COVID Creates Challenges and Opportunities in Power Gen
If you were hoping for COVID-19 to disappear from the news by the school year, it’s obviously not going to happen. With major companies like Google announcing they won’t be sending employees back to their offices until the summer of 2021 and COVID metrics climbing again in the South and West, we probably will be working on the impact of the pandemic well into next year.
It could almost be considered a truism to say that COVID-19 has been bad for business. The 33% annualized decline in GDP in Q2 2020 would apparently confirm that, and even the most positive about the economy must concede that a 9.5% single-quarter contraction is painful, to say the least. With businesses closed and housing starts in June lagging 4% behind last year, even with the brief reprieve when states began to reopen, the power generation segment has been hit hard by the pandemic.
Cummins, a giant in the industry, announced at the end of July that its revenues for Q2 2020 had fallen 38% from Q2 2019. That increased to 48% when looking at North America alone. Engine sales were down 47%, and power generation revenues declined by 37%. While Cummins was able to achieve positive net income because of a quick ramp-up in production in China after the worst of the virus had passed there, it was less than half of net income from Q2 2019.
