Life in Lockdown: How Businesses in Europe Are Coping

(Bloomberg) --

In Spain, it’s “cerrado,” in Italy “chiuso,” and in Germany “geschlossen.” The signs everywhere say Europe is closed for business. Efforts by governments to contain a disease that’s killed 90,000 worldwide have led to dramatic measures.

Factories across the continent have gone quiet. In cities, towns and villages, supermarkets and pharmacies are open, but books stores, bars and furniture outlets are dark.

Some workers are furloughed, getting a portion of their pay while they await the resumption of normal life, many others are working from home, and some, unfortunately, have been laid off.

Thousands of firms — from family-run hotels to cafes — have lost business, and are relying on government support to get them through. Others appear luckier, seeing demand in their area surge, though they face their own problems with securing raw materials.

Here are some of their stories.

Hotel Corisco

• Family-owned 24-room hotel
• Based in Tossa de Mar on Spain’s Costa Brava

The 24-room Hotel Corisco was gearing up for the summer high season along the Mediterranean Coast when Spain’s lockdown forced it to close its doors.

Even before then, Maria Teresa Coris was having to consider her family’s health, and she took action herself.

“I live in the hotel with my father, who is 86 years old, and my son. So I was worried. I thought, oh man, should I let clients into our hotel? I decided to cancel reservations on that Wednesday. And the lockdown was decreed on Saturday. I thought people wouldn’t understand why we were cancelling their reservations, but they all understood. I cancelled thinking about my father. My employees and my family.”

The 45-year-old temporarily laid off three employees and didn’t hire two more who she had planned to bring on this summer. Those two  join the tens of thousands of other temporary workers in Spain’s tourism industry who are likely to miss their one shot each year at full-time work.

After Prime Minister Pedro Sanchez ordered the lockdown, Coris’s banker called, saying she needed to take advantage of the nearly 100 billion euros in government-backed lending.

Last week, she received a 40,000-euro loan with a 1.5% interest rate issued by Spain’s state-owned bank. She has to pay it back next year, but in the meantime it will help with fixed costs such as electricity, gas, water, suppliers, last month’s paychecks.

“We’re not going to bring in any revenue but the bills will keep coming just the same,” she said.

Coris is now working on getting another loan and feels confident the funds will help her make it through the summer.

Until then, Coris posts photos of the Mediterranean on Facebook for regular visitors and potential new clients.

“I’m trying to do my part and let people know that we’re here and we’re waiting for them. When we’re all better, we will meet again.”

Terry Groenen

• Based in Groenekan, the Netherlands
• Modeling agent

In business for just a year and a half, Terry Groenen said she “shed a tear” when the Dutch government announced it would slap fines on gatherings of more than three people. That’s put an end to photo shoots for her agency, Inbetween Models, and the bleak prospects for the economy also mean companies are reluctant to spend on marketing right now.

The number of cases in the Netherlands is far less than in Italy and Spain. Like many, 25-year-old Groenen initially clung to hope that authorities would get the disease under control fast and restrictions would be lifted. But that hope is gone.

“The difficult thing is that I don’t know when this will be over,” she said. “That’s what scares me. First we were told that the lockdown would last until April — now it is until June.”

Groenen plans to request government aid for the self-employed. If she qualifies, her income will be supplemented retroactively by the government to 1,500 euros net a month —  the so-called social minimum —  from March 1 until at least June 1.

“Every day I have a to-do list. This ranges from cleaning my desk to doing backlogged administration,” she said. “So far, it keeps me busy, but if I think about the prospect that this might take two more months, it drives me crazy.”

ebm-papst

• Based in Mulfingen, southern Germany
• Makes fans for medical devices, cars, and air conditioners

Ventilators to treat hospitalized COVID-19 patients are in short supply everywhere, and ebm-papst is scrambling to meet sky-high demand for components. While it typically makes 100,000 such fans a year, it now has requests for 1.5 million.

The trouble is expanding its assembly line, and also sourcing supplies with so much of the economy in shutdown.

