Lakeshore Advantage released a second report on the business impacts of COVID-19 this month that shows several positive economic trends as companies return to work.
The Zeeland-based economic development agency polled Allegan and Ottawa county primary employers four times over a seven-week period between April 20 and June 3 to gauge business’ immediate needs as they return to work, to quantify the impact of COVID-19 and to track economic progress. Each week, the poll opened Monday morning and closed at 5 p.m. Wednesday.
Lakeshore Advantage’s first COVID-19 business impact report was published April 21, according to a previous Business Journal article.
The new report, published June 11, garnered 220 employer responses in the manufacturing, agriculture, wholesale and professional/scientific industries.
Michigan manufacturing opened May 11, and for the two polling periods following, all respondents were open for business, Lakeshore Advantage said, although not at full capacity due to decreased customer demand and the burden of getting proper protocols into place. The number of respondents operating at half capacity or greater increased from 49% to 72% over the seven-week polling period. In the most recent polling week, while 72% of respondents report operating at half capacity or greater, 46% of those respondents were operating at 80% capacity or greater.
“We implemented many different work safety practices and have been able to bring back 100% of our workforce,” said Ross VandeWege, president of Holland-based Techno-Coat, a powder coating company. “Demand has returned to around 85% of pre-COVID-19 volumes. Overall, we feel really good about being able to keep our employees safe while meeting the needs of our customers.”
While nearly all respondents reported weekly revenue decreases due to COVID-19, the number of respondents reporting a weekly revenue decrease greater than 50% trended downward from 63% to 42% over the seven-week period.
Lakeshore Advantage is optimistic cash flow will continue to improve following the reopening of the economy.
“We really are in recovery mode, and companies’ weekly revenue is starting to rebound, which I think is really positive, particularly in a region where we’re really heavy in manufacturing,” said Amanda Murray, vice president of business solutions for Lakeshore Advantage.
Supply chain confidence was high, with a majority of respondents either “extremely” or “very” confident that their suppliers will be able to deliver critical components, products and services going forward. Murray said this was surprising.
“I thought that the supply chain would appear to be a little more broken than what our respondents have reported. … The majority responded in a very positive way that maybe there were some disruptions that would slow them down a little bit, but it wasn’t going to be catastrophic.”
She said another surprise was that 65% of respondents reported that they still have expansion plans in the next three years despite the impact of COVID-19. This compares to last year’s Lakeshore Business Intelligence Report that showed 73% of companies planned to expand in the next three years. Murray said a decrease of 8% was not the “huge gap” she would have anticipated.
“Everyone seems to be saying, ‘Yes, we still plan on it; the timeline has just changed a little bit.’ That’s really positive for the economy.”
Using data from the quick polls, Lakeshore Advantage was able to see in real time what employers’ needs are and present solutions.
“The quick polls helped us pivot our strategy to provide immediate support to our region,” said Jennifer Owens, president of Lakeshore Advantage. “Our team was able to identify the crucial needs of employers and connect them with the right tools and resources.”
The most frequently cited needs at the beginning of the survey period were return-to-work personal protective equipment (PPE) such as disinfecting wipes, hand sanitizer and no-touch thermometers.
Murray said Lakeshore Advantage was able to put together a PPE supply chain initiative to connect local demand to local supply as a solution for the survey respondents. As of June 11, the agency had navigated more than 125 PPE requests from employers and other organizations.
“Some of the larger corporations didn’t seem to have as hard of a time sourcing PPE, but those that needed the smaller quantities and then also local units of government or counties that needed PPE, we were able to connect those,” Murray said. “They were able to connect with their neighbors to do that, so it wasn’t that things were coming in from outside of state or outside of the country. It was, you know, a company in Holland getting PPE from a company in Zeeland — so really closing those gaps.”
Other ongoing needs Murray said Lakeshore Advantage has been able to meet include providing a one-stop-shop for information about the ever-evolving Paycheck Protection Program through emails and webinars, as well as revamping its COVID-19 page to help employers find back-to-work guidelines and regulations.
“It’s really just week to week, whatever we’re hearing,” Murray said.
The Lakeshore Advantage team will continue to work closely with employers to understand their needs as the economy reopens and their operating capacity increases, she said.
Before the pandemic, the manufacturing sector was facing a nationwide labor shortage due to low unemployment. Murray said the high jobless rate today — coupled with the fact that many jobs in the retail and hospitality sectors have disappeared — means the labor pool is much larger. But an inherent challenge of capturing new talent and transitioning people into manufacturing is retraining, with the state’s Going PRO Talent Fund budget slashed and manufacturers facing revenue shortfalls.
Murray said it remains to be seen whether manufacturers will still have a labor shortage with the current lower demand level for goods and less output.
She said she believes Lakeshore Advantage is one of the few economic development organizations in Michigan collecting data on companies and publishing reports that track the business impact of COVID-19, and the organization will continue to do follow-up reports in the coming months.
The full business impact report for June is available at bit.ly/biztrendsreport.