Virginia Economic Review: Second Quarter 2020

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America After COVID-19 How the future of cities and towns, education and work, industry, small business, international trade, and economic development could change in the wake of the pandemic 1

Mount Vernon, George Washington’s estate on the banks of the Potomac River in Fairfax County, is the most popular historic estate in America.

More than 85 million people have visited Mount Vernon since 1860, when the estate officially opened to the public.

Contents 10

America After COVID-19

How the future of cities and towns, education and work, industry, small business, international trade, and economic development could change in the wake of the pandemic

12 Context Derek Thompson, The Atlantic

13 Cities and Towns Anita Brown-Graham, University of North Carolina Richard Florida, University of Toronto Joel Kotkin, Chapman University Karl Stauber, Danville Regional Foundation

17 Education and Work Byron Auguste, Opportunity@Work Peter Cappelli, University of Pennsylvania Wharton School of Business

28 Tech Steve Case, Revolution Brian Huseman, Amazon Mark Muro, Brookings

31 Data Centers Josh Levi, National Data Center Coalition

32 Cloud Computing Shannon Kellogg, Amazon Web Services

33 Real Estate Matt Kelly, JBG SMITH

34 Professional Services

Ryan Craig, University Ventures

Paul Laudicina, Kearney

Joe Fuller, Harvard Business School

Patrick Viguerie, Innosight

Rebecca Taber Staehelin, Merit America Michelle Weise, Imaginable Futures Bob Zemsky, The Learning Alliance for Higher Education

24 Manufacturing Manish Bhatia, Micron Technology Elisabeth Reynolds, MIT

26 Supply Chain Michelle Comerford, Biggins Lacy Shapiro & Co. Peter Debaere, University of Virginia Darden School of Business

78 Morgan Olson

Ramps Up in Danville Walk-in step van manufacturer sources and screens employees with assistance from the new Virginia Talent Accelerator Program

84 On the Front Lines

36 Hospitality Katherine Miller, The James Beard Foundation Chris Nassetta, Hilton

38 Construction Ken Simonson, Associated General Contractors of America

39 Retail Matt Powers, JLL

40 Agriculture Josh Katz, McKinsey & Co. Madison Pearsall, McKinsey & Co.

42 Utilities Tom Farrell, Dominion Energy

43 Gig Work Mary Gray, Microsoft Research

44 Healthcare Nancy Howell Agee, Carilion Clinic Vivian Riefberg, University of Virginia Darden School of Business

46 Small Business John Lettieri, Economic Innovation Group Karen Mills, Harvard Business School

48 International Trade David Dollar, Brookings Jennifer Hillman, Council on Foreign Relations Rufus Yerxa, National Foreign Trade Council

51 Site Selection Rob Boehringer, KPMG Matt Jackson, JLL Dennis Meseroll, Tractus Asia Ltd.

54 Economic Development Timothy Bartik, Upjohn Institute Jeff Finkle, International Economic Development Council Amy Liu, Brookings

David Rosenberg, AeroFarms

4 Facts & Figures 6 Virginia Wins 60 Range: The Case

for the Liberal Arts A Conversation with Katherine Rowe

66 Virginia Companies

Answer the Call

72 Virginia Universities

Apply Expertise, Resources to COVID-19 Issues

In Radford and China, Kollmorgen’s motion control products and systems have been instrumental in the fight against COVID-19

Subscribe today. Visit www.vedp.org/Virginia-Economic-Review

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Virginia Will Be Positioned for Economic Leadership in PostPandemic America ALL OF US LONG for the day when

we will have recovered following the COVID-19 pandemic. Yet the reality is that the pandemic will leave a permanent mark on America, resulting in changes, small and large, that will be with us for years – and possibly decades – to come.

While many analysts and reporters appropriately have focused attention on how the pandemic is impacting public health and the economy and/or how we will get back to (a new) normal, our special feature highlights permanent changes that may occur across various sectors of American life as a result of the pandemic. Inside we feature insightful and sometimes provocative perspectives from dozens of thought leaders on how the future of cities and towns, education and work, economic development, technology, site selection, and various industry sectors in America (and Virginia) could permanently change in the wake of the COVID-19 pandemic.

vehicles, and logistics. Further, Virginia recently has been making historic investments in broadband access, which the pandemic has shown to be more important than ever.

We also are delighted to include a discussion in this issue with Dr. Katherine Rowe, president of William & Mary, who is integrating digital literacy into the liberal arts while preparing students with the broad range of skills and perspectives that they will need to navigate our rapidly changing world.

Finally, we highlight the many ways that companies and universities across Virginia are contributing to the fight against COVID-19.

We hope you find these forecasts of the future to be informative and thoughtprovoking, and we wish you, your family, and your business well as you navigate the pandemic era and beyond.

Best regards,

Fortunately, Virginia will be well positioned for healthy growth in post-pandemic America. Indeed, Virginia already is a leader in many of the technologies and industry sectors whose prospects are being lifted by the pandemic, such as cloud computing, data centers, autonomous systems, e-commerce, food and beverage processing, commercial trucks, delivery

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Stephen Moret President and CEO, Virginia Economic Development Partnership @StephenMoret

Rudee Inlet on the Virginia Beach oceanfront is a popular local spot for fishing, boating, and 3 water sports, including surfing.