“You can’t increase it that quickly, because you don’t have the tools let alone the equipment,” said Chief Executive Officer Stefan Brandl. “Basically it’s not the staff — we’d have that.”

“There were companies that also wanted to close down factories over the Easter holidays. We’re now encouraging them to continue production.”

While there’s a rush on ventilators, other units at ebm-papst, which employs 15,000 in total, are idle. That’s the case for the division that supplies carmakers like Daimler and Volkswagen. Like millions of others in Germany, staff there are on Kurzarbeit, a program where the state pays their wages in a bid to prevent layoffs.

On top of the 750 billion euros worth of measures announced by  the government to combat the economic havoc, state development bank KfW also has 500 billion euros available for struggling  companies.

“We will probably want to fall back on further credit lines with KfW backing at some point,” Brandl said. But he fears it’ll be a time-consuming 20-page application that is too complicated for small businesses. “The question is whether, at the end of the day, when you want to take advantage of it, you can actually do so without bureaucracy.”

Laurent Gerbaud

• Based in Brussels
• Chocolate maker with a shop and cafe

The pandemic couldn't have come at a worse time for Laurent Gerbaud, a chocolate maker who opened his shop and cafe in downtown Brussels 10 years ago. He and his staff — six full time employees as well as 25 students — were just getting ready for Easter, which is “really important because it's the last big sale before the summer. May, June, July, August are super low income because of the heat and people want ice cream or beer.”

As a food shop, Gerbaud was allowed to stay open even as the Belgian government gradually tightened restrictions. But without any tourists or locals on the street, he was doing only 10% of normal business, and he closed his shop on March 18. Like more than 1.25 million other Belgian workers, his staff is now on temporary unemployment, which means they receive 70% of their salary from the government. Gerbaud makes up the difference out of his own pocket.

“Now I'm fine, but in the first week, March 12 to 18, I just couldn't sleep because of the stress.” He sells part of his stock through a website for gourmet food from the area, or through word of mouth. That brings in about 15% to 20% of normal income and helps with bills. The stock that perishes too quickly to be sold through deliveries he's giving away to hospitals.

If the situation doesn't normalize by the end of May, “there's going to be real trouble” for his business, Gerbaud said. And it's not just the near future that’s worrying. “The question is also what are we going to do after? Who will still be able to buy chocolate, to go to restaurants, to spend?”

The Drapers Arms

• Based in Islington, London
• Pub and restaurant

It was February when publican and restaurateur Nick Gibson began to ramp up his orders for hand sanitizer and instruct staff to be less discreet about cleaning down tables between clients, dashing across the bar to remind servers not to touch their faces and approaching his landlord to discuss what would happen if he was forced to shutter.

Even a week before he decided to close, takings were only down around 10-15% but as cancellations of weddings and parties poured in and the government encouraged patrons to stay away, it became inevitable. The business stopped trading on March 22, just days before U.K. Mother's Day celebrations that traditionally fill restaurants across the country.

“I realized it was not sustainable from a business perspective, as we were seeing cancellations coming in at an incredible rate,” Gibson said.

“The decision had to made whether we were going to continue doing something. We're well known for our pies, so should we turn ourselves into a pie shop or off license, delivering things like that. We decided not to for reasons of staff welfare, and probably not being profitable. Its unfair on staff to expose them to having to come into work.”

His employees are now furloughed under a government scheme that pays 80% of their wages — although does not make up for the third of their take home pay deprived from service charges and customer tips.

As for Gibson, he's optimistic and grateful for all the government’s help, including the deferment of an 80,000 pound sales tax bill which means he has been able to cover salaries until support payments kick in. He’s still counting the cost though, losing around 30,000 pounds a week in revenue during the closure. He also has to cover rent and pay suppliers for goods he received long before the lockdown began.

“The cash stopped coming before the bills,” he muses. “Our business is unable to function and we don't know when we'll be able to function again. We're just absolutely running out of money right now.”

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