Many hands make light work: Family-controlled and family-owned companies’ responses to the COVID-19 pandemic

The COVID-19 outbreak and its unimaginable effects have unified the world. Today, international solidarity is not only desirable but also necessary. COVID-19 brings us closer together to collaborate by extending a helping hand to those in need hence strengthening our sense of fellowship. We are all playing our part by staying home and following the physical distance instructions of our country of residence such as working from home, among others. We are aware of companies bearing the financial impacts of a paused economy that has imposed strict measures to protect the health of citizens. Beyond enduring financial impacts, family businesses are exceptional at navigating this turbulent period by assuming responsibility and offering solidarity through creative ventures and opportunities. What have been the responses of solidarity from family-controlled and family-owned companies? Why is it important to highlight these efforts? 

The global outbreak of the novel coronavirus has tested the ethical values of family-controlled and family-owned companies. The strong commitment of family businesses with their employees, under these purely conjectural conditions, embodies one of the multiple types of solidarity responses. For instance, Arturo Calle, a manufacturing men’s clothing company with more than 100 stores in Colombia and Central America and 53 years in the market, bolstered its commitment to its employees. Arturo Calle, CEO of the company, began the interview with BlueRadio on the 21st of March, the first day of quarantine in Colombia, by saying:  

“The company will continue paying its employees’ wages, taxes, and other obligations during the hiatus. Arturo Calle has been very careful with saving and not acquiring credit. We have 6.000 employees, but we acknowledge that our employees have families and children, so we calculated that approximately 14.000 people depend on our company. Our commitment is with our employees and we will not let them down.” 

Arturo Calle

Arturo Calle once again attracted significant media attention for closing a profitable deal with Ecopetrol  —an exploration oil and gas company— to produce 147,000 work wear garments for health workers. On May 4th, Arturo Calle garment factories started manufacturing 330,000 meters of fabric into medical suits to supply the country’s medical centres and the Red Cross.

Arturo Calle being back in operations during this time signifies the ability of the company to take advantage of opportunities and its commitment to its employees.  

Although many might consider Arturo Calle’s employee commitment as a company obligation, a basic gesture of solidarity, this effort is exemplary given the global workforce casualization. Giovanni Rana brand, a family company that produces Italian food products is another example of gratitude and appreciation for its employees during the COVID-19 crisis. The company started in 1962 with homemade tortellini and since then has expanded to 38 different countries by marketing refrigerated pasta, sauces, and ready-made dishes. An article of La Repubblica quotes Gian Luca, founder’s son, and current CEO, on COVID-19: 

“We are launching an extraordinary plan of salary increases of 2 million euros, as a special recognition to the commitment of our 700 employees in the five production plants in Italy that guarantee continuity in the supply of food. The plan consists of a 25% salary increase for 700 employees, a €440 allowance for childcare, and insurance in case the virus is contracted.” 

Arturo Calle

Though both Giovanni Rana and Arturo Calle showed their solidarity through employee commitment, the strategies they adopted differ. While Rana opted for a salary increase due to a rise in the workload caused by high demand, Arturo Calle focused its efforts on sustaining salaries and repurposing its manufacturing.  

Giovanni Ranna’s factory 

Source: ItalianseExcellence

Arturo Calle’s manufacturing factory

Source: Forbes, 2020 

By using existing resources and expertise to contribute to the national government’ efforts during the pandemic, Cemex in Mexico put its cement mixers at the communities’ disposal. Cemex, a conglomerate of four families founded in 1906, is a global industry leader in the production and supply of cement. Cemex shared on its Twitter account a strategic campaign to protect the health and safety of communities using Cemex mixers to prepare soap and water to sanitize public areas.    

Corferias, Bogotá, Colombia

Biggest temporary hospital of the city

Source: https://www.cemex.com/covid19

Nuevo León, Mexico

Outdoor public health areas

Source: https://www.cemex.com/covid19

Similarly, Bavaria, a Colombian brewery founded in 1889 by German immigrant Leo S. Kopp and currently owned by the Santo Domingo family, in partnership with Binner —a cleaning products and supplies manufacturer—donated 100.000 bottles of antibacterial gel made from the alcohol extracted during the beer production. As documented by Las2ORILLAS, an independent digital newspaper, Bavaria coordinated the distribution of the antibacterial bottles targeting the biggest public transportation stations in Bogotá, Cali, and Medellín and used its trucks that usually transport beer bottles.  

In addition to money donations, family companies are resourceful and innovative to adjust their production plants to the actual needs. Bavaria as well as Cemex were resourceful and innovative by adjusting their production plants and resources to meet the current demands of our society. Both are examples of solidarity and social responsibility, which might be strategic in terms of future marketing. Citizens will remember family companies mentioned on social media, building rapport with consumers, and possibly support their businesses on a larger extent during post-corona economy.

