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FIRST A PANDEMIC, NOW A WAR BY PAUL GOOCH
WHO REMEMBERS THE 2008 FINANCIAL CRISIS AND ITS IMPACT ON SUPPLY CHAINS? ARE WE FACING LEHMAN BROTHERS 2.0?
Those who fail to learn from history are condemned to repeat it (George
ground, they are shuttered because all the manpower has been mobilized.
Santayana, 1905).
For example, some automotive plants in the West (such as the BMW Mini
Since early 2020, chemical companies have been challenged to adapt their
plant in the UK) have restricted production because of a shortage of parts
supply chains to meet the various disruptive forces associated directly or
from Ukrainian suppliers. Exports of commodities through Black Sea ports
indirectly with the pandemic. Operations have been severely impacted by
are blocked. Supply chains in Ukraine are broken, and likely to stay that way
capacity limitations, sky-rocketing freight rates, lockdowns, shuttered plants,
for the foreseeable future.
shortage of workers, inventory bull-whip effects etc. All of this has been well documented - we don’t need to spill more ink on the subject. The pandemic has been called a Black Swan event, although the prospect
So where’s the connection with Lehman Brothers? As a result of global sanctions, we are witnessing the withdrawal of many Western corporations from Russia: Renault, VW, IKEA, BP, Shell, ExxonMobil, Boeing and Airbus,
of a pandemic had been predicted and some chemical companies had a
just to mention a few household names. As they will be leaving their assets
prepared response developed by their crisis management teams.
on the ground in Russia it means that they may have to take significant
The same can be said for the invasion of Ukraine. Speculation about such
write-offs, and potentially default on loans, which will impact the balance
an event has been circulating since 2014, but the general reaction has been
sheets of creditor banks. It is reported that BP alone may be faced with a
denial; Putin wouldn’t do it, would he? Well, he did. Again, hardly a Black
$25bn write-off from its Rosneft withdrawal.
Swan. Apart from the humanitarian tragedy, what we are seeing now is an implosion of the Ukraine economy. If businesses haven’t been razed to the
HCB MONTHLY | APRIL 2022
The next stage may be for suppliers in the West, who have built capacity to supply Russian customers based on bank credit, to default on their loans. The banks will be forced to make provisions for these write-offs.
