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Coronavirus Covid 19 and Marine Industry

Discussion in 'YachtForums Yacht Club' started by olderboater, Feb 29, 2020.

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  1. olderboater

    olderboater Senior Member

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    The first part of consideration is the direct impact on parts and on boats currently being built. That includes the impact on Chinese builders. Much depends on how long they're down. Some have plenty of financial reserves, but others don't.

    Then comes the other part. What about non-Chinese builders owned by Chinese companies? Often when there are economic crises, companies have issues not based on themselves but their parents. What about a builder like Sunseeker that is Chinese owned? What happens if the owners suffer huge losses as a result of Coronavirus Covid 19?

    Sunseeker has made other threads here for different reasons, but they were jeopardized a while back by Chinese edicts against loans for foreign entities. In 2017, Wanda divested themselves of $9.3 billion in theme parks and hotels. Sunseeker isn't contributing anything worthwhile to them in the best of circumstances. On January 30, Sunseeker registered a charge to HSBC Bank. I'll explain as those terms aren't familiar to most of us. This in essence gave HSBC the right to take any of their cash or receipts if necessary to pay any debt Sunseeker might owe HSBC. It gives the bank set off rights that are very unusual in my experience. Banks don't routinely make or obtain such rights. Before taxes Sunseeker only made 4.3 million GBP in 2018 on 297 million sales. They lost money in 2017. They have negative total equity of 57 million GBP. Now, Wanda has extremely deep pockets, but at some point I could see Sunseeker being more of a nuisance than they're worth.
  2. YachtForums

    YachtForums Publisher/Admin

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    Complex financials are outside my wheelhouse, but I wonder if concerns about the virus will affect attendance at upcoming boat shows?
  3. olderboater

    olderboater Senior Member

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    Most definitely in certain locations. All depends on timing. Worst case could see some shows canceled. The loss of Chinese tourists is already having a great impact and that's before the reluctance of others to travel and gather. In Japan, they're planning on playing professional baseball but not allowing any fans to attend. The next show is Stockholm and Amsterdam is soon, but the Dubai show for March 10 has been rescheduled to November.
  4. Pascal

    Pascal Senior Member

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    Geneva Auto show was just cancelled... chinese GP has been”postponed”... and now there are worries that the Ferrari team may notnbe allowed to get into australia for the first race of the season.
  5. Oscarvan

    Oscarvan Senior Member

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    I am not a medical professional, nor do I have formal education in macro economics. However I do a lot of reading from as broad a spectrum as I can manage and with the most verifiable sources, to the ecxtent that I can evaluate that.

    It is my observation that most of the doom and gloom is coming from the media, which results in hysteria amongst the unwashed masses which then leads to "action" on the part of the politicians. (I include all of government in this last group as it appears that they are ALL politicians first and administrators second these days).

    On the other hand the medical people are trying to explain that this is probably not stoppable as the vast majority has symptoms that are similar to other respiratory infections and thus they don't seek help and are not counted. It is now in over 6o countries THAT WE KNOW OF.... think about that. Those that do get serious symptoms seek help, get counted and yes their mortality rate is high. But it is a skewed number as we really don't know how many people have/had it.

    Our economy is global. Shutting down parts of it can not be done without affecting ALL the other parts.

    So here we are, severely damaging our economic system in a "frantic" effort to contain something that cannot be contained, and will become endemic like so many other viruses we live with on a day to day basis. Someone will probably figure out how to add something to the flu shot to cut down on the instances in the future.

    24 Million Americans will get the flu this season, 250,000 of them will require hospitalization, and 5-15% of them will not make it due to complications their immunocompromised systems cannot avoid and/or deal with. Maybe we should close all interstates, airports and shopping malls?

    If we do this every time this happens we are in deep doo doo.

    Gonna be some cheap boats for sale.......
  6. olderboater

    olderboater Senior Member

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    Here's the challenge. We know that in concentrated areas up to 20% of those in the area, get the virus. Only two areas that we have such data on though, Hubei and Diamond Princess. Now, the quarantines protected others but likely pushed the infection rates up for the areas.

