Apple and Amazon vs. the Virus

is starting to come into view. The International Monetary Fund said that what they're calling the Great law Down Recession will be the steepest in almost a century, and if the virus lingers or returns in waves, things could be even worse. The i m F predicted in its World Outlook report that the global economy would shrink by three percent this year. It would be the deepest dive since

the Great Depression. In the US, White House Economic advisor Larry Cudlow said that the three hundred forty nine billion dollars that had been allotted to help rescue small businesses in trouble because of the outbreak will run out of money as early as this Thursday. The money was part of the two point to trillion dollar stimulus package that

Trump signed into law late last month. A plan to add an additional two hundred fifty billion dollars to the Small Business Association program has stalled in Congress, and a new report from McKinsey adds to the growing evidence that COVID nineteen is taking a disproportionate toll on America's black population. The disease is more likely to kill Black Americans, and for those who survive, the pandemic will take a devastating

toll on their jobs and future earning potential. Black Americans are more likely than white Americans to have underlying health conditions that exacerbate the effects of the virus. They're also overrepresented in high contact essential services. And now for today's main story, big tech versus the virus. The coronavirus has dealt a severe blow to the global supply chain, with fewer workers to produce certain goods and a sudden surgeon

people demanding them. There have been shortages of everything from life saving equipment like ventilators two household staples like toilet paper two of the world's big guest companies, Apple and Amazon rely on a supply chain for electronics and goods that is spread all across the world in many countries that have been hardest hit by the coronavirus. The Czech giants employ hundreds of thousands of people, so their fate, in many ways is the fate of the global economy.

To take a close look at how badly hit these companies will be by the virus and what they're doing about it, here's Bloomberg's head of Global Tech coverage, Brad Stone. The tech industry is caught in the middle of the chaos at COVID nineteen is unleashed on the global economy. We spend a lot of time here on the tech team covering Apple and Amazon and the other big tech companies, and they once seemed invincible, and now they too are

swaying under the pressure of this global pandemic. I'm here with one of our stellar reporters to break it down, Mark German. Let's start with Apple. Apple supply chain is often hailed as one of the best in the world. Old Tim Cook, Apple CEO, really made his name over the course of two decades assembling a network of manufacturers in China that could mass produce products like the iPhone.

And so when the coronavirus first hit China in December, you know, how did Apple and its manufacturing partners respond. Right when coronavirus hit, you know, Apple supply chain immediately came into focus, and you know, it was nearly decimated depending on how hard this was gonna hit the area where Apple's factories are across China and other parts of Asia.

And what really slowed this down was this hit during the Lunar New Year holiday, where lots of workers and Fox On other facilities or elsewhere in China and in the world visiting family. So what they had to do was they had to quarantine for about two weeks or maybe more in some cases upon return, which slowed down the return to work process. But as we sit here today in early April, Apple supply chain in China is

nearly back up to speed. I mean, do you think Apple and and companies like Fox Con were in part fortunate that workers weren't crowded into those factories where they could have spread the virus. Yeah, you know, bred that that's a good point that they are fortunate in that sense.

That people were elsewhere. They weren't all crowded together hundreds of thousands of people in dorms and inside the factory floors, versus the spread that would have come into place if you had those hundreds of thousands of workers all there together at the same time for the entire period of the virus. This probably did end up saving a lot of lives just by the fact that this was during

that holiday period. So I think in the popular imagination, Apple supply chain is sort of concentrated in China, but really it's spread out, and now, of course the pandemic, unfortunately has spread out. So how has Apple fared elsewhere in the world. Yeah, that that's true, Brad. China is basically the the engine for final assembly, but a lot

of the components are sourced from all over. You see Apple being very impacted in places like Israel and South Korea and Italy and London and other parts of Europe and Middle East that are hit by coronavirus. So this is going to take some time to to smooth through.

