The EconomistMarch 21st 2020 Business 572
1Capitalist age
United States, biggest companies’ board members by age
March 16th 2020Source:Bloomberg *126companieswheredataareavailableJPMorgan ChaseWalmartVisaJohnson & JohnsonBerkshire HathawayFacebookAlphabetAmazonMicrosoftApple30 40 50 60 70 80 90 100CEO Others
Board averageMarket
capitalisation
$trn0.320.320.350.350.480.490.840.891.211.22S&P 500 average*On March 13th Bill Gates stepped down from the boards of Microsoft, the software giant
he founded, and Berkshire Hathaway, a company run by his plutocrat pal, Warren
Buffett. The 64-year-old Mr Gates’s replacement at Microsoft has not been named. At
Berkshire, he will be succeeded by Ken Chenault, a respected former boss of American
Express. Mr Chenault, who is four years older than Mr Gates, may not look like the fresh
blood the underperforming conglomerate needs, exactly. But relative to its ancient
boardroom, which includes three nonagenarians, he looks positively ephebic.Very golden oldiesM
uch of thepanic-buying provoked
by the covid-19 pandemic seems over-
blown. Grocers insist they are not about to
run out of food. But in one category of pro-
duct, scarcity is all too real. Overwhelmed
health services are desperately short of me-
chanical ventilators to help the roughly
10% of sufferers with severe symptoms to
breathe. Political leaders are urging exist-
ing specialist producers to ramp up pro-
duction. Germany’s government ordered
16,000 new machines from two domestic
producers. Others, like Britain’s prime
minister, Boris Johnson, want manufactur-
ers of all stripes to retool and help out. That
is easier said than done.
It is hard to pin down how many venti-
lators health-care systems have on hand.
The last survey of ventilator capacity in
America was ten years ago. It tallied 62,000
sophisticated machines and 100,000 basic
ones. American health authorities are now
hastily counting anew. They are likely to
find fewer than 200,000, 80-90% of which
are typically used by non-covid patients. A
rough calculation by The Economist sug-
gests that, if the virus keeps spreading at
the current rate, America would run out ofspare devices in four weeks. The situation
is worse in other countries (see chart).
In 2019 ventilator-makers had the ca-
pacity to churn out just 40,000 units suit-
able for intensive care, according to Get-
inge, a Swedish firm which makes one in
four such machines sold worldwide. Most
companies build kit, which costs any-
where between $10,000 and $60,000
apiece, to order rather than keep inven-
tories. Premier, a firm that bought 2,000
last year on behalf of 40% of America’s hos-
pitals, says that buyers must now wait 8-12
weeks for new ones to arrive, not a fort-
night as in normal times. Getinge’s orderDemand for breathing apparatus
greatly outstrips supplyManufacturingMy iron lung
Too little breathing room
ICU* ventilators per 100,000 population aged 65+
2020 orlatestavailableSources: National statistics;
press reports; The Economist*Intensive-care unit
†Assuming 50% increase
on reported numberNew ZealandFranceChinaSpainItalyBritainAustraliaIrelandCanadaAustriaGermanyUnitedStates1501209060300Middle estimate High estimate†6.7m in early March. A survey in Britain for
Barclaycard, a payments firm, points to
year-on-year growth of 12% in subscription
entertainment services like Netflix in the
four weeks to February 21st, and of nearly
9% growth in food takeaway and delivery
spending. Amazon is hiring 100,000 new
distribution workers in America to meet
demand for internet shopping.
Bricks-and-mortar firms that have in-
vested in online offerings are also cashing
in. A survey of American shoppers con-
ducted on March 13th by Gordon Haskett, a
research firm, found that one in three
bought food online in the previous week.
Among the 41% doing so for the first time,
over half chose Walmart, with its conve-
nient grocery pickup and delivery service.
In Britain Tesco and Sainsbury may be out-
pacing Aldi and Lidl, European discount
chains that have invested less online.
And, of course, any firm that comes up
with a vaccine or treatment for covid-19 can
expect a bonanza. Amid the market melt-
down the share price of Gilead, a biotech-
nology firm working on a coronavirus
drug, is up by 20% this year.
One lasting consequence of the pan-
demic will almost certainly be further con-
centration of corporate power in the hands
of a few superstar firms. The current airline
carnage may leave skies everywhere re-
sembling the uncompetitive ones above
North America. JPMorgan Chase, a bank,
observes that American carriers generate
two-thirds of global airline profits with
barely a fifth of worldwide capacity (not to
mention shabby service). Similar consoli-
dation now looks all too probable in Eu-
rope and Asia.
Companies with the most resilient
businesses, deepest pockets and longest
investment horizons may grow more super
still through cut-price acquisitions. Ru-
mours swirl that Apple, with a gross cash
pile of over $200bn and Tinseltown ambi-
tions, may swoop in to buy Disney, whose
share price has nearly halved since January.
Warren Buffett of Berkshire Hathaway, who
is sitting on $128bn and has long grumbled
about overpriced equities, may at last find a
bargain or two. Having raised a record
$888bn last year, private-equity firms are
on the prowl. Steve Schwartzman declared
earlier this month that the dislocation and
fear caused by the coronavirus has created
“a substantial opportunity” for Blackstone,
the buy-out powerhouse he leads.
The Depression wreaked economic hav-
oc but also produced radical new business
models from carmaking and entertain-
ment to beauty products. In time, today’s
crisis, too, may lead to some corporate res-
urrections—and plenty of new births.
Comparisons to that agonising time in
world history must not be made lightly.
That they look apt is a sign of just how bad
things are looking right now. 7