Ambitious (old) plans ventilated for UK manufacturers

After a marshal call to action from the Government,  plans have been announced for British engineering firms to convert a portion of their production capacity to manufacture the large numbers of new ventilators that the NHS requires in order to deal with the significant number of COVID-19 cases that it is ministering. 

Drawing parallels with the method by which Spitfires were produced during World War II, the proposal is for companies such as Rolls-Royce, Airbus, and McLaren to utilise some of their workforce and infrastructure, which might otherwise be hibernated due to coronavirus concerns, to 3D-print components and assemble the full ventilators.

Besides the patent public-interest credentials of this idea, it demonstrates an encouraging elasticity from businesses who could be at risk of serious financial difficulties if all activity (and the consequent revenue) ground to a halt. While it is proposed that these firms will provide their expertise and staff gratis, it appears that the Government will pay for the finished ventilators; therefore, the companies may generate some income from the project. The opportunity cost of dormant capacity will be keenly felt in this sector, so the proposal represents an interesting way for companies to keep some revenue flowing (albeit less than normal), ensure that their employees have work to do despite the ordinary production slowdown, and to pitch in and help the NHS all at once.

Besides the primary aim of producing more ventilators, it remains to be seen whether a knock on effect of these proposals will be that more businesses endure that otherwise would have failed; many companies (even household names) live hand to mouth, and a few months of reduced income could put some in real trouble. In the coming months directors will be looking to their advisers to assist in preparing and updating their contingency plans, and to help them navigate this epoch-defining time not just by surviving, but by utilising the opportunities that arise from the maelstrom. More than ever, companies will need to think laterally, take as much as advice as possible on the legal and commercial options available to them, and explore new avenues for activity and revenue - even where that means a significant departure from their 'normal' field.