100 days of coronavirus: Businesses feel the pain as Denmark prepares to reopen economy

Manufacturers have been hit by global crisis, currency swings and bankruptcies

Denmark has won plaudits for rapid and decisive action to protect the nation from Covid-19 and is preparing a slow return to normality as a reward for its efforts.

The turning point for its suffering business owners can’t come soon enough.

Joachim Brix-Hansen, the co-president of homeware company Brix Design, has seen his orders slashed and two of his biggest customers file for bankruptcy.

Those still in business are often unable to pay for what they have ordered.

“They want to use us as a bank rather than paying what they owe us,” said Mr Brix-Hansen, who runs the business with his brother Christian. “We still have to pay our fixed costs as well as our salaries.”

 

The company, which makes goods ranging from an award-winning jar opener to lunchboxes, sells its products globally and the universal impact of coronavirus has hit hard.

Turnover is down by more than half. Two new additions to the 13-strong workforce have been laid off though Mr Brix-Hansen hopes to rehire them when the crisis passes.

In the meantime, his workforce has been split in two, working every other day at the company’s headquarters in Stege on the island of Møn, an hour’s drive from Copenhagen.

“We’ve had a big drop in sales and turnover,” said Mr Brix-Hansen. “Some companies have cancelled orders and campaigns. We have an economic crisis although not that many people in the country are sick.”

Prime Minister Mette Frederiksen announced a lockdown of the country on March 11, earlier than other European countries, that saw schools, kindergartens and shopping centres closed – hitting the company’s bottom line.

Mr Brix-Hansen’s supply chain remains largely intact. Factories in Denmark have continued to produce and orders for other goods manufactured in China have been fulfilled despite some delays.

The problem is with the sales, particularly to neighbouring Scandinavian countries because of knock-on effects of the crisis, including a plunge in the global oil price.

“The Norwegian and Swedish currency has dropped to a very low level and that costs us a lot. Norway depends on the price of oil,” said Mr Brix-Hansen. The exchange rate volatility has seen the Danish company earn less from sales to its nearest neighbours.

“It’s a very sad situation, people getting sick and dying but it also costs a tremendous amount of money to shut down all kinds of businesses,” he said.

“The reason for the drop not being higher is all this financial support to companies. It’s essential to have support from the government but it’s not enough compared to the situation we face. I think there will be a lot of bankruptcies.”

The Danish government announced on Monday that it will partially open schools and kindergartens after Easter because of the success of its early lockdown, compared with other countries such as neighbours Sweden.

The mortality rate in Denmark, which has one of the world’s best healthcare systems, has been at 3.9 per cent, compared with 12.3 per cent in Italy and 10.2 per cent in the UK. Denmark will, however, keep its borders closed, ban large gatherings and keep restaurants, bars and cafes shuttered.

Despite the continued restrictions, almost 80 per cent of Danes have backed Ms Frederiksen handling of the crisis. The government announced a multi-billion kroner bailout package for companies that have lost 40 per cent of turnover to cover most of their fixed costs, plus staff support packages.

Its economic council predicted a contraction in GDP of only 3.5 per cent if output returns to normal quickly. The German economy was set to shrink by 9.8 per cent in the second quarter, according to a report from leading think tanks issued on Wednesday.

“Most people seem to support what the government is doing,” said Mr Brix-Hansen. “But if you own a company, you are suffering big time.

“I certainly hope they will start to open businesses and shopping centres. People have seemed to act in a good way, washing their hands and keeping their distances, and coughing into their arms.

“We have several planned [marketing] campaigns for the fall and Christmas. I hope those campaigns will not be affected.”

EDITOR'S PICKS
NEWSLETTERS