    We believe the death rate to be about 1 in 50. However, with Diamond Princess it was only 1 in 118 so far. In Korea 1 in 200, in Germany 0, Japan 1 in 50, Korea 1 in 200, Iran 1 in 14.

    If the worst case developed in a city or state or in a sports arena and 20% caught it with 1 in 50 dying, that would mean if 10,000 were exposed, 40 would die. Even if 1 in 100 die, if, like flu, 24 million caught it, that's 240,000 deaths. What we have no idea of is how many people would actually catch it. In China, outside Hubei, if you believe the numbers, it's not been a large number. only 13,000 so far.

    Given normal precautions, it is far more easily transmitted than flu. However, we really have no idea how it would spread in normal society. It the area of Italy it hit, it spread rapidly and we do have the 1 in 40 death rate.

    We really don't have many answers yet. Could we take precautions like we did for Ebola and control it? Too late as it's already far surpassed Ebola. Countries now are experiencing new incidents they can't trace back to anyone. Doesn't mean they don't tie back, just they haven't been able to trace it.

    In two weeks to a month, we will start to know. Will we be looking at 200,000 cases and 7,500 deaths and fewer new cases each day or will we be looking at it progressively worsening with 1 million people and 40,000 deaths and more new cases each day than the day before.

    Not knowing is the most difficult part of it and people speculate, but right now it's impossible to say if it will fade away and into control or if it will explode to be a worldwide crisis.

    It's a common practice in the worst of flu epidemics to shut schools down for a few days, but not business. We don't know if we have an office of 100 and 1 or 2 show symptoms do we need to shut down for a week. One reason is we don't know how many others in the office already have it without symptoms yet. I do believe the scientists are gathering more knowledge daily and if they're allowed to make the calls will soon have the knowledge to do so intelligently.
  7. PacBlue

    PacBlue Senior Member

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  8. Oscarvan

    Oscarvan Senior Member

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    And I will add that the average age on said cruise tub was probably a lot higher than the general population. On the other hand, their economic status probably provided for very good health care up to that point.

    Too many variables.

    I know one thing, when it subsides "they" will take the credit and we'll be left with a VERY bad year.
  9. olderboater

    olderboater Senior Member

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    A million potential cases and 40,000 deaths would likely be considered a good outcome compared to what they are seeing as the potential. What if in the US it was 20 million cases and 400,000 deaths? That's what they fear and before we say they're all overreacting, just think of what would have happened with Ebola without strong reaction and it was nothing compared to this. Their task is to prepare for the worst and with no anti-viral and no vaccine, that's appropriate. Then we all hope they over prepared. However, we've seen this virus in small areas where it was devastating.

    Now, that doesn't really answer the question for the industry. One boat show canceled. Will more follow? How many builders have lost significant production. What if the city where others are located got hit hard. I can tell you that several Italian builders are very worried although not impacted yet. They are dealing with "what if what they're seeing in Northern Italy came to their town."
  10. Pascal

    Pascal Senior Member

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    Anyone mentioning Ebola in the same sentence as Coronavirus is just plain irresponsible.

    400k. That’s about half the number of babies killed in a.... never mind.
  11. PacBlue

    PacBlue Senior Member

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    Wow. We just went from 1 million potential cases to 20 million with a nod to Ebola in the same breadth. I don’t understand the paranoia, have lived through many flu’s in my lifetime, 4 states , two countries and have never had a known family or friend or friend of a friend die from the flu yet. It is 9th on the list of the top ten causes of death in the US. Plenty of things to keep an eye on from a health perspective.

    Supply chains in the industry will be impacted, earnings will take a hit. The strong will survive and those with shaky finances are having to take a deep look inward.

    So other than change your current travel habits, what can you really do?
  12. olderboater

    olderboater Senior Member

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    Well, the thread is about the industry and whether the fear is reasonable or not, it impacts this industry. At this point it's impacted Chinese boat builders and the Dubai Show and is close to impacting others in need of some parts.

    You're right that the ones with shaky finances are those in the most trouble, but a lot of the industry has shaky finances.

