Back in the good old days – I’m talking about December before the coronavirus pandemic – site selectors thought about security mostly in two dimensions: natural disasters and man-made threats like crime or terrorism. Now a third dimension has entered our consciousness: the threat of a pandemic or other epidemiological event and how well communities are prepared for the next one.
COVID-19 continues to cause major transitions throughout the entire United States economy-from disruptions in workforce to supply chains. Every industrial sector has affected, but it really feels like a sucker punch to the agriculture sector because it was just getting through tariff battles, low commodity prices, and several quarters of poor weather conditions. Just when it appeared some positive upward activity might occur in the agriculture industry. COVID-19 landed a powerful blow!
A few Ady Advantage clients were in the process of gearing up and preparing to increase their exports and take advantage of the growing niche of specialty restaurant and hospitality markets. Most have had to change directions quickly. Initially, COVID-19 caused supply chain difficulties for agriculture and food processing companies, making it tough to obtain raw ingredients like artificial sugars from China. But with the closing of restaurants and other foodservice outlets like schools, hospitals, universities, and other public venues, companies had to switch to smaller units of production and packaging for grocery stores and other retail almost overnight.
COVID-19 forced companies to explore alternative supply chains and rethink their “just in time” strategy. This strategy makes it difficult to handle a surge demand of products. Companies at first were faced with making sure that they could provide retail with their needed products. At the same time, retailers worked to assure their customers that there was plenty of food available-putting additional pressure on the supply chain. In fact, some clients have even bypassed their own warehouses in favor of shipping directly to wholesalers or trade customers’ warehouses. Larger, more sophisticated producers have accelerated their use of artificial intelligence and machine learning algorithms to improve supply chain performance. Data analytics use has been a key in helping companies find alternative suppliers for those essential ingredients, packaging solutions, and other critical production supplies. We believe that one positive action coming out post COVID 19 is there will be an acceleration of adopting automation within the industry which might alleviate some issues such as worker safety, staffing, and demand for new SKUs, while increasing quality.
If this world event has shown the agriculture industry and the communities they serve anything, it is that it only takes one incident for a factory to be decimated and shut down. Personal protective equipment (PPE) has always been vital for operating a value-added agriculture business safely while keeping workers and animals healthy. Ady Advantage expects that this commonplace activity will be given a higher importance.
Communities that formally integrate PPE, social distancing planning, workforce training programs, and other pandemic preparedness initiatives will be better positioned in their labor matrix analysis used in helping companies determine future site locations. The need to get a location up and running quickly to meet market demand is always balanced with costs and post COVID-19, workforce costs are being recalculated due to greater physical space needs, along with new training and safety programs.
Some of our clients have expressed an interest in looking at smaller, less densely-populated communities, which allows them to avoid the COVID-19 experience of public transportation shutdowns, alleviating worker safety concerns. This option also allows them to experience possibly lower operating costs while understanding the impact on their access-to-market costs. Companies are also starting to look toward more automated facilities to deal with the new realities of production floor spacing in a post COVID-19 world. This means older, vacant buildings will be less feasible due to additional automation, revised production design, and the increased attractiveness of new construction thanks to low interest rates. Having all of this within an excellent location just makes more sense.
EDOs would be wise to consider these and other public health-related factors when developing post COVID-19 communications plans. The communities that create a sense of comfort and confidence around these issues – from PPE and critical care access, to training and support for future events – will gain consideration for businesses looking to expand and relocate both in the short and long term future.