May 1, 2020
The coronavirus crisis has rocked capitalism to its very foundations, with markets in turmoil, companies facing insolvency, individuals facing unemployment and governments borrowing at breakneck speed to limit the damage of the above.
The chaos the pandemic has unleashed is not unique but rather an iteration of a familiar story that has occurred time-and-time again in the capitalist world. This economic system is propelled forward by cycles of innovation that create new industries and destroy old ones.
The trigger is always different – an energy crisis, a collapse in the housing market or this time around, a global public health emergency. But the boom and bust principle is always the same.
It was the Austrian economist Joseph Schumpeter who first used the phrase “creative destruction” to describe the processes of capitalism. Schumpeter thought that innovation was the key driver of economic growth and that businesses driven by innovation in turn would be able to adapt to new economic conditions and thrive.
While we have no way of knowing how and when the economic crisis triggered by coronavirus will end, it is the ability to innovate which will be rewarded when it does. Times like these remind us that innovation is not just a buzzword but rather a means to safeguarding businesses from the disruption that is always around the corner.
The North East has a proud heritage of innovation, having powered the Industrial Revolution and given the world the lightbulb and the railways. We have not always been first to adapt to new economic conditions, but we have learned from our experiences and today have more innovative companies adapting to the new normal than ever before.
Whether it’s music venues streaming digital concerts, restaurants and retailers adjusting to home delivery, or manufacturers producing in demand supplies for the NHS frontline, the North East is showing that it will be part of the new world that emerges.
Companies that have pivoted to tackle the public health crisis are almost twice as valuable in economic terms. Not only are they demonstrating their ability to innovate and drive future growth, they are also directly involved in eradicating the thing that has triggered this crisis in the first place – coronavirus.
Barbour is one of the North East’s most recognisable brands. The 126-year-old company has weathered its fair share of crises, consistently reinventing itself in the face of changing trends and demands. If Barbour had stuck to just selling oilskins to mariners, dockers and farmers, it likely wouldn’t be a household name today.
That the South Tyneside-based company is now pivoting to produce personal protective equipment (PPE) is another example of this legacy. Working closely with the Royal Victoria Infirmary (RVI), which was the first hospital in the UK to treat coronavirus patients back in January, Barbour is moving to large scale production of medical gowns and scrubs for NHS Trusts across the North East.
Stressing that everyone has a role to play in the fight against COVID-19, company chairman Dame Margaret Barbour says: “The factory where we normally make our classic wax jackets is no stranger to adaptation.
“During both World Wars, we turned the factory over to make military garments to assist the war effort. We are pleased to once again be able to make a difference and this time, to support the NHS.”
Another firm using its manufacturing capacity to help beat the spread of COVID-19 is the Poetic License distillery in Sunderland. The company, which normally produces small-batch speciality gins with flavours like honey-bee blossom and blackcurrant and ginger, is now producing hand sanitiser for the NHS and the public.
Using ethanol, which is part of the distilling process, Poetic License is producing 2000 bottles of sanitiser, made to World Health Organisation (WHO) specifications.
“This is about us being able to do something for the community,” says managing director Jonathan Graham.
A number of bottles are being donated to the NHS and are available to buy for £3 for a 100ml bottle, with a maximum order of four bottles per customer.
Meanwhile, one of the North East’s most renowned innovative companies – Sedgefield-based Kromek – is pivoting to produce crucial medical equipment to the frontline.
The company, which is known globally for its flagship D3S detection technology used to identify terror threats such as ‘dirty bombs’, has plans to manufacture and supply thousands of ventilators for UK and international markets.
Dr Arnab Basu, chief executive, hopes that as many as 2000 of the life-saving machines will be available within 12 weeks and is working with Metran Co. Ltd – Japan’s leading ventilator maker – to make it happen.
“We have been working through the British Embassy in Japan with substantial help from the Department of International Trade,” he says. “By combining our existing manufacturing skills with Metran’s proven technology, we expect to manufacture and deliver these robust ventilators in a rapid manner.”
This is just a snapshot of the many North East firms that are finding opportunities to provide products, services and value in this crisis. And while changes in production at Barbour, Poetic License and Kromek may be temporary, they demonstrate an agility and capacity to innovate that is going to be crucial as we redefine ourselves in the age of coronavirus.
As businesses battle through this period of disruption, the Schumpeterian principle of creative destruction reminds us that this is all a matter of course.