Creating New Realities
Panchalee Thakur

Project professionals from four different sectors share their thoughts about the road ahead for their sector after the pandemic

Ten months of being engulfed in a global health and economic crisis has exposed some hard truths about the limitations and vulnerabilities of humankind, even after the immense scientific and technological progress that we have made. In fact, one of the greatest signs of human progress – our interconnectivity in a ‘global village’ – has proved to be a major hindrance in containing the spread of the virus. However, the pandemic has also shown that there are no limits to human ingenuity and will to bounce back.

As consumer demand slumped across sectors and the need for medical supplies grew, cosmetics companies started producing sanitizers, car manufacturers converted their assembly lines to build ventilators, and technology companies in the forefront of artificial intelligence directed their efforts to help in medical research. There are also innumerable examples of individual acts of kindness, communities coming out to support the vulnerable, and organizations contributing to COVID-19 relief funds.

The crisis has also led organizations that had resisted change so far to quickly pivot to digital technologies and stay competitive. Change is coming to some of the most traditional industries, such as construction, oil and gas, and education. The pharmaceutical sector, which is at the center of global attention, is looking at unconventional and innovative methods to quickly bring out a vaccine. As companies navigate uncharted territory to move to a new reality, they will be looking toward their project professionals to enable that change.

We speak to project managers from three sectors – construction, oil and gas, and pharmaceutical – to bring to you their perspectives of the “new reality.”

Energy Sector: Changing Course

A sector that has felt a major blow due to the COVID-19 pandemic is oil and coal. Lockdowns and travel bans have led to a drastic drop in the demand for oil. Adding to that is the curtailment of industrial and commercial activities. As the lockdowns got extended, oil refineries were forced to cut down their throughput. Only the demand for LPG and domestic natural gas remained buoyant, thanks to most people working from home.

It is a catch-22 situation for policymakers since falling international oil prices help downstream oil refining companies like Indian Oil Corporation or Bharat Petroleum Corporation to achieve higher refining margins, thereby enhancing their profits. However, it negatively impacts the profitability of upstream oil companies like Oil and Natural Gas Corporation and Oil India Ltd. because they get paid for the crude oil as per prevailing international prices.

How the oil sector recovers will depend on how quickly the virus is contained, and the economic stimulus policies that the government announces.

As the demand for electricity went down during lockdowns, power producers had to cut down operations and shut down power generating stations. Many coal-based power stations have operated significantly below capacity for a good part of this year. The muted demand for coal has forced coal producing companies to either scale down their operations or borrow to tide over the current liquidity crunch.

Going forward, as natural gas prices fall further and power produced through the renewable route becomes cheaper, coal may face an existential problem. COVID-19 has led to renewed calls for sustainable business practices, of which one is to move away from coal-based power generation that is leading to global warming and environmental damage, and higher reliance on renewable sources of energy. I foresee more efforts to prolong the life of coal as a fuel in a new avatar of “clean coal.” Clean coal introduces the latest mining technology to curb environmental pollution and coal washing to reduce ash content in the coal being produced.

COVID-19 has shown the importance of technology to supplement human effort or minimize human intervention. Energy producing companies that have been slow in adopting technology will need to upgrade their infrastructure and processes, and upskill their people in the latest technologies.

COVID-19 has been extremely disruptive for human lives. But what has been positive is the humanitarian response from organizations, communities, celebrities, and ordinary citizens. Western Coalfields, a Coal India subsidiary, launched a drive to offer food packets and water bottles to migrant workers travelling in Shramik special trains. Incidentally, the bottles we distributed contained water discharged from our coal mines, which was then purified and bottled at a plant that uses reverse osmosis to purify the water. The water is branded as Coal Neer.

Efforts such as these are some of the positives that came out of the pandemic. It gives us hope for a new reality that is kinder and more compassionate.

Auto Industry: Rethinking the Supply Chain

The COVID-19 pandemic has demonstrated how vulnerable automotive supply chains are to disruption, bringing under scrutiny global supply strategies.

