Facing our fears

Communities summon resolve as COVID-19 continues to sicken economy

Posted on Apr 30, 2020 :: Cover Story
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Posted by , Insight on Business Staff Writer

For Yee Lee Vue, the gravity of COVID-19 sunk in first gradually and then sickeningly quickly.

On March 16, when Gov. Tony Evers issued an order banning gatherings of 50 or more, Vue, who owns and operates the Appleton restaurants Bowl 91 and Big Pot & Grill with her husband, Thong, faltered but quickly put a plan in place. Vue and her team removed tables to allow for 6 feet of space between diners and doubled down on their already-stringent hygiene practices.

The next day, however, the directive changed from groups of 50 or fewer to groups of 10 or fewer. In a matter of 24 hours, Vue realized her thriving businesses would face extraordinary challenges.

“Everything just came way too fast. Honestly, I wasn’t ready for all these changes,” she says. “I was crying, but I was trying to stay strong for my team. Knowing that we don’t know when all this will end hurts me a lot.”

Opening Bowl 91 two years ago was the realization of a lifetime dream for Vue. The downtown Appleton restaurant quickly built a loyal customer base, and Big Pot opened in late 2018. Vue was poised to open a third restaurant, Little Siam, in downtown Neenah on March 21. That’s been postponed.

“We put so much hard work into this business. My thoughts were, ‘Oh my God, what if we don’t survive? What if we can’t come back strong?’” Vue says.

Bowl 91 remains open for takeout and delivery, but Big Pot is closed. In addition to working remotely in her other role as a librarian with the Appleton Public Library, Vue is working to help protect the livelihood of her employees. Bowl 91 usually employs 10 people per shift, but now there’s only enough work for the general manager, two assistant managers and one line cook.

Vue is paying all her part-time workers minimum wage right now. She says the community has stepped up in amazing ways to support Bowl 91, and every takeout and delivery order, tip, gift card purchase and positive review helps. To stay afloat, Vue plans to take advantage of the Hmong Wisconsin Chamber of Commerce Emergency Loan Fund and is looking into assistance from the Small Business Administration.

Stories like Vue’s have played out across thousands of businesses large and small throughout the country, and they underscore the unprecedented nature of this catastrophe that’s altering life as we know it on a global scale.

COVID-19 has disrupted the economy in unrivaled ways, bringing entire industry sectors to a crashing halt and putting millions out of work practically overnight. The hardest-hit sectors include retail, restaurants, entertainment venues, travel-related businesses, dental offices and salons — just to name a few. As more stay-at-home orders went into place, a U.S. Chamber of Commerce poll of small business owners found one in four predict they will close permanently.

“Without a doubt, this virus has ended the longest (economic) expansion in U.S. history,” says M. Scott Niederjohn, senior vice president for cooperative education and economic development at Lakeland University in Plymouth. “The unemployment rate is likely to more than double this month (April), and GDP growth has and will continue to shrink significantly with huge sectors of the economy turned off.”

‘The hardest days of my career’

Like Vue, Ryan Batley, general manager of the Best Western Premier Bridgewood Resort Hotel & Conference Center in Neenah, watched the state of his daily operations go from limited to nearly impossible in the space of 24 hours.

Businesses like Best Western were mandated to close at 5 p.m. on March 17. Batley’s team already had corned beef, cabbage and green beer prepared for a large St. Patrick’s Day crowd at the property’s restaurant, Ground Round, along with extra staff on hand and hotel rooms booked for people planning to make a night of it. “I like to say we are prepared for most everything, but we didn’t expect something like this,” he says.

Batley says the hardest days of his career soon followed as he laid off 140 people from his 160-employee staff and broke the news to couples that their long-held plans would be delayed.

Hotel room occupancy at the Best Western Premier has dropped to around 10 to 15 percent, and offsite catering is canceled for the foreseeable future. Ground Round remains open, offering takeout, room service and delivery within a 5-mile radius. Even though the community has shown its support, the restaurant is still losing 80 to 90 percent of its weekly sales.

As many would echo, the hardest part for Batley and his team is navigating the unknown. Customers want to reschedule events but don’t know when that’s feasible. Rescheduling events requires a lot of coordination, not just with the host site, and that’s not always easy to manage, he says.

“We sell time and space. We really don’t sell a product,” Batley says. “Where other businesses might be able to sell more of their product in the third or fourth quarter to make up what was lost in the first or second quarter, we’re not all of a sudden going to have more corporate events or weddings.”

Despite the difficulty, Batley and his sales team are forging ahead and helping organizations and brides and grooms create action plans to help ensure events can move ahead when it’s safe for people to gather once again.