    It's impacted travel and that's impacted the airlines and the charter industry. I have no idea where this will lead.

    Other than travel habits, I can make plans for handling higher than normal absenteeism, for handling a widespread spread of the virus through our facilities, for seeing that employees get appropriate medical care. I can leave my schedule flexible and stay close at home. I can follow updates and keep in mind all the possible scenarios and be prepared as well as possible whichever way it goes. I can follow the scientists and their findings.
  13. mapism

    mapism Member

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    I can assure you that all the Italian boatbuilders, bar none, would subscribe having "only" something like the Corona occasionally affecting their business, compared to several rollercoaster rides that they experienced in the past.
    The last and most striking of which was the mostly US-driven global financial meltdown a dozen of years ago, which lead to the total shutdown of several small but historical and highly respected builders.
    BTW, also nowadays, several marine equipment builders are located in the N IT regions already more widely affected.
    This is as far as we can tell now, of course. If we will all be dead in a few weeks, well, it has been nice till it lasted... :)

    All that said, in my personal understanding, the most remarkable difference between what is happening in IT vs. the US is not so much in the gravity, but rather in the speed of reaction - hence awareness.
    I hope to be wrong of course, but I suspect that it's actually much more widespread in the US than most folks think it is, simply because you can't quantify what you don't measure.
    Italy has been the very first Country to stop incoming flights from China, and to introduce sistematic controls, already several weeks ago. Yet, the numbers released are still qualified as estimates.
    So, how many folks are already affected in the US, as of today is something that God only knows, I reckon.
  14. Alzira II

    Alzira II Member

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    I believe we will discover there is many people who currently have the “flu” or a “cold” in this country right now that actually have the mentioned coronavirus. Only the bad cases get tested, how can we believe these fatality stats when we must know many people shrug it off and move on with life without going to doctor. If this hysteria keeps up more people will die from alcoholism use , loss of job, loss off job then healthcare, suicide, stress, etc than the actual virus.
  15. Oscarvan

    Oscarvan Senior Member

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    And this just in: Genetic analysis of the two Coronavirus cases in Washington state indicate that the virus has been in the state for as much as 6 weeks...... Math says 500 to 1500 people may have been infected and have since recovered or are currently contagious.....
  16. mapism

    mapism Member

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    Having recently spoken with a friend of mine in northern Italy, who is a virologist contributing to the research on the thing, I can safely agree with you that there's much more that the scientific community do not know about it, compared to what they know.
    But for this very same reason, dismissing it as an hysteria is downright silly.
    Feel free to look at that in this way, if it makes you feel more comfortable.
    But 'fiuaskme, I'm glad that someone around the world much more knowledgeable than myself is working around the clock on it.
    Also because if there's one thing that they are sure of, is that viruses like this are not unknown to radical mutations over time.
    Hopefully for the better, but possibly also for the worse.
  17. olderboater

    olderboater Senior Member

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    This just in for anyone who is trying to use too much logic to predict the impact to businesses. They surveyed beer drinkers and 38% said they would not buy Corona Beer under any circumstances.
  18. Capt J

    Capt J Senior Member

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    I can't see how the Coronavirus Cannot NOT effect the yachting industry and where yachts are built and serviced around the entire world. Look at how many items on the yachts have some sort of part made in China. Electronics are in so many items on the yachts. Also a lot of owners are global and don't live in the Country where their yacht is, so flying if restricted is going to create another problem. AND, with any economic downturn, yachts are the first thing on the chopping block. The DOW went down 11% last week.
  19. mapism

    mapism Member

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    Agreed, of course there will be some impact on the yachting industry - as well as many other, arguably also more important, sectors of the economy.
    But the reason why I don't see that as a major concern is that when the economy is hit by external, unpredictable factors, it typically rebounds even stronger as soon as these factors disappears.
    History is there to prove that, in sharp contrast with much more structural, internal factors like the financial crisis I mentioned before, whose effects dragged for years.

    Of course, I am now assuming that this specific external factor will disappear, hopefully sooner rather than later.
    In the opposite, very worst case, well, health concerns could override any enonomic problem, I'm afraid.
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