(Bloomberg Opinion) -- The coronavirus pandemic has forced Macy’s Inc. — a retail giant venerable enough to be featured in an old Christmas movie and familiar enough to retain bragging rights to New York’s annual Thanksgiving parade — to throw most of its 130,000 workers into the unknown.
Macy’s stores, which include Bloomingdale’s and Bluemercury, have been closed since March 18, and the company said on Monday that it will put a “majority” of its workforce on unpaid furloughs starting Wednesday. It also said all those employees, numerous enough to fill cities the size of New Haven, Connecticut, or Santa Clara, California, will have their health insurance premiums covered “at least through May.” After that, who knows?
Meanwhile, a Holland America Line cruise ship, the Zaandam, was recently left floating off the coast of Panama for several days with nowhere to go while a coronavirus outbreak wound through its decks. The ship, one of those mammoth floating hotels that can accommodate as many as 1,432 passengers and 607 crew members, was adrift because no Latin American ports would allow it to dock after it departed from Buenos Aires on March 7. Four travelers on the Zaandam have died, at least two others have been infected with the coronavirus, and another 189 are reportedly displaying “flu-like symptoms.”
The Panamanian government allowed the Zaandam and a sister ship that has picked up some of its passengers to pass through the Panama Canal on Sunday to sail toward Florida. A Holland America executive said that transiting the canal would allow the Zaandam’s passengers to make their way home. But who knows? The ship intends to dock in Fort Lauderdale on Wednesday, but local officials there said passengers haven’t been cleared to disembark. Florida Governor Ron DeSantis told Fox News that many of the Zaandam’s passengers were “foreigners” he didn’t want “dumped” in his state.
So it goes as the coronavirus tightens its grip worldwide, forcing businesses such as Macy’s and Carnival Corp. (the parent of Holland America) to wrestle with harrowing, existential decisions that affect the financial well-being — and sometimes the survival — of employees and customers. We are likely in the very early stages of what may also be one of the most brutal transformations of corporate and workplace landscapes in generations, with longstanding businesses rocked to their foundations — or entirely brought down.
The coronavirus is a villain in all of this, of course. But the pandemic is also a reckoning for businesses that have been slow to turn themselves around, haven’t adapted to earlier transformations in their industries or are simply run too recklessly to survive.
Macy’s was struggling long before the coronavirus came along. Its sales have sagged for years, its stores tethered to older, less free-spending shoppers and often located in down-on-their-luck malls. The department store chain has tried to fight back by pursuing off-price retailing and embracing Amazon.com Inc.’s bailiwick — online shopping — more robustly. But Amazon is Amazon and Macy’s is Macy’s, and there’s the rub.
The company is doing honorable things as it wrestles with the coronavirus and past mishaps. Its chief executive officer, Jeff Gennette, has given up all of his own compensation for an unspecified period and is finding other ways to cut back on spending. Just six days ago, Gennette said he was doing everything possible to avoid kneecapping his employees with furloughs or layoffs. By Monday, that apparently was no longer tenable. Plans to re-open stores on April 1 were also recently punted.
"We have no way of knowing how long our stores will remain closed, but we believe it will be at least several weeks before we have a clear line of sight," Gennette wrote in an email to employees.
The federal government recently passed its landmark $2 trillion stimulus bill that could potentially offer a lifeline to companies like Macy’s (and other retailers facing the same predicament, including Kohl’s Corp. and Gap Inc.). The legislation sets aside $500 billion in loans and other aid for major corporations that are stumbling. But does it make sense for the government to prop up a company like Macy’s that’s been stumbling for years and might have unraveled even if the coronavirus hadn’t come along? Wouldn’t the money be better spent on direct support for the company’s workers?
The decisions Carnival faces in connection with the Zaandam’s wanderings are even more stark. Cruise ships have the potential to act as gigantic, global Petri dishes: Before the coronavirus outbreak, the cruise industry’s largest trade association estimated that as many as 32 million people would take a cruise in 2020.
Although the cruise ship is no stranger to viral outbreaks (two years ago, 73 passengers contracted a norovirus on a trip off the coast of Alaska), the Zaandam and other Holland America and Carnival ships have received high marks in recent sanitation inspections by the Centers for Disease Control and Prevention. Yet reports have popped up regularly about other Carnival ships that don’t pass muster. (The parent company manages several brands, and the Princess lines have particularly weak health and sanitation records.) So how well prepared was Carnival for something as cataclysmic as the coronavirus?
Moreover, why did the Zaandam set sail on March 7? Well before then, two other Carnival ships had already become poster children for the coronavirus. On Feb. 4, the Diamond Princess was quarantined at a Japanese port after a former passenger tested positive for the virus. A subsequent test administered to that ship’s 3,700 passengers and crew turned up 700 infections; several of those people later died. As early as March 3, it was reported that passengers aboard a Grand Princess cruise in February had tested positive. That Carnival ship, returning from Hawaii, was then detained off the California coast for several days before docking on March 9 to prevent a further spread.
The peril for any ships heading out to sea was clearly known by early March. And if passengers weren’t aware of the danger, Carnival certainly was. Some Zaandam passengers have said they were assured that travelers were adequately screened for signs of the coronavirus prior to departure, but now doubt that claim.
Although Carnival may be facing broader business hurdles similar to Macy’s, it can expect no financial lifeline from the federal government. Last week’s stimulus blocked major cruise companies from receiving aid because they are incorporated outside the U.S. (a move that has allowed them to avoid paying federal taxes and to skirt some regulations). What goes around comes around, especially during a pandemic.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
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