Many businesses across the region that have remained open have pivoted to find new ways to operate within state directives. That’s been the case for Caitlin Brotz, owner of Sheboygan-based Olivu 426, which specializes in natural beauty and personal care products.

Business for Olivu traditionally was split evenly between her Sheboygan store and online sales. In the past several weeks, Brotz has seen demand for some of her products skyrocket. First and foremost, people are seeking hand sanitizer, but sales for products such as hand soap and lotion also are going strong.

With hand sanitizer in short supply, many people have resorted to trying to make their own. However, even the key ingredients of that — aloe gel and rubbing alcohol — are nearly impossible to come by. Brotz feels fortunate that a bulk order for alcohol she placed in mid-March recently arrived.

Olivu normally employs 10, but only about five are now working around the clock to keep up with orders. One employee works in a room dedicated to production, while another fills orders in a separate room, all with the aim of complying with physical distancing guidelines.

Brotz herself often comes in during the wee hours of the night, balancing helping fulfill orders with the day-to-day work of maintaining the online business. She relies on her faith and says helping others stay safe and well keeps her going.

“I genuinely want to be a positive light,” she says. “Find your gift and embrace it and use it in whatever package that looks like for you as an individual.”’

Analyzing the disruption

As emergency state rules began to close businesses, Jeffrey Sachse, the interim director of the University of Wisconsin-Oshkosh Center for Customized Research and Services, realized data needed to be gathered and tracked.

“In disaster situations — and this is an economic disaster — there needs to be documentation of what’s happening,” he says. “In this case, it is about documenting what businesses are going through. That way, we can go back and analyze the situation to fully understand its impact. We can also develop ways to prepare if something like this happens again.”

The COVID-19 Wisconsin Business Survey measures organizations’ economic losses and will guide future recovery efforts as the pandemic plays out across the state. The first version of the survey went out in early April, with another one expected this month. As results are gathered, data will be available at the county, region and state levels.
To increase participation in the survey and get the word out to industry sectors and businesses of all sizes, Sachse partnered with the Wisconsin Economic Development Corp., regional economic development groups across the state, chambers of commerce and other organizations. Plans include having the survey translated into Spanish and Laotian to make it more inclusive.

“As we get the information in from businesses, especially about the specific help needed, we can share that back with the local organizations so they can reach out to address those issues,” Sachse says. “From the responses I’ve seen so far, businesses want to keep the lights on and pay their people. When asked about their long-term survival, the most popular response is ‘I don’t know.’”

New North Executive Director Barb LaMue says the survey will monitor the pandemic’s rolling effects on the economy. She admits COVID-19 consumes most of her day, overshadowing other New North initiatives for now.

“As a region, our top priority now is helping our businesses through the COVID-19 pandemic. We’re doing everything from providing businesses with information on how to receive forgivable SBA loans to working with the state on identifying manufacturers who can retool what they’re doing to produce personal protective equipment,” she says. “We’re all in this together.”

Makers keep making

While many employees are now working remotely, vast numbers of others are working in essential industries that require them to show up at work, including most of Wisconsin’s manufacturers.

Ann Franz, executive director of the NEW Manufacturing Alliance, says COVID-19 has thrown the industry into chaos in several ways. “How do you manage something that’s never been done? For a lot of companies, there was a lot of confusion about what is an essential business,” she says.

Most manufacturers in the region have been deemed essential to the supply chain, Franz says, and the diversity of sectors in Northeast Wisconsin helps insulate the region against instability. Papermakers, food manufacturers, the defense industry and its suppliers, and the packaging industry, for example, all will keep running, she says.

Beyond the most basic question of what’s an essential business, manufacturers have had to find ways to keep workers safe, address concerns about potential downsizing, and in some cases at the opposite end of the spectrum, ramp up to meet demand.

That’s the case at Lakeside Foods in Manitowoc, which produces canned and frozen vegetables. Anne Smith, director of communications for the company, says Lakeside recognized the importance of its role as a food provider early in the outbreak, and teams have been working overtime to fulfill the influx of orders.

Smith says the company has seen the greatest demand for long-shelf-life products such as canned vegetables and dried beans. Delivering those items to people nationwide remains the company’s top priority, she says.

In addition to having the highest level of food safety certification from the Food and Drug Administration, Lakeside is following Centers for Disease Control and Prevention and Occupational Safety and Health Administration guidelines to keep employees safe.

“The overriding culture at Lakeside is one of an agricultural mentality where everyone pulls together to help out when needs arise. This is obviously one of those times, and our employees are doing just that. We’re proud of our Lakeside team,” Smith says.