But you know, it's really hard to take hold of the situation because Apples a global company and this is a global pandemic and Brad, You're the expert on all things Amazon, so I should really ask you, how is this global giant being impacted in terms of being that logistics company that can bring anything to your home? How

is that being changed because of the coronavirus. Yeah, I would say everything has changed, and they've made some difficult, perhaps impressive, but very controversial choices in their fulfillment centers. These are the hundreds of warehouses really across the world at store and then ship products to people's homes. The first thing that Amazon did was they really prioritize the

shipment of essential products, so groceries and medical equipment. You know, you used to end the good old days be able to get everything within a day if you're a Prime member, and now it takes sometimes days or even weeks if you're ordering something like say a book, you know, the

original item that Amazon used to sell. But of course, Bred being a company with tens of thousands of workers in these warehouses, dealing with these new requirements in the middle of a global situation like like the coronavirus, they might not all be happy. Right. What's the union, the labor the whole pr situation that everyone's talking about around that. Yeah, there are a couple issues. I think the biggest one

is safety. You know, Amazon, like a lot of other companies, wasn't able to get ahold of the personal protective equipment like like masks that it really needed to ensure the safety of its workers. And those workers have to come into some you know, sometimes very crowded facilities, work shoulder to shoulder, and they're taking a big risk. And you know, they asked Amazon to do more. You know, Amazon, to its credit, you know, raised that it raised their wages

by a couple of dollars. It offered things that it hadn't offered in the past, like paid sick leave or workers who had signs of the virus and unlimited unpaid leave. And yet you know, we saw workers really um you know, asking them to do more and making their voices heard. So what is you know, Amazon doing about these efforts to organize unions in these facilities. There's a developing situation

that really illustrates how Amazon is thinking about it. There was a longtime Amazon worker named Christian Smalls who organized a protest at the Staten Island facility, and actually a day after the protest, he announced live on Bloomberg TV that he had been dismissed by Amazon. He said the company accused him of exposing other workers to the virus. Well.

A couple of days later, a memo leaked to the news organization Vice And this was a memo that was written by a senior executive at Amazon, a lawyer named David Zapolski, and Zapolski, in a senior meeting with Jeff Bezos and other executives, wrote that Smalls was not smart or articulate, and he talked about an effort to paint Smalls as really part of a deliberate pr strategy to make him the quote face of the entire union organizing

movement end quote. So what does that mean? You know, it shows that they're really trying to undermine the movement to take this one situation and maybe a perceived safety violation on the part of Smalls, and to undermine the entire union, you know, organizing effort that now threatens Amazon really for the first time and its twenty five year history. So, Brad, this begs the question, how bad is this for Amazon? How bad is this labor and union situation going to get?

I think this is a setback I think the leaked memo gives some momentum to efforts to organize Amazon's workforce, but in the end, I don't think it's that much of an impediment to the company. You know, Amazon's uh force, it's like utility in our lives right now. We rely on it. It's one of the few retailers that's even operating right now. So this is a setback for sure. I don't think it's it's any sort of existential threat. And Mark, that leads me to the last question for you.

I think it was a famous general who said supply chain haines win wars. So who has the most durable supply chain here? And who's going to be flexible enough to get through this global pandemic? You know? I mean you've seen Apple. You saw Apple bounce back very quickly from coronavirus in terms of their final assembly line in China, and with two hundred billion dollars in the bank in cash,

it would be really hard to bet against them. But it would be also pretty difficult to bet against Amazon, which has shown a very strong ability to also roll with the punches. Mark German, thank you so much, Thank you for having me this is brad Stone signing off from my closet just north of San Francisco. That was Bloomberg's Global tech editor Brad Stone with tech reporter Mark German.

And that's it for the Prognosis Daily Edition. For more on the pandemic from our bureaus around the world, visit bloomberg dot com, slash Coronavirus and one Small favor. If you like what we're doing, please take a second to rate the podcast and leave us a review on Apple Podcasts or Spotify. It helps more listeners find our global reporting. The Prognosis Daily Edition is hosted by me Laura Carlson. The show was produced by me Seawan Wen Tover foreheads

Jordan Gaspoure and Magnus Hendrickson. Today's main story was reported by Bradstone and Mark German. Original music by Leo Sidrin. Our editors are Francesca Levi and Rick Shine. Francesca Levi is Bloomberg's head of Podcasts. Thanks for listening.