The Friday Report: May 29th, 2020

Quick wrap up of a few hot topic newsworthy stories in the supply chain logistics industry

Sales of Plant-Based Meat Alternatives Soar During COVID-19 Pandemic

Although many meatpacking plants are up and running, thousands of workers have tested positive for coronavirus and some have died.  Although meatpackers have invested more in worker safety to reduce the spread of COVID-19 however the number of infections continues to increase, renewing fears about the meat supply.

Consumers have watched the situation closely.  From the start of the novel coronavirus outbreak in the wet markets in China to the meat shortage in grocery stores, consumers have started to explore meat alternatives, including Beyond Burger, Tofurky and Impossible Burger

According to the Plant Based Foods Association, all 175 members have experienced increased demand for plant-based food products since before the onset of the pandemic.  Beyond Meat Q1 net revenues are up 141 percent from the same time period in 2019 and their stock rocketed up 26 percent.

Retail Bankruptcy Filings Erupt in COVID-19 Pandemic

As we have seen over the past few years, retail is in transition.  From closing shopping malls to filing for bankruptcy and pushing to handle direct to consumer e-commerce, retailers are struggling.  Of course, the bottom fell out with the introduction of a global pandemic.

In some cases, filing for bankruptcy can provide the means to shed debt, debut new strategies, reorganize the business and launch a leaner, smarter company.  Unfortunately, these are not ordinary times.  Between the high unemployment, uncertainty surrounding the COVID-19 pandemic and weakened consumer confidence, many companies are being forced to liquidate as buyers have not emerged.

Pier 1 and health-conscious grocer Earth Fare are two of those in this position.  Five of fifteen retailers which announced bankruptcy filings will be closing their businesses.  Last year, 16 of 25 retailers that filed for bankruptcy liquidated their assets.

With the unemployment rate soaring to 20%, continued use of social distancing and other factors, this trend is expected to continue.

U.S. Government Makes Move to Subsidize American Sourcing Out of China

According to a recent report from Reuters, the United States government may be getting ready to invest in incentives to help lure companies away from China.  American companies that move operations out of China may be eligible for tax breaks, structured subsidies and less onerous regulations. 

Reuters reported that a plan is being developed which potentially includes a “reshoring fund” that would be seeded with $25 billion to encourage American companies to reimagine their China sourcing strategies.  The fund would be used to encourage companies that produce “essential goods” to relocate manufacturing to the United States.  This includes raw materials as well as finished goods.

Japan has launched a similar program with a 243.5 billion yen stimulus package designed to encourage Japanese companies to relocate manufacturing out of China.

Within the past week, President Trump signed an executive order providing a U.S. overseas investment agency with new power to encourage manufacturers in the United States. Reuters also reported that both Democrats and Republicans are drafting legislation to decrease reliance on China for critical products including food and pharmaceuticals.

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