As a glimmer of hope for the city’s economy, two of Mobile’s largest manufacturers remain open and operating during the COVID-19 public health crisis.
While both Austal and Airbus remain open, it’s unclear what impact the virus and its effects will have on the city’s economy in the future.
Airbus Americas spokeswoman Kristi Tucker wrote in an email the health and safety of employees is the aircraft manufacturer’s top priority, along with ensuring it can meet customer commitments.
“Recommendations are being adopted on day-to-day behaviors relating to hygiene, social distancing, ill health reporting and travel,” she wrote. “Any employee who can work from home is doing so. We are continuing to watch developments and will adjust as needed.”
The same policies apply not only to the final assembly line campus at the Brookley Aeroplex, but also to Airbus’ defense and space operation at Mobile Regional Airport, Tucker said. Employees at Airbus’ engineering center are primarily working from home.
Austal is also continuing production, despite the state of emergency. Like Airbus, Austal released a statement saying the health and safety of its workforce was its top priority.
“We’re closely monitoring and following guidance from the [Centers for Disease Control and Prevention], World Health Organization, the U.S. Navy and state and local officials to ensure necessary steps are taken to safeguard our workforce and sustain support to national defense requirements,” Austal spokesman Craig Savage said in a statement. “Austal remains open and operating under close care. The company’s precautions include travel restrictions for non-essential employees, review of recently traveled employees, comprehensive facility sanitization, social distancing and moving to virtual meetings whenever practical. We’re continuing to monitor developments and updating our response accordingly.”
In a letter sent to Austal USA President Craig Perciavalle, Assistant Navy Secretary James F. Guerts called the shipbuilder’s work “mission essential.”
“I cannot stress enough the importance of accomplishing this mission and notifying the government of any impediments that are considered likely to interfere with timely accomplishment of this mission,” Guerts wrote.
Despite operations continuing in many areas of the city’s manufacturing facilities, it doesn’t mean COVID-19 hasn’t come with challenges with productivity, Mobile Area Chamber of Commerce CEO Bill Sisson.
“Of course there are going to be productivity issues with social distancing,” he said. “Everyone is recognizing there are going to be changes.”
In preparing for this, Sisson said, the chamber and its employees are transitioning to a “triage system” to help local businesses gain access to what comes available in the form of disaster relief funds.
Dr. Alvin Williams, a distinguished professor and chair of marketing and quantitative methods at the University of South Alabama Mitchell School of Business, said COVID-19 will have a much more far-reaching impact on the economy than what many might think. Not knowing what will come next is not good for the health of our economy, he said.
“Everyone is impacted in some way,” Williams said. “It has had a ripple effect. Uncertainty does not bode well for the economy.”
Williams said it’s important for business owners and others to prepare for a recession because of the coronavirus.
“We should buckle up and prepare for a recession,” he said.
What the federal government has discussed could help residents and business owners through this time. This includes talk of a stimulus package, a three-month delay on tax filings and a stop on mortgage and rent payments.
Mayor Sandy Stimpson, at a press conference on Monday, March 23, told reporters he was waiving late fees and penalties on city sales and lodging taxes to help those businesses impacted by the virus. He added it was decided in a discussion with the mayors of the 10 largest cities in the state that they would try to keep municipalities open and operating.
However, he said he would expect any call to “shelter in place” to be made by Gov. Kay Ivey.
“It appears that except for very large cities, those calls are made by the governors,” he said. “That’s a call for the governor to make.”
When asked what sort of impact this would have on the city’s finances, Stimpson said his administration was still researching it.
“We are working on a forecast right now,” Stimpson said. “As far as what kind of a hit we’ll take, it’s too early to tell.”
While a formal forecast has not come together, Executive Director of Finance Paul Wesch told councilors on Tuesday that using a model developed by New York City’s comptroller, city officials have a rough estimate of what the city could lose in terms of sales and lodgings taxes on a per-month basis.
Based on the projections, Wesch said the city could see a 20-percent dip in retail sales taxes and an 80-percent dip in food service sales tax revenue. There would also be about a 20-percent drop in hotel occupancy, which is estimated right now at 12 percent, he said. However, that number could go up as travelers look to driving instead of flying.
For the two-month period of April and May, Wesch predicted using the model that the city could lose about 7.2 percent of its revenue per month. On average, the revenue in March is about $23 million, he said.
“That’s indicating there’s maybe a 30-percent drop in revenue,” Wesch said. “That could extend if the crisis extends.”
The city has roughly $42 million in reserve right now, which means the city can avoid “drastic” furloughs, or cuts in services, Wesch said.
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