Why Daimler CEO Ola Kallenius is worried about a return to economic nationalism

The growing number of confirmed coronavirus cases in Germany has raised questions about the vulnerability…

The growing number of confirmed coronavirus cases in Germany has raised questions about the vulnerability of long international supply chains to such an epidemic.

Daimler CEO Ola Kallenius warned against a return to economic nationalism as a response to the crisis.

“These events show how fragile global supply chains are,” he told Der Spiegel magazine in remarks published on Saturday. “But a world without global work sharing would be less successful … We should protect [that success] while checking for vulnerabilities where we can bring more security into the supply chain.”

He said Daimler was “gradually ramping up” production again in China after the Chinese New Year stoppage, which had been lengthened because of the coronavirus. But the disease would have an impact on company results.

“We can’t yet say what the impact will be, but it is clear that both production and sales will be affected,” Kallenius said.

The number of confirmed coronavirus cases in Germany jumped by more than 100 on Saturday, reaching 795 by mid-afternoon, boosting anxiety of the economic impact of the spreading epidemic on one of the world’s most trade-dependent economies.

There are large clusters of people with the virus in the west and south, where an initial outbreak centered on Bavaria-based roof supplier Webasto, which has a unit in Wuhan, where the infection was first detected.

Western Europe’s most populous country has the second largest number of registered cases on the continent after Italy.

So far, no deaths have been reported, though the RND newspaper group reported that a transplant patient with a depressed immune system who had contracted coronavirus was in a critical condition.

Daimler is not the only German corporate giant feeling the pinch. Lufthansa, Europe’s largest airline group by fleet size, on Friday announced that it was slashing by half the number of flights it will operate in coming weeks as a result of the sudden slackening in demand.

While the government has so far resisted calls for direct economic stimulus to counter the effects of the slowdown, saying only that it has the resources to do so if necessary, more targeted measures are being contemplated.

Handelsblatt newspaper reported on Saturday that the parties in Chancellor Angela Merkel’s coalition were discussing ways to make it temporarily easier for companies to shorten employees’ working hours by letting them off some of the cost of social security benefits.

And with panic buying triggering pictures of empty supermarket shelves on social media, transport minister Andreas Scheuer recommended that a ban on deliveries on Germany’s sacrosanct Sunday be lifted to ease restocking.

At a European health ministers’ summit on Friday, Health Minister Jens Spahn advised against trips to affected regions both abroad and at home, mentioning specifically the German state of North-Rhine Westphalia, where 346 cases have been reported.