Part Two: Hamilton County Economic Impact Survey Results & Findings
Jun. 8, 2020
Your survey responses helped us understand how COVID-19 has impacted the Hamilton County economy so far.
In part one of the survey, we asked local businesses to tell us about their ever-changing situations so we can continue our work to establish strong footing for recovery.
Between May 18 and May 29, we caught back up with local businesses in part 2 of our survey to see how operations have shifted to adapt to the new normal. The results show that while there is a long road ahead, we're on a solid path toward recovery.
KEY FINDINGS (percentages rounded)
- 73% reported decreased revenue in both surveys
- 15% changed operational systems as compared to 19% in first survey
- 8% reported no impact as compared to 5% in first survey
- 7% reported increased revenue as compared to 2% in first survey
- 37% decreased revenue by 76% or more - first survey results only
- 36% decreased revenue by more than 50% as compared to 60% in first survey
- 28% of businesses have closed as compared to 30% in first survey
- 47% expect to be closed 5-8 weeks; 43% for more than 9 weeks - first survey results only
- 32% have had layoffs or have furloughed employees as compared to 40% in first survey
- 31% expect their business will be impacted 4 to 6 months as compared to 34% in first survey
- 51% expect business to be impacted more than 7 months in first survey and 32% expect the impacts to last more than 12 months in Survey No. 2; and 23% are unable to predict
- 48% report they will reduce variable cost as compared to 50% and 44% state they will reduce fixed costs as compared to 42% in Survey No. 1
Decrease in revenue/sales is the most cited impact at 79% as compared to 85% in Survey No. 1 followed by economic downturn and impact on business at 52% and employee well-being at 51%.
Hospitality, personal services, hospitals and health care, retail and advertising reported most severe impacts.
KEY FINDINGS: Survey No. 2
- 72% of businesses can afford to operate with no new sales for more than 30 days - 10% of businesses can afford 14 days or less
- 6% of respondents plan to cut health insurance benefits for employees to cut costs
- 12% plan to decrease square footage
- 61% of employees will be teleworking more than pre-pandemic
- 60% plan to maintain some teleworking for employees
- 28% plan to invite out-of-town friends and family to visit within the next 30 days, 24% in 3 months, 29% in 2020 and 19% in 2021
- Close to 73% would not be upset hearing an advertisement asking people to visit Chattanooga and 62% feel safe welcoming visitors to Chattanooga - with 36% expressing excitement about it
The impact of the COVID-19 disease on business operations and revenue in the Chattanooga region is widespread. In both surveys, 74% of respondents reported decreased revenue/sales and close to 30% have closed their business. The most frequently cited top impact continues to be a decrease in revenue followed closely by the impact on business by the economic downturn and the wellbeing of employees.
Although anxiety about the future is high, the numbers are headed in the right direction. When asked to anticipate the severity of overall impact from COVID-19 on a 10-point scale where 1 is minimal impact and 10 is possible business closure, 15% of respondents reported a level of 10 as compared to 22% in the first survey; 12% as compared to 15% reported a level of 9; and 12% as compared to 15% reported a level of 8. While the nature and severity of impact vary by sector and specific business, COVID-19 continues to cause widespread business disruption.
It is evident that there will be significant changes to the workplace environment as businesses start reopening. Currently 61% of employees are teleworking more than pre-pandemic and 60% plan to maintain some teleworking for employees. Some 12% plan to reduce office square footage. With schools, daycare and summer camps closed, the 'now normal' will have a huge impact on how businesses operate. Many large employers are phasing in slowly with some not planning to reopen working from the office until after Labor Day.
Unemployment hit record highs last month in the Chattanooga region. Updated regional numbers:
- Chattanooga MSA: 13.3%
- Cleveland MSA: 13.5%
- Dalton MSA: 20.5%
- Dayton/Rhea County: 24.5%
- Athens/McMinn County: 17.3%
Tennessee's highest unemployment occurred in Sevier County at 29.5%. These are incomprehensible numbers with one bright spot: Hamilton County and MSA daily job postings have started a slight upward trend over the last couple of weeks. This is a good sign as businesses start to reopen.