The domino effect of abrupt closures of production centers during the outbreak in China has caused widespread chaos among global auto manufacturers in Europe, the US, India, and South America. Having offshored their manufacturing activities to low-cost countries, many automotive original equipment manufacturers (OEM) and suppliers are scrambling to establish shorter or loca lized regional supply chains.

Challenges facing supply chains
Even before the COVID-19 outbreak, there was alread y a growing urgency among global automakers to localize the manufacturing of critical components. One reason is the increase in trade tensions between the US and China that is giving rise to protectionism.

With globalized supply chain networks programmed for the lowest possible price, auto OEMs have been procuring parts and electronics at a low cost from China. However, political developments such as US-China trade tensions and Brexit, natural disasters, and the pandemic have exposed inherent weaknesses at the core of offshore manufacturing. While a change toward flexible and multi-level sourcing had already begun, COVID-19 has added more urgency to it.

Global automakers ha ve been sourcing between 30 percent and 60 percent of their parts from China. Given the incredibly high number of parts required – each with different lead times – a return to regional supply chains presents an incredibly complex challenge. However, that challenge is now being considered worth taking in a post-COVID world. OEMs, component manufacturers, and auto sub-system assemblers are now looking to establish supply chains and regional logistic hubs within their borders.

Building resilience

With volatility in production volumes and schedules being the norm, suppliers and their logistic operators will have to be adaptive, and able to recover from catastrophic events. Human overrides and protocols need to be re-introduced to bring back stability during a crisis. As the current pandemic stress-test has demonstrated, large-scale variances and disruptions cannot be managed through statistical and algorithmic models.

The business case for increasing supply chain resilience is not straightforward. The current configuration of the international supply chain relies predominantly on low trade barriers and assurances that they will remain so for a reasonable period. Unfortunately, the devastating economic impact of COVID-19 has led to a resurgence of protectionist sentiments in most countries, thus threatening the continuance of such policies. Further, the economic arguments for offshoring are not as persuasive anymore, with higher wages in low cost destinations. For instance, the average wages in China’s manufacturing sector have increased in comparison with Brazil or Mexico.

Automotive components are mostly sophisticated, intricately engineered, bulky, and fragile that involve high logistics and transport costs. In most countries, government policies encourage sourcing from local producers. However, even if such suppliers are considered as alternatives, they are required to be tooled, trained, and resourced to produce to specifications and quality standards. Specialized suppliers, currently clustered in certain regions of the world, present a major obstacle to automakers looking to diversifying risks. Reducing or expanding the number of suppliers is not necessarily the only way to configure resilient supply ch ains. Ultimately a hybrid model of traditional, extended supply chains and a growing alternative of short and localized networks will need to develop. These localized networks will most likely be established through alliances with global dominant suppliers that can deliver components and services, and have the capability to adapt resiliently to changes in varied market conditions.
Construction Industry: Unexplored Terrains

The development of a nation hinges on the physical infrastructure available to attract, support, and sustain growth. Irrespective of the multiple global calamities hitting economic growth in the last century, the construction industry has been growing steadily. Now, the halt in construction activities after the COVID-19 outbreak and the subsequent restart of operations have shown what the industry needs to sustain growth in the post pandemic new reality.

We have seen innovation, integration, and adoption of mechanization in construction processes, automation of construction activities, and inclusion of lifestyle features into buildings that have given a boost to other domains of engineering as well. The recently inaugurated Atal Tunnel, the world’s longest tunnel, that too through a gigantic mountain range, with all its safety and security features, is a classic example of cross-industry collaboration. Going forward, such collaborations will make new realities possible.

COVID-19 has renewed a ttention on the harsh realities of environmental deterioration, which has been a subject of debate and focus in construction developmental plans. Research and advances in the material technology, and the recycling of domestic and industrial waste in the manufacturing of construction materials like high strength concrete, bituminous products, and steel products are subjects of keen interest in the industry today. Some of the focus areas for construction-related R&D are environmental protection, waste reduction, and healthrelated issues. In recent times, we have seen plastic waste being recycled for use in road surfacing, industrial liquid waste being processed into bituminous products, and construction waste being used in the manufacture of concrete products. I foresee more efforts in these areas as the construction sector re-emerges from the pandemic.

