Biz Questions, Biz Answers
Four Wichita business leaders share how COVID-19 shaped their industries, what they did to adapt and their plans for the future.
FOUR BUSINESS LEADERS DISCUSS THE IMPACT OF COVID-19 ON THEIR INDUSTRIES AND THEIR HOPES FOR 2021
It’s no secret that businesses around the world have been greatly affected by COVID-19. But how is it shaping Wichita’s prominent industries? We asked four area leaders – from the aviation, manufacturing, global trade and agriculture sectors – to discuss the impact the ongoing pandemic has had on their industries, how they’re shifting their operations and what they think will happen in the near future.
What we learned? Our industries have been dealt a massive blow… but companies that have focused on innovation, diversification and remote work have been able to stay in the fight.
THE BIZ BOSSES:
JASON COX – Cox Machine
Jason Cox is president of Cox Machine, Inc., which provides solutions for precision aerospace parts and assemblies. He previously served as the company's CTO before being named president in 2016.
JOHN O'LEARY – Airbus Americas Engineering
John O’Leary serves as vice president and general manager of Airbus Americas Engineering, Inc. He has been with AAE since its inception in 2002.
KARYN PAGE – Kansas Global Trade Services
Karyn Page is president and CEO of Kansas Global Trades Services, Inc., a full-service trade advisory firm. Kansas Global helps companies and cities leverage their capabilities and global reach.
ANTHONY SEILER – Sedgwick County Farm Bureau Agricultural Association
Anthony Seiler serves as executive director for Sedgwick County Farm Bureau Agricultural Association. SCFBAA helps improve the farming community through advocacy and education.
THE QUESTIONS:
We asked each of our leaders the same questions in order to gauge the similarities and differences between their answers.
How is COVID-19 impacting your industry?
JASON: We have had two primary impacts. The first impact was a reduction in revenue caused by a drop in commercial air travel. Nine months into the pandemic, the daily travel numbers are still only one-third of normal. Low traffic means fewer deliveries of new aircrafts and lower production rates for us. The second impact is operational, caused by co-workers entering quarantine when they may have been exposed to the virus. I think this impact is shared equally by all industries and can be challenging when making sure customer needs are being met.
JOHN: For the last 50 years, air traffic consistently doubled every 15 years regardless of previous pandemics or financial crises. But on March 30, global air traffic dropped by 80% and has yet to come close to recovering. Large legacy airlines depend heavily on business travel to subsidize the domestic, holiday travel segment. A recent Wall Street Journal article predicted a 19-36% reduction in business travel caused by changed behaviors learned during the COVID-19 pandemic (i.e. the ‘ZOOM Meeting’ effect). As a result, most believe it will take three to five years for aircraft production levels to return to pre-COVID-19 levels.
KARYN: We guide companies to export success and develop global strategies to increase their international presence. The inability to travel means the traditional methods to increase sales, meet potential partners and explore market opportunities have changed.
ANTHONY: Our organization represents more than 800 farm families in Sedgwick County who work throughout the agricultural supply chain. The impacts of COVID-19 on our members are almost too numerous to count. Producers whose business models rely on regularly marketing products, such and beef and dairy, took the biggest initial hit in the first months of the pandemic as our food system struggled to adapt. Others have felt the effects on their businesses more gradually. I also think there’s been an acute, psychological toll farmers and rancher have felt. Agriculture can be a solitary profession to begin with, but when combined with lockdowns and the stress of economic uncertainty, it has been an especially tough year for many.
Are there any silver linings or opportunities in your industry because of COVID-19?
JASON: We have dramatically improved our remote work and telepresence capabilities. Nearly everyone has a webcam at their workstation, and we are now very comfortable jumping on a video call with teammates at other locations or at home. We are also diversifying into computer chip manufacturing equipment. That industry is forecasting excellent growth due to the increase in remote work.
JOHN: Some governments have taken the opportunity to aggressively fund research and technologies aimed at further sustainable fuel sources such as hydrogen fuel. More research in bio mass fuels, production, distribution, cost analysis and regulations associated with sustainable fuel will help the transportation sector in general.
