May 7, 2006

Bracing for Bird Flu, Firms Set Backup Plans

By Scott Malone

NEW YORK -- As major U.S. companies brace for the threat of bird flu mutating into a form that could jump from human to human, they face one unusual challenge -- persuading employees to stay home.

"We're going to have to get over the mind-set that you can't be productive from home," said Andrew Spacone, crisis manager at Textron Inc., a $9.5-billion diversified maker of items ranging from Cessna jets to EZ-GO Golf Carts.

"At some point in time -- earlier as opposed to later in a pandemic situation -- we will be telling employees not to come in to work," added Spacone, who spearheads disaster planning for the Rhode Island-based company's 47,000 worldwide staffers.

"Bringing somebody into the office to do something for another day, if that person becomes infected or ill or infects other people -- the loss is going to far outweigh having that person stay home that day," Spacone said.

True to its name, bird flu in its current form affects mostly birds. But 206 people in nine countries have contracted the disease, mostly by being exposed to sick birds, and 114 have died.

Experts fear the H5N1 virus, which causes the disease, will mutate enough to pass easily among people and cause a catastrophic pandemic and millions of deaths.

About 76 percent of manufacturing executives believe human bird flu would take a toll on their operations, according to a survey by Mercer Human Resource Consulting. But only 20 percent have allocated funds to prepare for the threat.

At several major U.S. manufacturers, officials are focused on three key elements -- spreading staffers out to reduce the chance of infection; focusing on critical functions and pulling back on noncore work, and ensuring that backup sources are available for both raw materials and outsourced operations.

"We have an entire team of people that have worked globally on kind of a plan for each of our operating companies to roll out steps to know what to do the moment an incident would happen," said George Nolen, president and CEO of the North American unit of German industrial conglomerate Siemens AG.

"I'm not alarmed by it, but I am concerned," he added.


Since the flu is transmitted through human contact, such as handshakes and sneezes, one of the first steps companies would take in an outbreak would be to spread out employees.

That means having staffers work swing shifts so that offices can be less crowded, sending employees home with laptops or dispersing top executives across cities or countries to reduce the odds they would all be sick at the same time.

"Companies need to look at policies, even to the point of saying, 'If you have an immediate family member in the home that's ill, we would just as soon not have you come to work,"' said Jim Reynolds, a principal at Mercer, who is specializing in helping companies prepare.

Another key step is to identify in advance the functions that are vital to corporate survival and those that can be suspended.

Most executives interviewed said functions like finance and human resources would have to remain staffed, while companies could more easily close individual factories and slack off on merger talks.

At conglomerate Tyco International Ltd., which generates $39.7 billion in annual revenue from operations ranging from electronic components to security systems, factory managers are figuring out the minimum levels of staff needed to run their facilities to help decide how long they could operate during the worst of an outbreak, a spokeswoman said.

Tyco is also training additional employees to perform core functions, such as finance and security, as backup if the employees who normally perform those duties become sick.


Beyond ensuring that facilities continue to operate, companies are planning backups of raw materials in the event that key suppliers cease to operate -- particularly in Asia, where most of the human bird flu cases have occurred.

3M Co., of St. Paul, Minnesota, which is best known for Post-It notes and Scotch tape but makes much of its $21 billion in revenue through industrial and medical products, has charged supply-chain staff with lining up backup raw material sources for its factories in 65 countries, a spokeswoman said.

In addition to thinking about raw materials, companies should be ready to respond if the operations of outside service providers are disrupted, said Reynolds, the consultant.

"If you're a retailer and all of your order-taking is being done through a call center in India, what kind of backup plan do you have?" Reynolds said.

(Additional reporting by Nick Zieminski)