Thoughts on the Economic Impact to the Fort Collins Area of the Shutdown
The Board of Directors of the Fort Collins Area Chamber of Commerce held its first-ever virtual Board Retreat yesterday. A lot of topics were covered including reopening businesses and rebuilding the economy. Here are observations I shared with directors about how the public health shutdown will economically impact the greater Fort Collins area:
- Lack of vaccine = a cautious public = reduced economic activity = slower economic recovery (a Nike swoosh instead of a “V” recovery). An 80% economy. I also indicated I hope this is wrong and that we do see the “V.”
- For a long time, people will be more conscious about avoiding and preventing the spread of germs. Stay home when you’re sick, don’t shake hands if you’re sick, wipe down surfaces, etc. Ironically, we may be healthier over the next half-decade or so because of the virus today.
- The wide disruption of business models short-term may have long-term implications – retail, health care, manufacturing supply chains, higher education, etc.
- People will travel again, but it may be a slow wind up over a couple of years. A lot of business-related travel will be gone because people just discovered that virtual meetings on Zoom work fine and save a lot of time and money. This will impact motels/ hotels across the country, including Northern Colorado. Most tourist destinations and attractions won’t really recover fully until there is a vaccine.
- Many small companies cannot survive this, which will change communities that favor local restaurants and retailers. Fort Collins is one of those towns. In the years ahead those empty restaurant spaces will refill. Retail? The model was already disrupted by Amazon and this was a big hit. Longer-term there is still a place for small local retailers, but to compete they’ll have to operate differently – unique offerings, online presence, delivery.
- Like everybody else local governments will be forced to slim up. The City of Fort Collins is looking at as much as a $50 million budget gap. This will be painful. The Chamber will need to focus on advocating for core services and business / development services. We’ll also need to be vigilant about possible new fees on business, which would be counterproductive to economic recovery.
- Re-igniting the local / regional economy should become the top priority for city government.
- The traditional higher education model was severely tested. When CSU is not doing well financially, there are significant economic consequences for Fort Collins. For the 2020-21 school year, there will be few international students, fewer out of state students, probably just fewer students. Some potential college freshman will take a year off. We need to analyze the economic impact on the region with fewer students. We also need to closely follow trends in changes to the higher education model.
- The national business press indicates that some American manufacturers are rethinking and changing their supply chains. Some will be under pressure to ‘reshore’ their operations. That may present an opportunity.
- People want to be together so we will see in-person events reopen…gradually at first. It will be in fits and start during 2020 and when possible there will be a virtual offering for those not comfortable meeting in person. Once a vaccine is widely available, this will change.
- The health care system has been financially damaged. Many offices of small doctors, dentists, etc. have been closed for two months. Hospitals are losing millions daily for several reasons but largely because they have not been able to provide many of their traditional services. The use of telemedicine has increased dramatically. Until a vaccine is developed, hospitals will have to work hard to reassure patients that they are safe. Until elective surgeries are back on pace hospital systems will continue to bleed millions of dollars a day. It will be a while before we understand if there are permanent changes to health care, but for the time being, the pandemic has been a big financial drain.
- One bright spot in Northern Colorado has been senior living facilities. This disease is a big threat for older people, making the residents and staff in senior living and care facilities particularly vulnerable. In some places around the country this did not go well. The team at Columbine Health Systems got it right and saved lives.
- Childcare will be a major short-term workplace impediment. It may propel a public ‘solution’ in the form of public mandates on businesses.
- Another obstacle to reopening is getting workers to return. Unemployment compensation benefits are generous to the point of being a disincentive for some workers to come back to work.
- Fear of lawsuits will be another obstacle for businesses and universities trying to reopen. Per a headline in the Wall Street Journal “Plaintiffs lawyers are massing to loot medical providers and employers in response to the coronavirus.” The Fort Collins Area Chamber will work with the U.S. Chamber and our Congressional delegation to support liability protection.
- Residential real estate will bounce back because we have a shortage of housing, though how homes are shown and sold will be different until a vaccine is developed.
- Office buildings will be interesting. For a while, many of these spaces will be under-utilized as companies keep employees working from home. Once people are cleared to come back to work, both they and their company have decisions to make and this will be a mixed bag: some companies have found employees are more productive from home; others, not so much. Regardless, workplaces will be impacted and so will the culture of companies.
- Beer is a big part of the Fort Collins culture. AB Fort Collins will be fine. The local microbreweries with taprooms will probably be fine when they fully reopen though some may not make it.
- Major area companies have taken big financial hits but have the means to ride this through. We need to understand more about where our top employers are currently and what they are forecasting.
I do not subscribe to the ‘everything has changed’ perspective being espoused by some people. This is certainly a monumental event, one that has not yet run its course, and we can’t pretend to understand all of the consequences. But we will bounce back as a country and a region. How long it will take is the big unknown.