Last month, the Indiana Subcontractors Association (ISA) and the National Association for Industrial and Office Parks (NAIOP) collaborated to host a webinar discussing the current state of the global economy and how pandemic-related regulations and tariffs have affected local companies. Pete Mento, Managing Director of Global Customs and Duties at Crowe LLP, kicked off the webinar by discussing the economic effects of COVID-19 and how companies can re-think their business operations to thrive in a new era. Following Mento’s presentation, panelists from companies across Indiana discussed how COVID-19 is affecting the local economy.Mento earned his master’s degree and a PhD by studying supply chains and analyzing the effects a pandemic might have on our economy. His work in this field gave him insight into the reasons behind the economic troubles caused by the outbreak of COVID-19.

“When an outbreak happens, we are afraid to get engaged in the social structures of our economy,” Mento said.

He said an outbreak of disease often shuts down the services sector first, which creates a ripple effect that causes services sector workers to stop consuming non-services sector products. Mento pointed to this country’s high unemployment levels as evidence of how quickly sickness can ruin an economy.

“At the height of unemployment due to the pandemic thus far, you can imagine it as if every man, woman, and child in Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, New Jersey, Delaware, the District of Columbia, and North Carolina all lost their income into their homes,” Mento said.

He said the global broader economy is being negatively impacted by peoples’ inability to get basic materials right now due to the increased costs associated with transportation and shipping, as well as a lack of support for production. The smartest strategy a professional can use right now, Mento said, is to identify what worked in his or her supply chain and understand what failed.

“Companies that do well are going to be liquid, they are going to be innovative, and they are going to be quick,” Mento said. “This has never been more evident than now. If you don’t have money to invest in great ideas and get them into the hands of people quickly, you’re probably not going to be around for much longer.”

Early predictions estimated that a lack of consumption might occur on a larger scale in the U.S. than it has so far. Despite the country’s slow response to the pandemic, Mento expressed optimism that America’s monetary policies and continued consumption have thus far fended off a recession or depression, though he admitted nobody knows exactly how long the country can sustain this level of consumption. He used the current housing market as proof that early judgments about the precipitous downfall of the American economy are not set in stone. Residential housing markets have actually experienced a spike in consumers due to low interest rates, and while some predicated this market would dry up as people feared for their job security, that scenario has not yet played out.

By adjusting business models to fit new regulations and protecting intellectual property first and foremost, Mento said businesses can thrive in this new post-COVID-19 economy so long as they remember the volatility of the global supply chain.

“In this new changing economy, keep in mind that as quickly as everything changes, it’s going to continue to change with equal acceleration,” he said. “So, my advice to you sit back for a moment, take a look at what has worked so far, and work off that.”

During the second part of the webinar, ISA and NAIOP invited leaders from various Indiana companies to speak on how the pandemic has affected the local construction industry and discuss ways by which their companies have adapted to new challenges. Panelists for this conversation were Dan Phair of Holladay Properties, Jeff Hagerman of The Hagerman Group, John Hirschman of Browning Investments, Matt Niehoff of Cushman & Wakefield, and Matt Waggoner of JLL.

One question posed by the moderator asked panelists about each of their companies’ approaches to changing their physical spaces to adhere to new safety guidelines.

Hagerman said since the beginning of the COVID-19 outbreak, his firm has adjusted company protocols to require social distancing and the use of hand sanitizer and masks – both on site and in the office. Hirschman said Browning Investments is also embracing new CDC recommendations for safe interactions.

“We’ve changed our workplace a lot in terms of our layout, amenities that are either available or not, how our conference rooms work, and how our restrooms work,” Hirschman said. “We’ve really reduced the density of people in our space and we’re paying a lot of attention to best practices and thought leadership to make sure were staying on top of this as we go.”

Panelists were then asked if they expect working professionals to return to office spaces in the future. Waggoner said at LLC, they noticed a steep decline in office space transactions in Indianapolis over the past few months.

“Transactionally, the volume is dramatically lower than it was six months ago,” Waggoner said.

However, Waggoner noted that some companies that benefitted most from the pandemic such as Amazon, Facebook, and Zoom are becoming some of the largest occupiers of office space in cities, causing some to wonder if in-person work will return as it once was after the pandemic.

“Almost across the board, there is this element of a lack of connectivity, a lack of being able to support employees, lack of socialization, mentorship, and knowledge share,” Waggoner said. “Those things are so critical to so many businesses that I still see the office playing a key role going forward.”

Similar to how Mento exposed some of the flaws in early COVID-19 predictions, most panelists agreed in thinking that initial projections about the revolution of office spaces were more dramatic than what we currently see.

“I personally think the ‘death of the office’ is premature right now,” Hirschman said. “The office serves really important functions especially for STEM organizations, not only in terms of a place to do work, but a place to create culture, a place to attract talent, and a place to create a brand. And I don’t think any of those functions go away.”

Later in the presentation, panelists were asked about trends they are seeing right now in their industry. Niehoff circled back to Mento’s point regarding new tariffs and explained that with these added restrictions, offshore producing and manufacturing benefits have almost disappeared. Local economies could become beneficiaries of this situation if companies choose to locally produce and manufacture materials, he said. More inventory will be stored locally, which means more warehouses and larger size demand requirements for the local industrial market.

While the COVID-19 pandemic has brought many industries to a grinding halt in the U.S., panelists in this webinar all shared a similar sense of optimism regarding the future of construction in Indiana.

Hirschman said, “We’ve all learned a lot more about the virus and transmissibility as time has passed, so it has required everyone to be really flexible, fluid, and adaptable as we learn more.”