European Best Pictures Of The Day - March 17 - ELLESMERE PORT, - MARCH 17: Recently assembled Vauxhall vehicles are stored in the distribution yard at the Vauxhall car factory on March 17, 2020 in Ellesmere Port, England. The carmaker's parent company, PSA Group, said its plants would remain closed through March 27, citing a drop in demand and supply-chain disruption due to the COVID-19 outbreak. (Photo by Christopher Furlong/Getty Images)
There is a growing acceptance of the need to switch from pure pursuit of shareholder value to a model based on inclusivity, sustainability and purpose © Christopher Furlong/Getty

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In the years leading up to the second world war, Britain’s government devised a plan to catch up with Germany’s speedy rearmament. It came up with the “shadow scheme”, ordering the creation of new factories and telling car plants in the Midlands to switch production and make planes and tanks. The massive retooling effort was led by Lord Beaverbrook, the press baron whom Winston Churchill made minister of aircraft production. Today, governments around the world are once again on a war footing as they try to combat the coronavirus pandemic. The unfolding health and economic crises are forcing companies to adapt.

This time the urgent need is not for aircraft but for emergency health equipment: everything from life-saving ventilators to protective suits for front-line hospital staff to humble hand sanitiser. With the usual manufacturers unable to keep up with the soaring demand, the rest of industry has rallied to help. In the UK, a group of aerospace companies, including Meggitt and Airbus, joined by carmakers, has responded to calls by ministers for more ventilators. Smiths Group, which makes lightweight ventilators, is boosting production. In Europe, companies including LVMH, the luxury goods conglomerate better known for perfume and champagne, has shifted production to hand sanitiser. Germany’s Nivea is making medical-grade disinfectants. In the US, carmakers are among those talking to the Trump administration about producing ventilators. 

At such extreme times it is only right that business steps up. Governments and central banks are deploying all their firepower to help keep markets and economies functioning in the face of a near total economic shutdown. Before Covid-19 spread around the world, business leaders had pledged they would pursue a more responsible capitalism. There was a growing acceptance of the need to switch from pure pursuit of shareholder value to a model based on sustainability. For business, the pandemic is a chance to demonstrate that the label “purpose” is not just skin deep.

Business leaders are understandably keen to help out — many will feel a public service duty; there is logical business rationale at play, too. With large portions of manufacturing capacity lying idle as demand has plummeted, anything they can do to keep some workers busy is a benefit. It is in everyone’s interest to pull every lever they can to help the world survive this crisis. Companies can do well by doing good.

Today’s plans to harness industry are not on the scale of the production shift that took place in 1930s Britain. There are also two important differences: countries are not at war and, in the UK specifically, today’s efforts for now lack a central commanding figure like Lord Beaverbrook. But to win battles, troops need leaders, ones who are happy to sacrifice custom in pursuit of a greater goal. The longer this pandemic lasts, the greater the pressure will be on governments everywhere to identify their own modern-day Lord Beaverbrooks. 

Given the scale of this crisis, governments will also have to decide whether companies’ offers to volunteer are enough. In the US, President Donald Trump has invoked the Defense Production Act, which grants presidents powers to force industry to produce critical equipment, but said he will not use it. Yet through state orders and measures to protect jobs, governments will inevitably play a much larger role — potentially leading to something akin to wartime-style command economies. That should not continue once the virus abates. For now, however, businesses must be ready to do all they can in the fight against the pandemic. 

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