Category: Community Development

Economic Recovery Strategies for Winners, Survivors and Losers.

It’s important for everyone to understand your community’s recovery strategy.

As parts of the US start opening again people are finally starting to wrap their brain around what’s next. Leadership in communities all over the country have been working on Re-opening and Recovery plans. I personally would be working on Reemergence and Reimagine plans because I’m not sure recovering to what we had before was working for everybody, but that’s a different blog post. This is one is directed at helping you understand the purpose of recovery plans so you can assess your local plans against your business needs and you personally.

Recovery plans are designed to help a local economy rebound. In this blog, I’m going to address the issue of rebounding the economy from a recession, since there is no real context for a pandemic-led recession And a lot of pandemic rebounding will hopefully be addressed in the re-opening plans guided by health experts. So here we go, an overly simplistic description of the thought process in recession recovery planning.

Recessions usually produce three categories: winners, survivors, and losers. I fully recognize and own how harsh that sounds. But understanding this is a bit of a needed reality check, so bare with me. At this point in the recession timeline, you can typically start to project which of these each of your community’s industry clusters will fall into. Each category requires a distinct strategy to help them continue to be an important and contributing piece of your local economy. This is a really, really important point. They all need assistance coming out of a recession, but in uniquely different ways.

Winners. These are the industry clusters that will continue to provide jobs to some degree during the recession and quickly ramp back up coming out of the recession. All economies are local, but think biotech, health care, technology, logistics. So why are these important to help if they are already growing. Because you must FEED the engine that is growing. Failing to do so, will slow down their growth and subsequently the recovery. The strategy for this group focuses on getting these clusters the talent they need to keep growing. Actively preparing by working with them to identify employment needs, ensuring the training institutions have capacity to scale their training programs to address the needs, and creating awareness in the community to direct the employment interest quickly and appropriately. Funding here is awareness, training capacity and scholarships to ensure people can afford not to settle for underemployed positions.

Survivors. These are the industry clusters hit hard by the recession but are still holding on right now; but barely. In this recession think small business, retail, hospitality, consumer products and service. And for those communities where local business trumps chains, and entrepreneurs trump corporate, you will have a much higher number of businesses in this category. They often don’t have the longer term corporate assistance that many chains do in rebounding. The strategy here is much different. This requires immediate injection of capital, with plans for followup funding if needed. It requires local governments and communities to prioritize their survival with contracts for work and priority for supporting over the next two years. It requires prioritizing their employees, and contract workers, as essential to the recovery and aiding their employers in hiring or redirecting them to other options.

Losers. It’s harsh, again I know. But there will be industry clusters that just don’t make it as a result of a recession. And this particular pandemic recession has made that even worse. Most recessions are slow progressions over time. This one came fast and furious and there is still debate on how long it will last. This category hits all clusters to some degree because all have businesses that were still working on their sustainability prior to COIVD-19 and just can’t hold on. In most local economies, think entertainment and boutique hotels as two examples of hardest hit. The recovery plan here is two fold. First, if there are still true survivors operational in these hardest hit clusters, prioritize their assistance under the previously discussed Survival plan. But they must be true survivors. Again, harsh, but real none the less. Second, don’t abandon the industry. Put a plan in place to recreate it, reboot it. Recessions often spur entrepreneurial activity. Your community should have a plan in place to support and prioritize their engagement in recreating and rebooting. Your community will be full of quality talent in these business sectors. Don’t lost them!

These COVID-19 recovery plans are especially hard for local communities to develop when they are complicated by the lack of consistent, and sometimes contradictory direction from higher levels that govern and regulate re-opening. In the end, that just adds greater urgency and reliance on our local leaders to be responsive and act with foresight. This pandemic and resulting recession is proving that those economies with diverse industry clusters will bounce back quicker. That diversity of business sectors matters now more than ever. How quickly your local community develops and implements a plan that addresses all parts of the economy by meeting the specific needs of each business sector will determine how well your economy turns the corner from surviving to thriving.