English translation: #It’s in our hands to make a difference.
Source: https://twitter.com/BAVARIA_OFICIAL

As family companies find unique ways in fighting this pandemic, the Old Rip Van Winkle fundraising auction is worth sharing. The Van Winkle family has been in the bourbon business for more than 100 years and has helped shape the industry during and after the constitutional ban on the production, importation, transportation, and sale of alcoholic beverages in the United States. The Van Winkle family, launched an auction campaign of special edition bottles of bourbon, autographed by Julian Van Winkle, to raise funds for the Restaurant Workers Relief Program, a scheme of the LEE initiative.  According to The Business Journal, the signed bourbon barrel head auctioned off to benefit The LEE Initiative raised $20,000, with another $9,000 from a follow-up bidder.  

Additionally, Old Rip Van Winkle has demonstrated its commitment to restaurant workers by donating 100% of profits from the “Pappy Gives Back” collection of merchandise to The LEE Initiative for the length of the auction. Auctions are transmitted live and marketed on the official company’s website. Old Rip Van Winkle uses a pop-up advertisement, encouraging website visitors to participate.

Special edition: Old Rip Van Winkle 10 Year, Special Reserve 12 year, Pappy Van Winkle 15, 20, 23 Years, All bottles signed by Julian Van Winkle
Source: The Business Journal

A new business ventures within the existing production line is another response from family businesses. The high demand for masks, clothing, and shoes for health care worker as well as other essential supplies for hospitals provided an opportunity for family businesses to address these demands. For instance, TRIGEMA, founded in 1919 and currently one of the largest manufacturers of sports and leisure clothing in Germany, ventured into mask making at the beginning of April 2020. TRIGEMA, led by Wolfgang Grupp, sole managing director and owner of the third-generation family business, stands for social and economic responsibility as well as the preservation of Germany as a production location. TRIGEMA, like other companies, switched to the production of protective masks and charges about seven to 12 euros per a washable and reusable mask. The company was strongly criticised for the high prices of the masks, to which Wolfgang Grupp argues: 

“The price must be high enough so that the family business does not go bankrupt due to the coronavirus crisis. Five work steps are required – from cutting fabric to packaging. Therefore, the price is reasonable considering the fair wages and special expenses we are covering. “I was happy to help, but I can’t give away the masks,” says Grupp to FOCUS”.  

Wolfgang Grupp

Family businesses have found a way to adjust their business model and maintain internal stability. In doing so, solidarity and social responsibility should be sought only through a critical eye. Solidarity does not always mean free giveaways, especially for a business that has expenses such as salaries and taxes whether they are operating or not. In-kind and cash donations from a family business to address the unimaginable impacts of COVID-19 are playing a relevant role especially at the local level. Yet, these forms of solidarity from family businesses are also beneficial in terms of corporate image and reputation, as well as customer’s expectations, and loyalty.   

This pandemic, a period of social and economic upheaval and uncertainty, has highlighted various family businesses efforts of solidarity in different regions of the world. The task of collecting and presenting each family business’ effort is unthinkable considering that in Germany alone there are approximately 3.3 million family enterprises, combining family controlled and owned companies. Interestingly, the Foundation for Family Businesses in Germany and Europe – Die Stiftung für Familienunternehmen in Deutschland und Europa in German- launched a platform to fight against COVID-19. The platform is a clever initiative that benefits family companies by encouraging the exchange of experiences upon mitigation of health risks and economic consequences.  

Family businesses matter, especially in times of crisis, due to their economic significance in job and wealth creation. Family values and commitments play a huge role in coping with COVID-19 and therefore responses differ from non-family enterprises. As a source of inspiration, family businesses’ responses of solidarity during COVID-19 might derive from a strong commitment with its employments, venturing into a new business line, fundraising to support groups in need, sharing expertise as well as resources, to addressing gaps by assisting communities. Family enterprises have responded strategically, proactively, and united as in the case of Germany.  

COVID-19 requires collaboration and cooperation and family businesses have been responsive towards this need. It may go unnoticed how family businesses’ efforts contribute to stability and safety during COVID-19. Yet, we should remember many hands make light work! Health care workers, police officers, teachers, students, artists, family businesses, you, and me, as well as many others, should be recognized for being resilient, courageous, and most importantly for adding our “little grain of sand” in these uncertain times. Family business, in their own and unique way, have expressed solidarity in a powerful and inspiring manner, leading to collaborative efforts. 
 

This blog piece is written to honour the efforts of all family companies during these exceptional circumstances. Especially to honour my mother and father’s family companies which in severe financial hardship have failed. But, have never given up and continued the bumpy business path to provide jobs and maintain the family values embedded in my generation.    

Author: Silvana A. Navarrete R.