Industry Insider: COVID Business Landscape Part III
View all installments of the five-part Industry Insider series. By Tom Michael This week we begin the third part of what we thought would be a two-part article. Response from…
By Tom Michael
This week we begin the third part of what we thought would be a two-part article. Response from mints and auction houses has continued to arrive. Reports of how business has changed during the pandemic are evolving into a broader picture. This week we will cover what is happening with mints on the Pacific Rim and in central Europe, plus a fun sidebar about a great coin project designed to both honor and assist U.K. health workers.
At the Japan Mint, the initial business impact of the pandemic was harsh, but the mint acted quickly to reduce risk to their staff and continue needed production.
Nayuko Kume, deputy director of overseas business informed us that, “Based on the state of emergency by the government, we are reducing the number of workers coming to work per day for some distance and to reduce the risk for infection. Now about under 50 percent of workers are working at the factory. Also, we are closing the factory tour and the museum.”
So essential business keeps going and, according to Kume, “for now we do not have any infected patient.”
This approach has worked for other mints in southern Europe, as discussed in our last article, with good results, in terms of both staff health and public coinage supply.
Collectors will be wondering about delays or cancellations in the extensive Japan Mint Olympic commemorative coin series.
Kume was able to explain to us that, “As for Tokyo 2020 coins, we have postponed the order acceptance for the base-metal complete sets of both Olympic and Paralympic and all 37-proof coins complete set. The base-metal complete set contains all the base-metal coins from the first series to the fourth series, and all 37-proof coins complete set contains all the coins from the first series to the fourth series. The reason for this postponement is that the Ministry of Finance has decided to postpone the exchange of the fourth series base-metal coins at financial institutions, which was scheduled in July initially, to avoid the crowd at the financial institutions. So, we need to postpone the sales of the products, which include the fourth series of base-metal coins. As for the fourth series gold and silver coins, we are selling them as scheduled.”
This is comforting news for the folks who had previewed these coins during the World Money Fair in Berlin in February. The Japan Mint hosted this event and provided a full representation of the Olympic and Paralympic coins to be issued, as well as a beautiful touch of Japanese culture in several artistic forms such as calligraphy and music. The fact that some of the base-metal coins will be delayed out of concern for crowding at financial institutions is a new wrinkle we have not seen before, but one that we are pleased to see has played into the forward-thinking in Japan.
Mark Cartwright, general manager of sales, marketing and distribution at the Royal Australian Mint had good news to report with, “a clean bill of health across the board!” for their staff.
Cartwright explained their approach in this way: “Here at the mint we initiated a range of measures to ensure that our staff were safe, but also to enable the organization to continue to be productive. We transitioned to a hybrid model where, on a roster basis, staff would work from home to minimize the number of people on site. This is still in effect. We have some of our staff that are categorized as vulnerable on leave, which has resulted in reduced capacity across some areas of production.”
Additionally, RAM Marketing and Communications Manager Nicolle Keyes told us that, “As an essential service, the Royal Australian Mint continues to operate. The mint has adhered to government social distancing restrictions and as such part of its workforce is working from home and increased cleaning and disinfecting measures have been introduced.”
But once these internal staff changes were established, other difficulties came along.
As Cartwright explained, “The major challenges for us was in relation to managing the supply chain which had been impacted, as well as evaluating the changing market conditions both in Australia and abroad.”
Managing the supply chain and gauging market conditions and demand have been areas of concern for several other production and distribution companies we have talked with. Even retail coin sales outlets are working hard and thinking creatively to adapt to these changes during the pandemic.
Mint tours, gift shops, museums, and other interactions with the general public have been concerns for almost every mint we have heard from. Online features have been expanded and created in several cases to accommodate those reductions in face-to-face contact.
For the RAM, Cartwright explained the challenge.
“We did not close our business, but we have closed our doors to the public. The mint averages approximately 1,000 visitors per week, so it was very disappointing to have to limit access to the building; however, it was necessary given the risk of transmission and the Australian government response to COVID-19.”
Keyes went on to explain that the RAM has also had to “temporarily postpone events and pop-up stores during COVID-19 times.”
We hope that these RAM features and other new offerings for the public will be able to be continued as the pandemic wanes and risks subside.
As for program cancellations and postponements, the RAM is doing its best to avoid these problems, but the harsh realities of the pandemic make that difficult.
As Cartwright explained, “We have worked diligently on re-forecasting and re-prioritizing our production plan. The result of this has been postponement or cancellation of quite a few projects over the second half of this year and the early part of next year. This is disappointing but was somewhat unavoidable.”
But there is good news as well. Cartwright gave us more background on a new investment bullion coin program.
“On a more positive note, we were able to set a new record for our organization by initiating a new bullion project on March 31 and having gold and silver products on the shelf on April 28 – less than one month later. This is a testament to the focus of the Royal Australian Mint crew and our determination to continue to supply our loyal distributors with high-quality products. This was particularly important during this period where many businesses were going to be affected by not being able to access goods to sell, so we were really pleased to present the ‘Beneath the Southern Skies’ program, which has proved to be extremely popular.”
