How the Covid-19 crisis has affected NI based science and technology companies – a Matrix perspective

By Dr Rob Grundy, Matrix Chair

The evolving Covid-19 crisis is affecting every science and technology orientated business in Northern Ireland. There are a number of aspects that would be considered a normal part of the jigsaw of business as usual that are being severely affected. These prevent our companies from operating and present an existential threat.

As order books soften with a general lack of economic activity many businesses are being forced to furlough staff. This is far from ideal for the individual and creates uncertainty around ability to resume activity as is assumes those workers will be available or willing to return. They may not. As these factors affect supply chains, our advanced manufacturing companies find circumstances beyond their control limiting their productivity.

Lack of a single component can prevent major projects being delivered through factory gates. Investment issues loom large. Internal investment is not being made as, under these conditions, cash is king and liquidity is vital to survival. Investment in R&D projects will not be made in this quarter, or the next.

External investment – many of our innovative SMEs are peri or pre revenue and rely on venture capital and private equity for survival. If activity is not occurring to work toward the return on that investment the taps may be turned down or off and new enterprises may not be funded as investors seek to shore up existing portfolio companies or retreat to weather the storm.

As business needs change so must funding schemes. UKRI and other funders are adapting quickly to prevailing conditions but the environment will continue to change for months to come so these agencies must also.

Procurement rules are changing fast also. This is necessary to cater for the new, rapidly emerging needs but a significant degree of clarity is needed so that everyone who can add value has the ability to navigate the new procurement reality. Skills and training needs are changing quickly too. A greater level of digital literacy and competency will be needed and short, easily accessible courses geared towards specific functionality need to be curated and funded.

There are some obvious losers in the current environment. Sectors that were key to NI’s economic growth such as tourism, transport, retail and hospitality have been hit badly and may not fully recover. Certain aspects of manufacturing will come under pressure and the SME sector where the balance sheet is always the first thing a CEO looks at in the morning will be badly hit. This will be a particularly acute problem for NI as there is a disproportionate number of SMEs in the economy.

However, there will be opportunity. The life and health sciences sector is in overdrive understanding emerging needs and trying desperately to respond to them. The value of a communications infrastructure and remote storage and computing capacity are driving huge amounts of activity in the ICT/Digital sector. E Commerce is booming and innovation around retail platforms and transactional activity will follow a change in consumer behaviour.

These opportunities must be supported robustly to double down on the emerging opportunities to kick start an economic recovery. Pivot opportunities are also manifesting themselves as manufacturing firms are diversifying into the production of Covid-19 crisis associated needs on several fronts. Whether these represent long terms strategic value or not remains to be seen.

In amongst this is a need for clarity and to make simple the message of need and the conduits for solution provision. Industry is a very fragmented and heterogeneous environment and anything that provides timely and clear messaging is welcome.