KARYN: As with any challenge, opportunity exists to innovate, find new customers and implement operational efficiencies. For example, less or no travel means cost reductions. With the reduction in costs, barriers for small and minority businesses are lower. I think we will see practices that include virtual options perfected and incorporated in standard operating practices. I foresee more Zoom meetings for potential distributors and hybrid trade shows with virtual and in-person options.
ANTHONY: The food shortages in grocery stores caused many consumers to become much more interested in where their food comes from and how it gets to them. Many producers were able to capitalize and sell directly to consumers. Groups such as “Shop KS Farms” on Facebook and “HAHA Urban Farm” created new ways for consumers to connect with farmers and ranchers online, learn more about their food and purchase from local producers. Also in the conventional ag sector, the federal government broke with tradition and made disaster programs available to farmers and ranchers through the Small Business Administration, which was very helpful, in addition to USDA programs.
Has anything changed in 2020 about your ability to operate here in Wichita?
JASON: I feel that people are realizing you don’t need to physically be in a particular place to get things done. Telepresence has changed that for all of us. Just this week, we’ve had video meetings with customers in Europe, and I attended a virtual conference and chatted with people from seven countries. We just weren’t doing that before.
JOHN: Not appreciably.
KARYN: We work remotely and have a hybrid office at Groover Labs. We are 100% digital in terms of operations and client work. We meet clients where, when and how they need us. Today that means meeting virtually. Tomorrow that may mean in-person or virtual, depending on the client’s needs and the environment.
ANTHONY: Farming in a semi-urban area will always present challenges and opportunities. Though in times of economic uncertainty, we’re especially grateful to be in a large metropolis like Wichita where we can market our products and bulk commodities to local consumers and businesses.
Do you believe 2020 would have been easier or harder if you were located in a different city or region?
JASON: Wichita was hit pretty hard because of our aerospace concentration. The pandemic was stacked on top of an already-tough job situation.
JOHN: I personally appreciate the common sense approach the Wichita metro area has taken to operating. In particular, the investment in the WSU Molecular Diagnostic Lab provides a testing capability that is far better in terms of cost and speed than other cities/regions.
KARYN: The location of our office or residence is not as important as our ability to meet the client where and when they need us. Digital and virtual operations mean we can operate from anywhere to anywhere.
ANTHONY: I think we feel fortunate to be in the Midwest and hope we will be able to get the virus under control before we see the kind of damage that some of our friends in other parts of the country have experienced.
How is your industry reacting to COVID-19 and the current economic climate?
JASON: Our reaction was to reduce expenses to align with the new reality of revenue. I believe that is typical of others in aerospace. It’s an unfortunate situation, and I’m hopeful that things will turn around soon.
JOHN: Initially, strong cash containment. Then, implanting strategies to safely operate in a COVID-19 environment while protecting the production supply chain. Now, it is about adjusting the cost structure to account for reduced production levels.
KARYN: Some companies are actively pursuing new [international] opportunities, and some are not. We are increasingly seeing more openness to a more robust business pace, even if it’s different, and the pursuit of new opportunities. The character traits of a company have become more important. Companies that are curious, driven, willing to adapt/innovate and not averse to risk are finding more success.
ANTHONY: Farmers and ranchers are used to factoring uncertainty into their business decisions. So in some ways, this is just one more blip on the radar. Hopefully some of the new markets and opportunities that have developed this year will be able to continue into the future. It will also be important to see how the international trade landscape develops with the new administration and when the world hopefully starts to bring the virus under control.
What opportunities and challenges do you project for 2021?
JASON: We have redoubled our efforts to bring in new business. This is, of course, both an opportunity and a challenge. We will also be reinvesting in our infrastructure to ensure we are prepared when the industry ramps up.
JOHN: Reacting to reduced production levels while preserving core product and process knowledge within my organization is key for 2021. The biggest opportunities are to re-tool our engineering processes for greater efficiency, adopt teleworking policies that allow us to reduce our property and plant footprint and deploy IT solutions to enhance levels of collaboration, regardless of where the teams are.
