By Don Holbrook, Site Location & Economic Incentives Consultant
Life in the post Coronavirus global pandemic environment, have nearly overnight changed everyone’s life in some very dramatic ways. Our new way of life has also dramatically changed the way we will now live, work and socialize, for many years to come. The pandemic exposed the freedoms we took for granted; such as sporting events, concerts, dining out and going to the movies. It has also mobilized us as a species to change our own capabilities. This new environment has forced us to live more detached from our offices, yet remain even more connected. In many cases we have to relearn how to earn our livelihood, even under such a dire landscape remotely. In this pandemic economy some very staunch economic engines, ones normally fairly immune to such economic calamities have suffered devastating losses, such as the funeral industry.
A global virus that invisibly keeps us holed up and hunkered down in our homes is already reorienting our relationship to government, the media and our employers (especially our trust of their guidance). The virus has exposed the underpinning of how most do not believe the media to be trustworthy. People feel challenged as to what is actually factual and simultaneously they feel they are susceptible to the vast unsubstantiated opinions that clog up their social media.
Some of the changes that many people are wondering are just what will become of touching, hand shaking, even showing warmth and intimacy? Will physical contact become taboo? What will become of restaurants and bars, sporting events, concerts, and location-based entertainment such as theme parks, water parks and the travel industry, the entire people moving industry might be decimated?
How will airlines, subways, trains, buses, shuttles, trams, ride sharing and other concentrated people movers be impacted by this fear of contagious spread?
What we will see is that crisis moments also present opportunities for new industries to be borne and grow: more sophisticated and flexible uses of technologies, less polarization, a renewed thirst and appreciation for the outdoors and seeing those places on our bucket list. No one knows exactly what will come, but I believe we will take stock in our personal desires and find new ways to find enjoyment, economically sustainable livelihoods and demonstrating our human ingenuity.
The pandemic virus has been brutal on bricks and mortar dependent companies with over 41 million people laid off and a 14 percent unemployment rate the economic outlook for most is fairly bleak. This wave of an invisible threat has destroyed main street America. Many of the high-tech companies that are accustomed to this virtual environment are thriving. Amazon has announced it is adding 100,000 jobs. Companies such as Costco, Walmart, Kroger and others that sell staples have thrived, but it has been through online advances in home delivery and curbside pick up. This economic model will likely continue to grow even after the pandemic virus has cut its path through our species.
Unfortunately the invisible virus has exponentially sped up new economic focus towards doing as much as possible at a safe distance. This new health threat exposed our over-dependence and lack of preparation for many traditional industries especially in pharmaceuticals and healthcare supplies. The current administration has already taken a very pro-invest in America stance through the trade negotiations. This virus has not only heightened the average American’s awareness of our need for bringing back more basic manufacturing to our shores (In-shoring) for economic reasons, it has now made it a case of national preparedness of homeland health and security. Economic development faces the toughest challenge in most of our lifetimes.
Everything that will be built will be extremely high tech and less labor intensive and that will not bode well for a rebound in the labor-force. The aging infrastructure will be more tasked with demand just as local, state and the federal government coffers are financially exhausted.
The high-tech sector will see exponential growth in micro-fulfillment for in home deliveries, robotic warehouses, autonomous cars, ride sharing and drone deliveries. All new outcomes that address the publics concern for continued social distancing even after the President, Governors and Mayors open their economies back up.
Many people will change their lifestyles for good because of this global meltdown. The shakeout of these changes will be a boon for high-tech but it will come at devastating costs to the old traditional manufacturing, entertainment, transportation and consumer location driven industries. Many economists suspect that a large portion of those laid off during this crisis will never fully be re-employed as they once were. The new burgeoning high tech industry will be highly dependent upon youthful computer savvy and communications driven workers and this will be devastating upon those that depend upon their skills in a face-to-face environment.
Many experts wonder if the stress of our necessity to adapt to the trauma of social distancing and the rise of telework will have catastrophic economic impact on our mega cities. The discussion is whether this fear will finally empty out the huge cities and lead to a decentralization of the urban map of population densities. Some in rural areas are not wishing for such an influx. That seems doubtful, so these huge cities are going to remain vibrant, yet transformed. After each of our previous crises, big high tech hubs continued to grow and add jobs to the digital services employment sectors. That’s seems ton be driven by the expectation of high-tech to need centralized hubs for branding and workforce culture.
After the last recession, the high tech sector grew exponentially. Today our distance and telework-surviving workforce has been creating an economic boon for Amazon, Apple, Netflix, Facebook, Google and Microsoft products and services. This shows no signs of relenting. The pandemic COVID-19 has amplified the automation wave that was already sweeping changes across our global manufacturing and delivery of goods and services industries.
According to a Brookings Report (https://www.brookings.edu/research/how-covid-19-will-change-the-nations-long-term-economic-trends-brookings-metro) the face of retailing and restaurants will be dramatically changed through new hybridization of leases. Due to the fickle and highly predictable nature of consumers, the commercial leasing industry will have to respond with more flexible lease terms that can fluctuate with seasonality and shorter lease periods. The 10-year single tenant anchor concept may be gone forever with the closing and shuttering of over 15,000 retail stores. Giants such as JC Penny’s, Neiman Marcus, Gold’s Gym, Hertz, and Pier One Imports are all filing for bankruptcy. Other chains such as Lowes, Home Depot, CVS and Walgreens are also thriving in this new era.
Rebuilding our economy is going to be stressful. I recently read a Boston Consulting Group article by their Henderson Institute that discussed that our economic re-emergence would highly depend upon the establishment of trust by governments, companies and employers.
I think this is absolutely true. People around the globe have developed a severe distrust of all of these institutions and for good reasons. These pillars have shown that economic prosperity is of more concern many times than the plight of everyday people. In order to restart the economy all of these institutions need to be transparent, honest, guardians and stewards of our privacy and security, focused on the preservation of our healthy interaction at work and in travel and consumption of goods and services, and credible and factual with providing us with information to allow us to make knowledgeable decisions. Trust will be the core driver of re-establishing pre-COVID-19 human movement and activities.
What does this mean for the post-COVID-19 period? Much will depend on Gen Z, they are a rapidly emerging highly educated group built with very diverse backgrounds. These youthful entrants into the new high-tech economy have very strong urban roots. These folks will face challenges, just as the previous generations. But if they follow in the footsteps of the millennials during a similarly dim period, they invigorate economic growth. Economic development will be facing the most apocalyptic landscape since the great depression of 1929. How this group of economic innovators adapts their policies, in this time of drastic and rapid changes, remains to be seen. One thing is for sure the demand and art of site location will be forever changed by this global pandemic.
About the Author
Don A. Holbrook is a 25-year veteran economic development site location and incentive consultant. He and his team have worked on projects across North America and around the globe. His focus is primarily on place-based economic development tourism strategies and designing the team and products that communities’ can use to attract such investments. He lives in Las Vegas, Nevada and has written five, best-selling books speaking frequently around the world at professional functions. He has been featured on CBS, NBC, Fox, ABC, PBS television and radio networks, and in LA Times, USA Today, New York Times, Washington Post, FDI (the Economist Group) and many local television, print and radio interviews. He has been one of the North American Judges for FDI Magazine for the past six years on The Best Community Economies for Growth & Investment. He is a former board of director of the International Economic Development Council, and Fellow Member of IEDC, as well as Certified Economic Developer.