Perhaps the most significant and high impact development in the construction industry in the last half century is the aggressive adoption of IT and IT-enabled services into brick and mortar structures. Once a lifeless structure, buildings today have a life of their own – from monitoring its own health parameters, to monitoring the movement of people in a building, and controlling internal services like lighting and heating.

The sector continues to create new records. The tunnel underneath the Las Vegas Convention Center that is revolutionizing tunneling technology, the Jeddah Tower in Saudi Arabia with a height of 1 km, the Hong Kong Zhuhai Macau bridge of 55 km that is the longest sea crossing, and wave power plants in Denmark are some examples of the strides that the construction industry is making.

Mega construction projects with tens of thousands of activities, large time horizons, and a high degree of uncertainties and associated risks demand agility. Right from inception, through planning and execution, agility is the norm of the day till closure of a project. While the path may be defined, the journey with its unique challenges, makes the entire project a new experience, which is good for reference but cannot be a template for replication in the future.

Creating new realities, conquering greater heights, and giving life to the dreams of humans have been a constant endeavor of construction professionals. Market conditions today have opened a plethora of opportunities to explore new ideas and create blueprints for building a long-lasting infrastructure network to support the growth of the nation. We are at the threshold of creating new realities for future generations and leaving an imprint in the history of humankind.
Pharmaceutical Sector: Crossing New Frontiers

Never before has the pharmaceutical industry been in the limelight as it is now. The world is looking toward pharma companies to come up with quick solutions – a vaccine that would halt the spread of COVID-19 and a cure for those infected. The pace and scale at which companies are conducting research in this area have also not been seen before.

Even as clinical trials have begun for a couple of vaccine candidates, there is widespread debate on political desires, transparency around trials, and efficacy of these candidates. There are also numerous challenges behind manufacturing, distribution, alliances, partnerships, and dealing with governments to decide the best approach for distribution. In anticipation of approvals, pharma companies need to get the supply chain and manufacturing engines in place, and run pilots, which in turn leads to high risk investments and increased cost pressures.

A lot of effort has indeed gone into research in the past few months, with scientists and others putting in long hours, not knowing what the final outcome will be. There is also a constant fear of failure and the implications of their work for their organization, the industry, and the communities they serve.

The pandemic has taught us a number of lessons that I believe will define the new reality for this industry.

First, the speed of work needs to keep pace with the market realities. Even as research continues, we need better processes that will hasten the production and distribution of drugs.

Second, collaboration and partnerships are the way forward for the industry. We have seen former rivals working together in drug discovery and development, sharing libraries with academicians, and giving access to others to research findings and aid in set up of alliance manufacturing capabilities.

Third, IT’s partnership with business is now even stronger and with this expectations are high on IT teams. They need to come up with solutions to streamline processes and simplify the IT landscape, making it intuitive, secure, and seamless no matter where one is working from across the value stream of research, development, manufacturing, and marketing.

Fourth, digital is the new normal not just in this industry but also across the health and wellness domain, and aids in moving to predictive, preventive, personalized care. Today, pharma companies are using data from wearable sensors, smart devices, data analytics, deep learning, and artificial intelligence (AI) for better insights on how patients respond to certain drugs, bring about behavioral changes, identification of the right drug, quick detection, improved diagnosis, and treatment.

Companies are placing their bets on data. Huge investments are being made in AI/ML technologies. There is also a noticeable increase in upskilling in these areas by the workforce. There are expectations from senior leaders on how they can bring higher value and outcomes through digital. This is leading to healthy collaboration, openness, and an innovative mindset.

(The views expressed by the author here are her o wn through extensive reading from publicly available material and do not represent those of her organiza tion.)