COVID TRENDS SERIES: BUSINESS

COVID: What have we learned and what to expect:   Business Insights

Welcome to my COVID TREND SERIES. Today’s post will talk about some things that we’ve learned during COVID about business and what might emerge post COVID.

Business has been hit hard during COVID in ways that we’ve never seen in this country since the great depression.  COVID made its mark world wide, creating a supply chain ripple effect that has left no industry untouched.  Below are a few things that I believe are important to think about as we try and identify what could help or our hurt local economies.  Pivoting now to take advantage of these trends will help determine the winners and losers in this recession over the next couple of years. 

MANUFACTURING:  Good news if your local economy is looking for increased manufacturing. But bad news for your job numbers when automation comes along with it.

  1. Just in Time Manufacturing is all but dead. While we’ve been moving away from this for awhile now, this pandemic has magnified the disadvantage of maintaining the minimum capacity necessary to meet demand on a just in time basis as it arises.  While this crisis created an unprecedented demand that we probably would not have been able to fill regardless, our emphasis on lean supply production infrastructure greatly inhibited our ability to scale up quickly. 
  2. Redundancy is a fast rising priority. The disruption in supply chain created by uneven Shelter in Place orders worldwide will likely result in a movement back to creating multiple manufacturing locations for product parts, lessening the  dependency on one location that might get interrupted. 
  3. Shelter in Place is resulting in development and utilization of digital tools that could have a side effect (see below) of accelerating automation in manufacturing that we all knew was coming.  

TECHNOLOGY: This trend might also have a double edged sword: more entrepreneurship and local small business collaboration but obselesence of sales and customer rep positions.

  1. Digital tools that support COVID solutions like contact tracing and telemedicine will both invigorate technology entrepreneurship again, and magnify the tension between need to know and personal freedom that most Americans struggle with.
  2. The national movement to support local small businesses could ignite a new level of interest and development of technology platforms to support local take out and drive by service in a whole host of service industries.  These platforms could allow local businesses to find alternatives too high cost national platforms like GrubHub and would resonate with local residents thinking local again, keeping take out a priority revenue generator.  
  3. Technology might also come to the rescue when consumers start trying to confirm that the restaurant down the street that just opened back up is complying with COVID requirements and is a safe place to eat.
  4. There are some indications that COVID has forced a level of consumer comfort in the use of technology to purchase online products and services, that we might see the disappearance of middle men in some industry sectors. Consumers are getting used to making purchasing decisions without sales and customer reps. Direct online sales during COVID in industries like insurance and automobiles are fueling that speculation.

CONSUMER BEHAVIOR THAT COULD HURT OR HELP BUSINESS:

  1. Businesses are not the only one worried about supply issues; consumers will also be concerned about scarcity after COVID. There may be greater interest in storage capacity to hoard supplies and the products that make that easier, like freezers.
  2. Home remodeling might refocus into higher priorities for home offices,  remote learning spaces and storage capacity.
  3. Interest in upgrading technology capacity will only increase and home systems that utilize that technology capacity might also see an increase, because working remotely just isn’t going away.
  4. Recreation and physical exercise will be re-prioritized. When travel is allowed, much of the immediate travel will be focused on outdoor environments that allow people to experience an impressive change of scenery. Parks, trail ways, bike paths all become important because it will allow for appropriate social distancing movement with limited fear of contact. 
  5. Most consumers will more likely patronize “in person” businesses that adhere to COVID re-opening requirements, alleviating their fear of contact transmission of the virus. The cost of retrofitting these businesses to accommodate this will need to be recognized and subsidized including improvements such as temperature and hand washing stations, upgrades to HVAC systems, and reporting requirements. 

It doesn’t matter if you’re a business owner, community leader, or economic developer; arming yourself with all the ‘What if’s” in times like this, is essential to inform the pivot you’ll need to make to reemerge fast and quicker.