With or without COVID 19, the United States remains a global economic powerhouse. The U.S. has an unmatched base of manufacturing companies, leadership in quality global health care, an open and thriving capital market and financial services industry and the largest venture capital industry in the world driving technology disruption and a high-tech revolution going on for thirty years. However, COVID 19’s near term economic impacts should not be underestimated: the closure of manufacturers like Honda, Ford, Fiat Chrysler and others generates lost employment with these companies and a large supply chain; restaurants are estimated to lose $225B and 5-7 M jobs; global shipping is estimated by to down $350 a week; closure of Broadway alone is jeopardizing a $1.8 B New York tourism industry; and states unemployment ranks are swelling—Ohio’s jobless unemployment claims moved from under 5000 the week of March 9 to nearly 140,000 to finish the week of March 16, 2020 reaching near a record high.
Past thoughts on corporate site location trends trying to pick industry winners and loser are well.. in the past. We are in the COVID 19 world now. Limiting the spread of the virus and treating the sick is the immediate concern and tough decisions by public officials to make this happen need to be supported no matter the near-term disruption to life and commerce. However, a COVID 19 economy creates corporate site location winners and losers in 2020. Some industries and weaker companies will collapse while other existing industries will prosper and new companies will grow.
COVID 19 Corporate Site Location Losers. Prime among the COVID 19 corporate site location losers are underperforming, lowly capitalized or overly full markets in industries that were struggling prior to COVID 19. Look at traditional retail. Large, traditional, 1950’s era shopping malls and their cousin the 1980’s retail strip center are closing for public health reasons may not reopen when COVID 19 is gone but not forgotten. These malls and strip have been struggling to compete in the Age of Amazon. Losing millions of dollars in revenue is likely to kill many of these retail institutions. Along with the malls is likely more big box retail stores that have not made the transition to the digital age and the distribution fulfillment center. Craft beer companies are facing equal challenges but not because their market is dying but because their market has overheated. Many craft beer companies have publicly discussed turning their facilities into sources for hand sanitizer to fill this pressing public need. Hundreds of restaurants will likely not survive a three-month closure without government support. Financial services operations like bank branches may have hundreds of locations close and many not open again. Global manufacturing outside of the United States will also become a harder sell. Lax environmental and health standards in China and third world countries should cause U.S. policy makers and consumers to question more where the products they use come from.
COVID 19 Corporate Site Location Winners. Much like COVID 19 corporate site location losers, many of the winners will be in industries who were trending the right way before the public health crisis. Look at retail’s unruly cousin logistics, distribution and fulfillment centers. The COVID 19 consumer with the widespread closure of most non-grocery or pharmacy stores is on-line right now shopping on Amazon, Chewy or other on-line retailers to fill their needs. Assuming these on-line purchases are delivered on time, what starts as a forced consumer behavior is going to become the common practice for millions more global consumers. Consumers won’t buy less when this public health crisis is over they will just change more how they buy goods and services. COVID 19 is like “pouring gasoline on a fire” for the logistics, distribution and fulfillment industry. It creates a substantial opportunity for regions with large scale industrial parks prepared with zoning, tax incentives, infrastructure finance and construction financing to add thousands of jobs to make up for other economic losses in the coming months and years. Equal to logistics growth, the source of COVID 19 will drive more manufacturing back to the United States in many industry categories. Starting with protective personal equipment, hospital equipment, pharmaceuticals and any product that policy makers and consumers needed in the current crisis but was manufactured in China. Then add in the hostility that is coming China’s way following the conclusion of the spread of COVID 19. Hopefully the summer of 2020 will be when the “hangover” from COVID 19 happens. This should be a period of economic revival but also may be a time when policy makers and consumers really question if “Made in China” is the stamp they want on their products. Automation in the manufacturing sector makes the United States more appealing for these jobs as fewer, higher skilled, higher wage workers are needed. Thus, U.S. manufacturing is positioned for future growth.
Lots can change. We pray COVID 19 is a couple month public health care due to decision action by policy makers and the world’s best first responders, doctors, nurses and health care workers. We also pray that COVID 19 is followed by a renewed run of large-scale corporate site location projections and substantial economic growth.