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Sharp drops in demand and severe supply chain disruptions continue to plague Aussie businesses

This report is the fifth in a series of monthly reports by Ai Group about Australia’s business experiences of the COVID-19 pandemic, as of July 2020. Throughout 2020, Ai Group has provided assistance, information and advice to thousands of member businesses who are experiencing the consequences of activity restrictions and reductions in income due to this pandemic.

As part of this process, we have collected detailed feedback from Australian businesses about their experiences, through a range of sources including emails, surveys, web queries, phone calls and (remote) meetings. This report summarises the impacts, responses and requirements of businesses as a result of the COVID-19 pandemic. Ai Group received over 1,000 reports from businesses about their experiences between March and July 2020. They told us that:

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1. The most-reported impact on business from COVID-19 has been a sharp drop in demand. Production has also been hampered by severe disruptions to supply and freight services (international and interstate). Increased workloads due to new OH&S requirements and increased ongoing costs due to PPE and other measures were reported by many businesses in March and April, resulting in reduced productivity and/or elevated staff anxiety for many workplaces (chapter 1).

2. In response to these impacts, businesses initially focussed on risk mitigation and workplace health and safety. They moved staff to home-based work where possible and developed COVID-19 safety plans. As the crisis wore on, reduced demand and revenue forced more businesses to cut work hours and/or employment numbers. The support of JobKeeper helped to stem these cuts from May. From May, business responses shifted towards adjusting work practices, work sites and their product offering to accommodate ‘safe working’ requirements. (chapter 2).

3. The unique and rapid nature of this crisis has meant businesses everywhere have required urgent assistance with responding to COVID-19 and to various activity restrictions. In March the most pressing need was for clear, straightforward information and directions. Many businesses also needed practical assistance with international and domestic freight, access to PPE and workforce management. From April, the sharp drop in demand meant that most businesses needed to seek financial support. They now want restrictions eased and more certainty about the path ahead. Many also want a stronger focus from national and state governments on infrastructure development, local procurement and investment (chapter 3).

The experiences summarised in this report pre-date the ‘stage 3’ and ‘stage 4’ activity restrictions imposed in Victoria from the end of July, as well as the interstate border closures implemented by various states throughout August. The effects from these latest restrictions are large. The Australian Treasury estimates they will result in lost output nationwide and over 250,000 additional job losses in Victoria and elsewhere.

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