Delaware has been in Phase 2 of its reopening plan for over a month – with no firm indication when it could move to Phase 3.
That uncertainty means many Delaware businesses are seeing their recovery efforts stall as they also wrestle with how to navigate a post-COVID world.
The Delaware State Chamber of Commerce hosted a virtual conference this week addressing these issues and contributor Jon Hurdle sat in on it.
When Ron Gomes and his partner set up Painted Stave Distilling in 2011, their vision was to make craft spirits and serve them to customers in a renovated 1940s movie theater in Smyrna, while making additional income from contract distilling and distribution.
By early this year, the business, Delaware’s first ‘destination distillery’, was getting about 80 percent of its revenue from serving spirits on site, and the business employed 15 people.
But revenue abruptly ceased in March when the coronavirus hit and the state government shut down non-essential businesses in an effort to curb the pandemic.
“As the virus took hold here in Delaware, all that went away,” Gomes told an online conference on ‘Putting Delawareans Back to Work – Economic Recovery in the First State’, held by the Delaware State Chamber of Commerce on Tuesday to discuss ways of recovering from the pandemic. “Revenue streams dried up in all channels.”
With the pandemic accelerating, the company quickly switched to making badly needed hand sanitizer, which became its main product from March to May. But demand for that, too, dried up when the state went into Phase 2 of its reopening.
So Painted Stave Distilling is now rebuilding its core business by reopening its cocktail garden, albeit with a greatly reduced capacity for 55 people, while selling its spirits – four varieties of whiskey – online for pickup.
In the expectation that much more business will come to it online in post-COVID future, the company now foresees the need to modify its software to receive and fulfill orders, and will need staff who can do that, said Gomes, a PhD who previously worked as an academic scientist.
The story of a hospitality business that was suddenly shut down by the pandemic, quickly pivoted to an entirely new source of revenue, and is now rebuilding through adaptation to a diminished market was one of a number of case studies presented to the day-long conference as examples of ways in which Delaware businesses are trying to pick up and move on as pandemic restrictions are slowly lifted.
Through the bruising experience of the pandemic, businesses are being forced to adapt to major market changes much sooner than they would have had to otherwise, said Mike Quaranta, president of the chamber. A health system, for example, scrambled to adopt telemedicine in a matter of weeks early in the pandemic, rather than the 18 months that it had previously planned, he said.
IT skills will be in particular demand, Quaranta said after an event that wouldn’t have happened without the capacity of technology to facilitate a high-level conversation among business leaders, economists, consultants and politicians without breaking social-distancing rules.
COVID has, for example, increased the pressure to provide broadband internet service to some poorly served rural areas. With the likelihood that at least some lessons will be provided online rather than in-person in the coming school year, the public health crisis has heightened the need for every home to have the internet capacity to allow children to learn without physically going to school, Quaranta said.
The skills to install that technology are in growing demand, he said. They will come mostly from people who are already in the workforce, and so will need to be retrained. “The need that industry is going to have in the coming decade is going to require retraining by 80 percent of the existing work force.” He said construction, health care and financial services are also expected to be strong sources of employment in a post-COVID world.
Gov. John Carney (D) told the conference that his administration is focusing on curbing the virus so that business can restart without risking another spike in infections. “We have to get healthy first,” he said in a keynote speech.
Small businesses in the hospitality industry have been particularly hard-hit, Carney said, because they bring people together in conditions that have a high risk of spreading the disease. By contrast, other businesses have been able to survive more easily by quickly going online.
“In order for all the businesses that have gathered today in this conference to be successful, we need a healthy community,” Carney said.
Delaware House Speaker Pete Schwartzkopf (D-Rehoboth Beach) said Delaware’s hotels and restaurants have lost business because of what he called an unjustified decision by New Jersey and three other northeastern states to put Delaware on their quarantine list. That means people from those states are officially discouraged from visiting Delaware, and if they do, they are told to quarantine on their return.
Although Delaware briefly exited the list after Gov. Carney argued successfully that Delaware’s infection rate didn’t warrant its inclusion, it is now back on, and won’t have a chance of changing that until the list is reviewed next Tuesday, Schwartzkopf said.
"God knows why but New Jersey put us back on the quarantine list and I'm getting text messages from hotel owners telling me how many rooms they are losing because New Jersey put us back on the damn list,” he said.
Some hospitality businesses were beginning to think that they could salvage a disastrous season and save businesses that have been on the brink of closure because of the pandemic shutdown, but they are still struggling because of the out-of-state decision, he said.
“Now we've got those knuckleheads over in New Jersey that are saying that you can't go to Delaware, or if you do, you've got to quarantine when you get back,” he said. “I guess we're headed for another bad weekend because we can't get off the list until next Tuesday."
But business is better at the Port of Wilmington where container volume has remained steady during the pandemic so far despite sharp declines in the volume of world trade, said Eric Casey, CEO of GT USA Wilmington, the port’s owner.
But the port’s cargoes of bulk materials are down, due in part to a halt to production by some 1,600 mines worldwide, and there’s little prospect of a rebound for the remainder of the year, Casey told the conference.
“We are expecting in the maritime industry cargo volume declines to stay at up to 30 percent for the rest of this year,” he said. “We are hoping for a recovery in September-October but right now it doesn’t look like it with a lot of manufacturing starting to open and going back and closing again because of the recent uptick worldwide.”
Still, plans to expand to port to the nearby Edgemoor site remain on track. When built, it will be the first new cargo terminal on the East Coast for years, and is expected to create “thousands” of new jobs, Casey said.
For ILC Dover, a Frederica-based maker of protective materials for the aerospace, pharmaceuticals and personal protection industries, the pandemic has brought a 1,200 percent increase in demand for respirators that are used for COVID patients, resulting in a 20 percent increase in the workforce to about 600.
Steve Warthman, vice president of global operations, said demand is continuing to be strong for the company’s COVID-related products, and that there is “inelastic” demand for its other output. “Our product lines are very unfazed by the economic conditions that are out there,” he said.