The impact will differ based on the genomics of business, size of companies, product portfolios, overseas supply chain dependencies and many more. Supply-side shock is not going to be a long term problem as experts are saying because after ending or during this phenomena it will be as it were before. Raw material suppliers need to supply if they want to earn money out of their resources and manufactures need raws to fulfil their orders ordered by both national and foreign armed forces. Acute of supply is just going to be so brief.
But if manufactures won't get further orders as they were getting before this pandemic, it will be an actual pandemic for the defence industries. It's mainly depending on how hard Corona is hitting the world economy and the mindsets of governments around the world are going to change or not. Demand for defence equipment may go down if the governments can really understand the necessity of developing dedicated medical & treatment facilities after this outbreak or will they walk towards that particular way that they've walked before, building modern and more effective human killing machines.
Tough choices made by defence companies such as decommissioning some production lines or lessening investment on defence research projects may impact finances and competencies.
Stock price declining which is already in effect will bring the secondary problem. Companies may face a huge capital crisis in the near future. According to NYSE(New York Stock Exchange), Lockheed Martin's stock price has fallen by around 28% while Leonardo's by 55%, Fincantieri's by 32 and Thales by 33% according to the information provided by Italian Stock Monitors.
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Defence industry will see a dry pipe of defence deals because defence deals are mostly done in a face to face meeting and due to its G2G connection which is not present in other industries it takes a long time to make a deal. Again forces around the globe choose their best weapons and being demonstrated with new types of equipment in defence exhibitions such as the International Defence Exhibition (IDEX) in UAE and Zhuhai Air Show in China. But because of this social distance protocols, all kinds of public gatherings are restricted in most of the countries. So defence exhibitions are impossible to be held in this year just like France has already cancelled one of the most famous defence exhibition EuroSatory 2020. Military exercises also play a vital role in this business indirectly. And now exercises are suspended.
An example can explain how the situation is right now. According to The Diplomat, Fincantieri a worship building company of Italy has suspended its frigate building operation due to supply shortage not because of the direct effect of the massive outbreak of COVID-19 in Italy. That company was ordered to supply 4 dedicated frigates to Qatari Navy earlier in 2020.
In the USA, defence companies are fully functional while more than 120,000 people are infected to COVID-19 which is the highest in the world still now. But in Europe, the situation is completely different. Defence firms are following the same shutdown procedure like other industries by both direct and indirect effects of COVID-19.
But the automation is holding the hope lamp though the heat will burn a huge number of people's jobs. In the answer to the question of how this scenario will change, Mr Arjun Sreekumar who is a senior defence and security consultant answered, "There's no magic bullet for successful weathering this scenario. Only the discovery of a vaccine or cure can start changing it slowly. "
The author is a student at Department of Criminology, University Of Dhaka.