KARYN: Opening back up, but differently will mean companies will need to navigate how, how fast, when exactly, which rules, etc. Those that embraced digital and began their transformation will be better positioned to capture future opportunities. Economic challenges will remain which means that companies will need to cast a wider (global) net to achieve sales goals.
ANTHONY: The pandemic has highlighted the need to build out a thorough and reliable broadband network. We have members just 20 minutes outside of Wichita that have no option to purchase reliable high-speed internet. We’ll be continuing our work at the federal, state and local level to make sure everything possible is being done to remedy this.
What do you think is the worst-case scenario for Wichita in 2021?
JASON: Worst-case is stagnant unemployment and a lack of federal assistance.
JOHN: If we miss the opportunity to invest in sustainable energy solutions. If the new administration allocates a large amount of funding into the development of sustainable energy, our aviation industry could use it to develop aircraft solutions tailored for sustainable aviation fuels. If there’s push back from our fossil fuel industry, it will stop our political leaders from moving forward.
KARYN: Continued status quo thinking and political wrangling will mean we’re not looking to the future.
ANTHONY: I think it would be a mistake for us to try to just hunker down and wait out the pandemic to go back to “normal.” If I’ve learned anything from the agriculture industry, it’s that if you don’t try to take advantage of challenges and see them as opportunities, eventually you’ll get left behind.
What do you think is the best-case scenario for Wichita in 2021?
JASON: Best-case scenario for aerospace would be the “light switch” theory, which predicts travel immediately returning to 100% after wide distribution of the vaccine in the first quarter.
JOHN: The vaccines being deployed right now knock the virus down quickly. The political lockdown mantra stops and pent-up demand to travel snaps the airline industry back to pre-COVID-19 levels by the middle of 2022. Production levels return to pre-COVID-19 levels by middle of 2023.
KARYN: Boeing 737 Max problems are resolved and Boeing brings supply chain back online quickly. Also, less political wrangling and more collaboration to future-proof our communities. If this happens, we would experience a magnificent increase of new companies being born, which would attract investment and talent from around the world. The support ecosystem – our government, non-profits, and professional service providers – would be re-tuned to assist, support, guide and champion innovation at every level with all companies. This would create an environment that nurtures economic prosperity. Lastly, companies would forge ahead. They would courageously innovate, embrace digital transformation and aggressively gain market share worldwide. They would utilize the many resources available to them and think strategically about their place in the global marketplace, identify new markets/customers and act.
ANTHONY: We combine the lessons we’ve learned and new opportunities to build back our economy and community stronger in 2021.
What do you need from the community to ensure success going forward?
JASON: Support for everyone that has lost a job. Before the pandemic, finding employees was one of the major obstacles facing our industry. We’ll need everyone back soon, but right now they need support from our community, and government support from the local, state, and federal level. I know there are many, many people working very hard on these issues and I am very appreciative.
JOHN: In the short term, nothing. The success of my organization and industry is directly tied to wiping out COVID-19 and the rationalization of travel restrictions currently imposed by various governments. But long term, Wichita needs to continue to invest in energy production and it must move away from fossil fuel to sustainable energy.
KARYN: Leadership to innovate and boldly act, with the courage and wisdom to discern what needs to be done and appropriately resource determined actions.
ANTHONY: If you’ve started purchasing directly from a producer during the pandemic and had a good experience, please keep it up! Also, if you have friends or family who farm, support them and let them know that you appreciate the work they do to the feed, fuel and clothe the world.
What role do you believe your company or industry play in overall economic recovery here in Wichita?
JASON: We’ve lost a lot of great employees that I would really like to rehire in 2021.
JOHN: Aviation is critical to Wichita and the region. Increasingly, supply chain logistics, whether it is for e-commerce or energy production and distribution, could (and should) become equally as important.
KARYN: Our job is to guide companies to international success. Shrinking markets mean companies must hunt globally to find export sales and maintain or recover sales. Guiding companies to increased sales leads to economic recovery. So, it is imperative we find global opportunities and work with companies to execute on those ideas.
ANTHONY: We’re excited to help the local food system continue to mature through the Wichita/Sedgwick County master plan. We’re also looking forward to helping support our legislators on the state and federal level through our advocacy work as they guide our county and state through the recovery process.