Corona makes long-term planning impossible for companies. Three executives in the dark about management.
In the coming year economic output should grow again, unemployment should decline and overnight stays in tourism should increase again. Positive reports like this are currently rare – and often of short validity.
Because since Tuesday of this week Austria has been at a standstill again. Hotels, restaurants and shops are closed – and this changes the outlook for 2021 again.
For companies, it is driving in the (short) term, management into the unknown. Forecasts made a month ago are quickly outdated. “The uncertainty has also captured science,” says Martin Kocher, chief economist at the Institute for Advanced Studies (IHS).
New methods
In order to do justice to the fast pace of life, the time intervals between the economic forecasts have also become shorter, and the Institute for Economic Research (Wifo) has also developed more closely-knit methods in order to be able to map the current state of economic activities. So far, the institute has made 16 short- and medium-term forecasts for 2020 – in normal years there are seven, says Wifo economist Stefan Schiman.
“Now we look on a weekly basis to see how the labor market figures change compared to the previous week or the pollutant emissions in the industry in order to be able to draw conclusions about production. In the past we only used data on a monthly basis. “It is more difficult to obtain figures for gastronomy, tourism or retail.
No clairvoyants
But even economists cannot look to the future. Your calculations only show the status quo of economic activities. “Our forecasts about a market situation two or three months into the future are based, among other things, on company surveys. We aggregate your subjective assessments. “
Even if economists are wrong, their forecasts are and will remain irreplaceable. They form the basis for entrepreneurial strategies and visions, they are a basis for personnel planning, for possible investments in the coming years and provide information about future market developments.
Better than chance
They also give orientation to the population. As the economy grows, it becomes less concerned about its job and spends more money. “With our work we offer an anchor point,” says Kocher, summarizing the work of the economists.
“We can't look into the crystal ball and in volatile times our informative value is less than usual. But companies cannot make decisions that are based on chance. You cannot throw the dice for it. “
Back on the brakes
Forecasts correspond to the desire for predictability and this is particularly great now. Nevertheless, Gerhard Wendl, CEO of the JUFA Hotels Group, like many in his industry, is currently on sight.
JUFA Hotels board member Gerhard Wendl: “We develop strategies based on assumptions”
The second lockdown thwarted tourism. He looked forward to winter with “good expectations”, says Wendl, who is responsible for 60 hotels in several countries. It was tarnished again with the second lockdown.
Short term planning
“Operationally, we act at extremely short notice. We make budgets for one or two months and these, too, are constantly changing due to the new framework conditions. ”He used to plan up to a year and a half in advance, with broader prospects for the next two or three years. Now develop strategies based on vague assumptions.
How strong will domestic tourism be if it opens in winter? How many seasonal workers are needed? Can you count on tourists from neighboring countries? “Working like this is a challenge, also because our core team of up to 1000 employees has to play a part,” says Wendl. Because these also require reliable planning.
Confusing situation
The patchwork of economic policy measures, funding models and hygiene regulations make the situation even more confusing. In addition to Austria, the hotel group also has locations in Germany, Liechtenstein and Hungary. All locations except one hotel in Vienna are currently closed.
Wendl is planning to open 30 hotels for the winter season. But how and whether winter tourism will start remains unclear. “We don't even know whether we will be allowed to open on December 7th,” said Wendl.
Aviation on the ground
Robert Machtlinger, CEO of the Upper Austrian aerospace group FACC, has also had some turbulent months behind him – and probably still ahead of him. The corona shock is deep, because at times the entire aviation industry was on the ground.
FACC CEO Robert Machtlinger: “We dealt with worst-case scenarios early on”
At the beginning, the high level of production was maintained, according to Machtlinger, but then the plants had to be shut down, sales stagnated, and people were forced to adapt to the low market level. “We had to manage and reschedule a supply chain with 650 suppliers in a controlled manner, that was not very easy.”
In order to steer into the crisis as well prepared as possible, worst-case scenarios were used at an early stage and these were communicated transparently to the workforce. “We anticipated rumors.” The company had to part with around 650 employees in September, and FACC also had to cope with sales of 392 million euros, a decline of 32.6 percent compared to the previous year.
Slow recovery of the markets
“But we knew there would be no V-shaped return to aviation. Rather, there are signs of a regional recovery. ”In the meantime, 70 percent of the output is back, says Machtlinger. In sight, they wouldn't drive. On the contrary. According to forecasts, aviation is recovering worldwide, and the industry expects a recovery at pre-crisis level by 2023.
The focus of FACC is directed particularly towards China and the Middle East, these markets buy around 50 percent of all newly manufactured aircraft. “We have already agreed with our customers for 2021, the planning remains stable.”
High data usage foreseeable
For Marcus Grausam, CEO of A1 Telekom Austria, the second lockdown held fewer surprises in store. It was clear that all the surfing, texting and telephoning had a positive effect on business. In addition, you have learned a lot from the first lockdown.
A1-CEO Marcus Grausam: “We have an annual strategy, but plan in scenarios”
“It was foreseeable that the data usage would increase and the daytime utilization would be higher due to homeschooling and home office,” said the CEO. But there are also negative effects. Due to the travel restrictions, roaming income has collapsed, and major corporate projects have been stopped or postponed.
“The greatest uncertainty in our industry is: What happens when state subsidies run out? How many bankruptcies will there be and how many defaults will there be as a result? “
New leadership style
Management into the unknown also changes the management style in the company. Communication is more intensive, instead of weekly meetings there are daily stand-ups, decisions are made more quickly and one thinks in scenarios, so Grausam. “What remains unchanged is our vision. And we have an annual strategy, only the way there has changed. “
