When will the region's economy recover? CEOs shared their forecasts

Running a business has never been an easy thing to do.

The obstacles to success are numerous. Rising costs, cutthroat competition, fickle consumers, and unreliable workers are just the short list of land mines that anyone who owns or manages an enterprise must always be on the alert for.

Shortly after the calendar turned to 2020, that list got longer and a lot more serious. It now includes a global pandemic, an out-of-control viral contagion, a shrunken economy, double-digit unemployment, widespread public protests, and intense scrutiny over hiring practices and workforce diversity.

It’s almost enough to cause one to throw in the towel, and indeed, many businesses have closed or filed for bankruptcy in recent months.

But never underestimate the optimism of the American entrepreneur.

This summer, Northern Kentucky Tri-ED reached out to 70 of the region’s business leaders to ask them how the Covid-19 pandemic has affected their operations, when they were forecasting recovery, and how they could do a better job of promoting diversity and inclusion.

The results were surprising. Despite a virtual shutdown of business in March, April, and May, and the steep jobless numbers and operating challenges that have continued since then, most were optimistic about recovery. Some are still hiring, and some are planning to expand, according to Tri-ED, Northern Kentucky’s main economic development organization.

“It was better than I thought,” says Lee Crume, Tri-ED’s CEO. “People’s feelings about how they fast they would recover or how little impact it had on their business … it was definitely optimistic.”

Crume was quick to note that attitudes and expectations were dependent on the type of business. For example, the challenges for the aerospace industry, which was already beginning to slump pre-pandemic, have only been exacerbated since the virus emerged and spread.

But Tri-ED spoke to 20 business leaders in the fields of manufacturing, food, life sciences, health care, aviation, technology, real estate, and financial services who agreed to share some of their experiences and expectations in this most unusual of fiscal years.

All of them had continued operating through the shutdown, having been declared essential businesses. As of July, 84 percent were hiring, and 84 percent had maintained full employment.

The big question overarching all was when will we get back to a period of growth? A huge majority of the CEOs, 75 percent, said they expect that to happen by the end of 2021, Tri-ED said.

One of the leaders interviewed was Dan Janka, president of Mazak Corp.’s North American operations, based in Florence. Mazak is an engineering and manufacturing company whose Northern Kentucky operation has grown into a campus that includes a manufacturing plant, a national technology center and a North American parts center. It makes the machines used by manufacturers in the aerospace, oil and gas, automotive, medical, and semiconductor industries, as well as others.

Because Mazak and other machine tool makers touch all those other manufacturers, its leaders are well positioned to gain insights into a broad swath of the economy.

The overall machine tool market is down about 40 percent so far this year and Mazak production is down 30-plus percent from last year, Janka says. “That’s a big hit,” he says.

Despite the hit, “I’m still quite optimistic about the recovery,” he says.

He believes consumer demand for cars, computers, travel, and more will explode once the Covid disease is wrestled to the ground with a vaccine or a reliable treatment. That pent-up demand will drive the growth of the economy, he says.

“When the light switch is flipped back on, I don’t believe it will be a gradual thing for our industry,” he says. “I think the demand will hit pretty hard. The longer this drags, the greater the pent-up demand when the recovery hits.”

Mazak has continued hiring through the pandemic, although the company did require rolling furloughs of one week off and three weeks on for a period of time.

That allowed the workforce to remain intact, he said. “It’s a highly technical, highly engineered workforce,” he says. “It’s not like we can let people go and then hire people back. Those skills are not available.”

Indeed, the top concern that the CEOs and other leaders mentioned was ensuring that a skilled workforce was available for the expected recovery.

“Northern Kentucky needs to be seen as an aviation career hub,” says Fred Murphy, CEO of FEAM Aero, an aircraft maintenance and engineering company that is growing at the airport. “We have a massive need for trained mechanics to serve our clients – air carriers operating the DHL and Amazon Air networks – at their cargo hubs at Cincinnati/Northern Kentucky International Airport.”

Ed Walton, CEO of Step CG, a Covington-based IT provider, said his firm operates an innovation center where students of all ages, including adults, can learn information technology skills. “Our region has a high demand for tech talent,” he says. At the center he says, people can learn “The skills they need so we can serve the growing need for next-generation technology infrastructure.”

Coming on the heels of the glaring spotlight shone on racial discrimination, a spotlight that included public protests in Northern Kentucky and Cincinnati, all the leaders agreed that diversity and inclusion were priorities in their companies, and said they would bring more intentionality to their hiring and spending decisions.

“The key word that jumped out at me in our conversations with CEOs was ‘intentional,’” Crume says.

One company had analyzed the diversity of its workforce at all of its locations and found its Northern Kentucky site lacking, he says. “So they asked, ‘How do we become more intentional so that we have exposure to more minority candidates,’ ” he says. “That comment flowed from advanced manufacturing companies all the way through to professional services companies,” he says.

Developing a minority supplier list for Northern Kentucky was a top takeaway for inclusion spending goals, Tri-ED says it found.

The organization plans to continue engaging CEOs as both the pandemic and racial issues evolve. “We’re committed to keeping the dialogue going and having transparent conversations with business and community leaders,” Crume says.

 

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