RESEARCH TRIANGLE PARK
Companies across the Triangle are cutting back on face-to-face meetings, pulling out of trade shows and offering their services to governments as COVID-19, the disease caused by the coronavirus, continues to spread around the world.
More than 81,000 cases have been reported, with the majority happening in China, according to the World Health Organization.
But for the first time this week, the number of new cases outside of China exceeded the number of new cases in China, the WHO said.
Firms with international exposure here are closely monitoring the spread of the coronavrius to see how it could affect their employees’ health and their bottom line.
For the Chinese laptop maker Lenovo, which has a major office in Morrisville, the outbreak meant quickly offering assistance to the Chinese government. The company has donated IT equipment to new hospitals being built in Wuhan, the Chinese city where the outbreak started.
However, because of its China-focused supply chain, the company was also forced to close some factories, and it saw demand from Chinese customers fall.
“Looking forward, [there is] still much uncertainty around the novel coronavirus,” Lenovo CEO Yang Yuanqing told investors and analysts earlier this month.
It’s unclear what the long-term effect will be on the Morrisville office, as the company still tries to determine an estimate for the financial impact of the virus.
“The unfortunate health crisis could lead to meaningful disruption in Chinese demand and supply chain,” Wong Wai Ming, the company’s chief financial officer, said.
“The majority of our factories in China have reopened and are now operational, albeit on a limited basis due to transportation and travel limitations,” Wong added. “Given the situation remains extremely dynamic, it is difficult to provide an accurate estimation of the full financial impact.”
Cree, a Durham-based LED light and semiconductor maker, is also monitoring the situation as the company has a factory in China and sells some of its products there. The company is also deferring some travel to avoid exposure.
In calls with investors and analysts, the company has said the outbreak will affect its financial performance. How bad the hit will be is still too “fluid,” the company’s chief financial officer, Neill Reynolds, told investors in late January.
“Cree continues to operate the business, but as we indicated on our most recent results call in late January, we do expect some impact to our performance as a result of the coronavirus outbreak,” a spokesperson for the company said.
Chances of a recession jump?
A slowdown in China could have a major effect on U.S. businesses in the coming weeks and months.
N.C. State University economist Michael Walden said the coronavirus came as a shock to most businesses, catching them flat-footed and leaving them increasing uncertain about how they should move forward.
“Uncertainty is one of the most dangerous elements in the business world,” Walden said. “If the virus persists and cases rise and geographically spread, I think this will cause many businesses — and most certainly those with international connections — to lower their production and sales forecasts, which would negatively affect hiring and staffing.”
Lower production, sales and hiring all would increase the likelihood of the U.S. economy entering a recession, he added.
“The odds of a recession have clearly risen — my own forecasts have increased the probability of a recession in 2020 from 0% prior to the coronavirus to 25% now,” Walden said. “All this said, if ‘good news’ concerning the virus occurs, then economic indicators should rebound probably faster than they declined. So we’re in the unfortunate situation of watching and waiting.”
Federal Reserve Chairman Jerome Powell said earlier this month that it is too early to know what effect the coronavirus will have on the U.S. economy.
However, he added, there will “very likely be some effects on the United States,” Politico reported.
Limiting chances of exposure
No North Carolina cases of coronavirus have been reported. There have been dozens of cases reported elsewhere in the U.S., but most of them are people who were evacuated from the cruise ship Diamond Princess, which was quarantined in Japan. For the first time, a California resident with no connection to anyone who had traveled to China has contracted the coronavirus, the Sacramento Bee reported.
Now, companies are canceling trips to major events and trade shows that are being held in the U.S. over health concerns.
Cary-based video game maker Epic Games said Thursday that it would not attend the 2020 Game Developers Conference scheduled to be held in San Francisco.
“Regrettably, uncertainty around health concerns has made it unviable to send our employees, and so we have made the difficult decision to withdraw attendance,” the company said on Twitter.
A spokeswoman for SAS, the Cary-based software firm, said with the virus spreading to more countries outside of China that it’s “adhering to the latest WHO recommendations regarding travel restrictions in an effort to be as preventive as possible.”
IBM, which has a large presence in Research Triangle Park and owns Raleigh-based Red Hat, also canceled plans to attend the RSA Conference in San Francisco.
“The health of IBMers is our primary concern as we continue to monitor upcoming events and travel relative to Novel Coronavirus (COVID-19),” IBM said in a release.
IBM is asking employees in affected regions — China, Japan, Taiwan, South Korea and Italy — to work from home. So far that does not apply to its Research Triangle Park office, a spokeswoman for the company confirmed.
“It’s too premature for us to talk about consideration of a broader policy at this time,” IBM spokeswoman Laurie Friedman told The Washington Post. Instead it is “having our employees work from home where recommended and deciding on our participation in large meetings and trade shows on an individual basis.”
Lenovo said that in response to the virus, it is trying to cut back on face-to-face meetings as much as possible and minimize unnecessary travel.
“We are reviewing travel requests across the company on an ongoing basis with a view to minimize all unnecessary travel and any potential risks ,” Ashley Kusowski, a spokeswoman for Lenovo, said in an email. Instead the company is “favoring telephone/video conferencing instead of face-to-face meetings where it makes sense.”
Durham company has experimental drug
In Durham, pharmaceutical company BioCryst is pushing an experimental drug through clinical trials that could potentially be effective against coronavirus. While officially targeted toward yellow fever, in some clinical trials, the broad-spectrum antiviral drug has been shown to be effective against coronaviruses.
The drug, called galidesivir, is in Phase 2 trials and has not been cleared by the U.S. Food and Drug Administration for use in humans yet.
John Bluth, vice president of corporate communications at BioCryst, said the company is making sure the experimental drug is available if government agencies are interested.
“BioCryst is in active dialogue with relevant U.S. public health authorities to ensure that galidesivir is available to them — which it is — as they assess COVID-19 and potential approaches to treat and prevent infection,” he said in an email.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to
Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.
