In early March, we were worried about supply chain disruptions because of the novel coronavirus spreading in Asia. Just two weeks later, our country — and economy — basically shut down as COVID-19 spread throughout the United States, ending the country’s longest economic expansion on record.
At the end of the first quarter, the U.S. economy contracted by 4.8 percent — the steepest contraction since Q4/2008 during the Great Recession, according to the Bureau of Economic Analysis. How should businesses respond to this crisis? In this issue, several consultants to industry have provided our readers with some advice. Specifically, Kate Crowley and Jeff Jorge from Baker Tilly provide an approach for “now, next, later.”
The “now” strategy focuses on financial considerations, i.e., getting the capital your business needs; reexamining supply chains and inventory; and strategic planning. “Next” come plans for sustaining business for the medium term. And strategies for “later” include preparing your company for the economic recovery, including considering strategies for perhaps reshoring or near-shoring some of your supply chain.
As the economy begins to re-open, there is also the question of putting the millions who have been laid off or furloughed back to work. Managers should rank workforce openings based on their potential economic and strategic impact, according to Kent Cornell of UHY Advisors. SSOE Senior Project Manager Michael Vetter says it’s also important to for companies to make sure their employees are — and feel — safe on the factory floor.
Ways of operating may never go back to the way they were, according to economic modeling firm Emsi, so businesses need to prepare for a reshuffling of the workforce, with some employees moving into newly created or significantly altered roles. Importantly, those companies that have received incentives based on job-creation and investment numbers, may now need to go back to incentive-granting authorities to renegotiate terms.
Go to our "COVID-19 Response" coverage to read more about incentives renegotiation and other ways the COVID-19 crisis will affect business operations. Highly regarded consultants to industry present their views on how companies — and taxing authorities — should prepare for the “new normal.”
As we continue to navigate these uncertain times, Area Development will continue to provide our readers with information to help guide their site and facility planning needs.