There are a wide range of emotions related to reopening - many are still very conservative, especially those with pre-existing conditions or with family members who are in compromised conditions, but many are ready to welcome guests and return to a physical work environment. Employers will want to explore flexible options to support employees.
Accurate and timely information - accurate and timely information continues to be extremely important, but businesses are learning how to apply for loans/grants. Questions about repayments are high. Critical information on what is required to reopen a business is most requested now.
Loans/Grants - access to working capital with speed and efficiency in processing is the biggest need. Some of the hardest hit businesses won't be able to cover their payroll or rent without help. Exactly 97% were aware of the CARES Act program and 70% felt the Paycheck Protection program was the most beneficial. Of those surveyed, 61% applied for funding.
Support for displaced workers - employee layoffs in some sectors were deep. There are concerns about how this will affect our economy going forward after government incentives are no longer available and unemployment is at record highs.
Overall, businesses need decisive, effective government action in response to both the health and economic implications of COVID-19.
Much about the virus is still unknown. The more controllable things are made clear, businesses will be better able to adjust plans and position for recovery.
Although COVID-19 has negatively affected our community, many businesses are resilient and have been using innovative means to stay in business. Our community has a strong history of working together so there is confidence we will make it through this crisis and learn many valuable lessons along the way. Many organizations are working together to support local business and move our economy forward. Economic development activity is high and inquiries are coming in each day. The workplace in Chattanooga will be significantly different in the future and hopefully, employees will have more of a work-life balance as employers become comfortable with work-from-home options. We also have a great opportunity to recruit businesses with remote workers thanks to our quality of life.
Advanced Manufacturing - continued operation of production facilities is divergent across industry sectors. However, Volkswagen and Gestamp have resumed production along with several other large manufacturers in the region.
Construction/Engineering Services - projects already in the development pipeline are proceeding for now with minimal disruption. Crews and subcontractors remain active on job sites. Delays in permitting and building inspection as local governments adjust to new remote work protocols have the potential to hamper continued progress. Many report that the pipeline for future projects is thin, a potential warning signal for the duration of economic recovery.
General Business - from banking to accounting, IT to marketing, many professional service firms have transitioned to remote work environments and are busy helping their clients respond to urgent issues.
Health Care - in addition to being on the front lines of pandemic response, major players in the critical health care service and delivery sector, plus their supply chain, face unique workforce and supply chain challenges. Chattanooga is fortunate that our hospitals have not been overrun with COVID-19 cases. The resumption of non-essential medical procedures has been welcomed - the shutdown created a negative impact on revenue for hospitals and physicians. The increase in COVID-19 cases during the past month is concerning to all.
Nonprofit/charitable - leaders in this important sector, both for employment and for critical human needs, are concerned about their capacity to raise needed funds to meet rapidly increasing needs. Severe weather and tornado damage only escalated demand for services. This continues to be a critical issue as so many are dependent on these organizations.
Real Estate - on the residential side, showings and listings are down. Low inventory remains steady. On the commercial side, many property owners are already beginning negotiations with leaseholders and lenders. Several commercial projects have been placed on hold rather than eliminated.
Retail - dramatically uneven impacts exist in this sector with grocery, pharmacy, home improvement and other essential goods retailers posting strong sales and struggling to maintain inventory while other retailers have been hurt dramatically. Malls are opening with restrictions, but traffic is significantly reduced and tenants are having a hard time making rent payments.
Logistics - port activity and logistics continue to operate. All conditions are being monitored closely and Georgia's deep-water ports remain open for business as usual. Overall trends do not indicate a huge hit at this point.
We collected information for Survey No. 1 from April 14 to 27 with 252 responses and Survey No. 2 from May 18 to 29 with 311 responses. Outreach methods included:
- Electronic Economic Impact Survey sent to all Chattanooga Chamber members
- Calls to Chamber members (2,000+)
- Chamber Executive Committee outreach
- Chamber Public Policy Committee outreach
- Chamber Communications Committee outreach
We plan additional surveys throughout the duration of COVID-19 to determine the impact and overall recovery of our regional economy.
For more information about these findings and the impact of COVID-19 on Chattanooga area businesses, contact:
Sandra Brewer, email@example.com
Vice President, Membership & Investor Relations
Chattanooga Chamber of Commerce