile fever.

But because so little is known about the highly contagious
disease and because, aside from standard nursing care and
help in breathing, there is no treatment or vaccine, health
officials here and around the world remain deeply
concerned. 

Fears about SARS are affecting so many businesses that
economists at many of the big investment banks reduced
their estimates today for economic growth in East Asia,
especially in Hong Kong and Singapore. Goldman Sachs, for
example, estimated that the disease would reduce economic
output in the current quarter by seven-tenths of a
percentage point in Hong Kong, half a percentage point in
Singapore, three-tenths of a point in Taiwan, and
two-tenths of a point in Thailand.

The immediate impact is most severe in the travel and
tourism industries. In a survey released Tuesday by the
Business Travel Coalition, an advocacy group for business
travelers, 27 percent of the respondents were banning
travel to Asia and 8 percent were considering a ban.

Kevin P. Mitchell, president of the advocacy group,
estimated that the survey's participants spend an average
of $734,000 a day, or $268 million a year, on air travel to
Asia. 

Entertainment in Asia is also being affected. The Rolling
Stones, Moby and Carlos Santana have canceled or postponed
concerts. 

Businesses across East Asia, especially here in Hong Kong
at the epicenter of the SARS outbreak, are being forced to
develop a new approach to workplace health.

J. P. Morgan Chase has split some important departments
into two shifts that take turns working a week in the
office and then a week at home, in the hope that if one
shift becomes contaminated with the virus, the other shift
can take over. 

The hardest-hit company here appears to be HSBC, a bank so
dominant in Hong Kong that it used to be said that its
branches were more common than rice shops.

Five HSBC employees - one each in treasury, trade finance
and private banking and two in branches - have fallen ill
here with SARS. On the advice of its doctors, HSBC is
sending home only those workers who had close contact with
workers who became ill, and it is not clearing out an
entire floor each time.

As a precaution, however, HSBC sent 50 fixed-income bond
traders home last Thursday with instructions that all those
who stay healthy for seven days - the disease's usual
incubation period - should then report to a backup site at
the other end of the harbor from the bank's headquarters.

Fears about the disease are affecting many companies in
other parts of the world as well.

Intel, the computer chip maker, has decided to cancel two
conferences it planned to hold this month in Taipei and
Beijing for about 1,000 suppliers, customers and computer
programmers, according to Chuck Malloy, a spokesman.

In Switzerland, the government barred visitors from China,
Vietnam, Singapore and Hong Kong from working at
exhibitions at the 86-year- old World Watch and Jewelry
Show in Basel and Zurich.

Of 650 stands registered for the Zurich fair, 400 were
closed because the employees of the stands, most of whom
were already in Switzerland, were not allowed to work.

In Canada, where more than 100 people have been infected
with SARS, Chinese restaurants and shopping areas in
Toronto were shunned today while face masks and
thermometers were big sellers. For a few businesses,
however, the SARS outbreak is proving to be a boon.

"We've seen a reasonable increase in sales," said John
Mozas, general manager of Grocery Gateway Inc., which
operates an online supermarket. But Grocery Gateway, too,
has made changes to accommodate customers' concerns. For
the time being, all its delivery people are required to
wear gloves and to leave orders at customers' front doors.

The biggest question now is how much the SARS outbreak
will affect China. Taiwan in particular has been strongly
discouraging its citizens from visiting the mainland after
a spate of SARS illnesses among recent arrivals from there.


Taiwanese companies working with mainland factories produce
much of the world's desktop, laptop and notepad computers
and dominate the market for wireless local access network
equipment, for example. But because few factories on the
mainland have many engineers of their own, Taiwanese and
other companies fly in engineers to oversee the design of
products as well as the construction and equipping of new
factories. 

Manufacturers have tried to accomplish the same tasks
through videoconferencing and the Internet, but they have
mostly been unsuccessful. If the current difficulties cause
a delay in tight schedules for the introduction of new
computer models and the construction of factories,
multinational companies may seek additional sources of
supply. 

"One of the imponderables here is how this will affect
perceptions of China," said Russell Craig, the research
director for semiconductors at the Aberdeen Group, a market
research firm in Boston. "Until this happened, it was the
absolute hot spot in terms of the electronics industry."

http://www.nytimes.com/2003/04/03/business/03IMPA.html?ex=1050353608&ei=1&en
=8d920151c5c174fd



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