Food that’s produced needs packaging, so that means companies such as Amcor and Menasha Corp. continue to go strong, Franz says. Georgia-Pacific Corp. continues to produce toilet paper 24/7, and Kimberly-Clark Corp. said it’s taken steps to accelerate the manufacturing of its essential products and reallocate inventory to provide greater access to consumers.

“In regards to our manufacturing industry, I’m very bullish on the outlook for these companies,” Franz says. As of press time, the state’s Safer at Home order was extended through May 26.

A way forward

One of the most frustrating challenges with COVID-19 is uncertainty around when businesses will be able to resume normal operations.

Tim Schneider, New North Inc. co-chair and CEO of Investors Community Bank in Manitowoc, says the crisis is like nothing he’s ever seen before, including the Great Recession.

“This situation has a more widespread impact and is affecting more businesses, but we’re hoping it will be a shorter rebound” since it’s caused by an outside actor — the virus — versus something fundamentally wrong in the economy, he says.

As businesses seek funds to remain afloat, Schneider and other bankers remain busy processing applications for the Paycheck Protection Program, which is part of the $2 trillion CARES Act. Through the PPP, businesses with fewer than 500 workers can receive cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during the crisis. “I am sure there will be more funding coming since what’s in the CARES Act is not enough,” he says.

The original CARES funding for businesses ran out April 16 and, as of press time, Congress was working on another stimulus package, which would inject additional money into the PPP.

Despite the federal government pouring cash into businesses and unemployment programs, don’t expect the economic growth from previous quarters to return immediately, says David Fuller, an associate professor in economics with UW-Oshkosh. The shock caused by COVID-19 has jostled around segments of the economy. For example, he says while restaurants have been hit hard, grocery stores and delivery services have grown.

“(The shock) moves resources around. It will take some time after the Safer at Home orders are lifted for these resources to shift back,” Fuller says. “Firms can expect some bumps in the road trying to get back up to full speed.”

Marc Schaffer, director of the Center for Business and Economic Analysis and an associate economics professor at St. Norbert College, says the full weight of the economic upheaval will remain unknown for months.

“The second quarter started April 1, and we won’t have the GDP for the quarter until July. We’ll see a little bit of the effect in the first quarter results since the stay-at-home orders began going into place in March,” he says.

Once stay-at-home restrictions are lifted, Schaffer says to expect slow, gradual economic growth. “The uncertainty factor is going to drive the recovery. People and businesses may be slow to begin spending again just in case the virus returns and we go back to another (economic) shutdown,” he says. “Until the health side of this is resolved and there’s more certainty, that’s when the economy will truly begin to come back.”

A lifeline to businesses

As businesses of all sizes grapple with uncertainty, area organizations are mobilizing to help them sort through the information overload and complexities the situation presents.

Joe Sheehan, executive director of the Sheboygan County Economic Development Corp., says his organization has sent letters to each of the county’s businesses to let them know about the support and services SCEDC can provide.

Several companies within the county employ as few as two to five people and don’t have time to sift through information and fill out paperwork. SCEDC aims to help businesses identify the steps they need to take to continue operations. Those include applying for the PPP, which provides a 100 percent forgivable loan through the SBA if organizations retain employees for an eight-week period.

That option provides many with some peace of mind, Sheehan says. “To a person, their whole mindset is, how do we impact as little as possible our employees and their families?”

Like Sheehan, Laurie Radke, president and CEO of the Greater Green Bay Chamber, says her organization strives to inform without inundating or overwhelming people. The chamber assembled teams focused on putting together resources for individuals and businesses.

The chamber reviews and disseminates information from groups including the U.S. Chamber of Commerce, Wisconsin Manufacturers and Commerce and legislators. It’s updating its website frequently to provide resources aimed at specific groups including employees, human resources and business owners.

The organization also developed a series of virtual learning opportunities called “Chamber at Home” that offers education on topics such as working remotely and leading through tough times. They’re available to everyone, not just chamber members.

Region-wide, New North Inc. created a webpage filled with information and links to provide business leaders information about available assistance and resources. The organization is also working with the WEDC to provide free weekly webinars designed to help business leaders manage through these challenging times.

While uncertainty continues to rock individuals and organizations, Radke has seen the community rise together in inspiring ways.

“When people are filled with fear, they have to remember what we’re made of as a community and even as a state,” she says. “We’ll prevail and there’s hope, and it doesn’t mean there’s not going to be challenges and hard times, but it’s an opportunity to really shine and show externally what we’re made of, and the best way we can do that is sticking together.”