In a market hungry for bullion coins, the “Beneath the Southern Skies” silver and gold coins should be very well received. As the saying goes, timing is everything.
Of course, the other well-known saying is location, location, location and in the case of the Mint of Poland, their bullion coin and bar business has been in great shape through the first quarter of 2020. The pandemic has created a strong interest in gold and silver. We addressed some of the benefits and problems associated with the bullion business in our first article, but primarily from a U.S. perspective. In this case, the Mint of Poland was positioned to benefit within their country, without the impediments of transport problems.
As their website reiterated, “the turmoil associated with the pandemic brought us a situation when demand significantly exceeded supply. Record gold valuation in Poland related, among others with the weakening of the national currency, as well as the desire to secure owned capital, encouraged many people to invest. However, as the largest distributor of investment gold on the domestic market and the only producer of bars in Poland, we were well prepared to constantly meet the needs of our clients, summed up Grzegorz Zambrzycki, President of the Management Board and Chief Executive Officer at the Mint of Poland.”
Though Mint of Poland stores were closed initially, along with most other Polish businesses, current lifting of restrictions as the country opens up again have made it possible for their stores in Warsaw, Krakow and Poznan to be open for business once again and their website is open for orders now too. Siemowit Kalukiewicz, chief operating officer at the Mint of Poland informed us of his good health and that “all company is working every single day during pandemic time.”
In Bern, at the Federal Mint – Swissmint, General Manager Marius Haldimann reports that production “is almost the same as before COVID-19 had started.”
Enabling a program of social distancing has worked for the Swissmint and Haldimann tells us, “Fortunately we have had no COVID-19 case so far.”
Material supply has been a challenge for the Swissmint also. Haldimann tells us that, “we had changes by the supply chain because some suppliers had delivery problems which causes us impact on the production and planning. There is currently less demand on uncirculated coins at the Swiss National Bank, but so far no impact on the actual coin program.”
Commemorative coin issues from the Swissmint have had their issue dates shifted from May 7 out to Sept. 3. This affects the stunning Roger Federer tennis design in 50 franc gold and 20 franc silver as well as the 20 franc silver coin celebrating 150 years of the Swiss Fire Brigade Association. The fall should be a good time financially for the Swissmint and a fun time for collectors of their coins.
In Vilnius, Lithuania, Linas Veikalas, head of sales and marketing department at the Lithuanian Mint, informed us of several pandemic changes that have kept their staff all in good health.
“All departments except production work remotely from home. Those working in production must wear protective equipment and comply with other safety requirements. Body temperature is checked for entrants. Employees with young children took temporary additional vacation to care for them.”
A shift of the planned annual vacation time at the Lithuanian Mint from traditional August back to May was the solution to anticipated downtime during the pandemic.
“The main reason is that supply chains are disrupted and we cannot work at full capacity,” Veikalas said.
These and other shifts in the production schedule have enabled the Lithuanian Mint to stay on track for their annual planned programs.
“At the moment we have one potential delay for the Lithuanian Bank project only.”
We have yet to hear from our friends at the Italian Mint in Rome and are becoming concerned, given the impact of COVID-19 on the country. There have been reports from Rome of a surge in customers selling stores of personal gold coins, a common European hedge against financial fluctuations, since the beginning of May. According to Reuters, one prominent gold purchaser noted an increase in purchases of gold from private customers of roughly 50 percent. Many of the gold-buying stores nationwide opened for business during the 2012 recession and remain ready to purchase personal gold reserves during the pandemic. Their main competition comes with pawnbrokers, a business that goes back centuries in Italian tradition. Customer demand for purchasing gold is up as well, just as we have seen in almost all the areas from which we have received communications.
After an eight-week, near-total shutdown of all activity, COVID-19 has begun to be contained, but Italy’s economy is bowing under business debt and unemployment. The European Commission anticipates nearly 10 percent reduction in Italy’s economy through 2020. We sincerely hope that the Italian Mint family remains healthy and ready to get striking once the pandemic is contained.
As in our articles from the last two weeks, we can see that shipping remains a problem to be dealt with and now, as import/export starts up again, problems may arise there, too. The difficulty in getting materials affects production at the mints, as well as other manufacturers. So even with increased demand, each business must have the right set of circumstances in order to produce what is sought by collectors and investors. Delivery of numismatic items on both large production and small business scales is also being affected by shipping problems, between countries and even within a country.
As we come out of lockdowns, the business of coins will become easier – for mints, dealers, auction houses, and collectors. We may continue experiencing these new “growing pains” as a result of the pandemic for years to come. But the new ideas our forward-thinkers produced in this troubled time will facilitate new forms of coin trading, collecting, and production, which will also help us to grow as a hobby and industry.