Facts Figures George Mason University #9 Education Curriculum and Instruction Online Program U.S. News & World Report Best Graduate Schools, 2021

#10 (tied) Homeland Security and Emergency Management Program U.S. News & World Report Best Graduate Schools, 2021

#10 Special Education Online Program U.S. News & World Report Best Graduate Schools, 2021

George Mason University

University of Virginia

University of Virginia #1 Law School With the Best Professors

The Princeton Review, 2020

#2 Best Law School for Career Prospects

The Princeton Review, 2020

#3 Top Public Universities

Niche 2020 Best Colleges in America

#4 Top Public Schools

U.S. News & World Report, 2020

#6 Management Program U.S. News & World Report Best Graduate Schools, 2021

#8 Best Law Schools (overall) U.S. News & World Report Best Graduate Schools, 2021 4

College of William & Mary #9 Top Public Universities Niche 2020 Best Colleges in America

#12 Top Public Schools

U.S. News & World Report, 2020

Hampton University #4 (tied) Historically Black Colleges and Universities

U.S. News & World Report, 2020

Virginia Commonwealth University #1 Fine Arts — Sculpture Program U.S. News & World Report Best Graduate Schools, 2021

#1 Nursing Anesthesia Program U.S. News & World Report Best Graduate Schools, 2021

#2 Fine Arts – Printmaking Program U.S. News & World Report Best Graduate Schools, 2021

#3 Fine Arts — Glass Program U.S. News & World Report Best Graduate Schools, 2021

1 2 2

WalletHub, 2019

Virginia: Public Schools in the South SmartAsset, 2020

Best State for Higher Education Money, 2019

(tied) Most colleges listed among 50 Best Colleges in America

#4 Best Fine Arts Program U.S. News & World Report Best Graduate Schools, 2021

#4 Fine Arts —

Graphic Design Program

U.S. News & World Report Best Graduate Schools, 2021

#4 Rehabilitation

Counseling Program

U.S. News & World Report Best Graduate Schools, 2021

#5 Health Care Management Program

Washington and Lee University #4 Law School With the Best Professors The Princeton Review, 2020

#9 Best Liberal Arts Colleges

Niche 2020 Best Colleges in America

U.S. News & World Report Best Graduate Schools, 2021

#33 Top Private Universities

#5 Time-Based New Media Program

#36 Best Colleges

U.S. News & World Report Best Graduate Schools, 2021

Virginia Commonwealth University

Niche 2020 Best Colleges in America Niche 2020 Best Colleges in America

#8 Education Online Program U.S. News & World Report Best Graduate Schools, 2021

Virginia Tech

Liberty University #2 Best Online Colleges

Niche 2020 Best Colleges in America

Virginia Tech #6 Industrial/Manufacturing/Systems Engineering Program

U.S. News & World Report Best Graduate Schools, 2021

#7 Environmental/Environmental Health Engineering Program U.S. News & World Report Best Graduate Schools, 2021

#8 Civil Engineering Program U.S. News & World Report Best Graduate Schools, 2021

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Microsoft is investing $64 million to establish a new regional hub in Fairfax County, shown in this rendering, and create 1,500 new jobs.

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VIRGINIA WINS

Selected Virginia Wins Greater Fredericksburg Microsoft Corp. will invest $64 million to establish a new software development and R&D regional hub in Northern Virginia, creating 1,500 new jobs. The company will occupy 400,000 square feet in Reston Town Center in Fairfax County for its new location, anticipated to be ready for employees in summer 2021.

The Redmond, Wash.-based company, which has revenues surpassing $125 billion and nearly 156,000 employees worldwide, has had a presence in Virginia since 2002, with corporate locations in Reston and the Richmond area and an enterprise data center in Mecklenburg County in South Central Virginia. As part of the project, the company will partner with local colleges and universities to develop a tech talent pipeline for cloud computing and related degrees to support the expansion.

GRIMM

Jobs: 23 new jobs CapEx: $435K Locality: Stafford County

Greater Richmond Moore

Jobs: 239 new jobs CapEx: $31M Locality: Henrico County

SimpliSafe

Jobs: 572 new jobs CapEx: $5.5M Locality: Henrico County

Greater Williamsburg Navien, Inc.

Jobs: 180 new jobs CapEx: $77.5M Locality: James City County

Hampton Roads Amazon

Jobs: 500 new jobs Locality: City of Chesapeake

We’ve had a presence in Reston for many years now, and this expansion will allow Microsoft to deliver even more solutions from a region known for its innovation and passion for technology.

TERRELL COX General Manager, Microsoft

Amazon

Jobs: 1,000 new jobs Locality: City of Suffolk

Total Fiber Recovery

Jobs: 68 new jobs CapEx: $49M Locality: City of Chesapeake

I81-I77 Crossroads 1901 Group

Jobs: 150 new jobs CapEx: $1.2M Locality: Washington County

South Central Virginia Braven Environmental

Jobs: 52 new jobs CapEx: $31.7M Locality: Cumberland County

Virginia’s Gateway Region Amazon

Jobs: 150 new jobs Locality: Prince George County

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Each year, Franklin County Parks & Recreation presents a free concert on the water at Twin Ridge 8 Area at Philpott Lake.

Recreation

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AMERICA AFTER COVID-19 How the future of cities and towns, education and work, industry, small business, international trade, site selection, and economic development could permanently change in the wake of the pandemic 10

W

hen the United States and the world battled the H1N1 pandemic in 1918, the number of cars on the road had just surpassed horse-drawn carriages. The automobile promised a world of unprecedented freedom and decentralization; no longer would workers be leashed to offices and factories by the routes of clanky, crowded streetcars.

Architects like Frank Lloyd Wright and Le Corbusier promised the end of the city; the Frenchman, in the introduction to one of his works, wrote of the plight of his poor secretary, who said of her trip to work, “I’ve spent the best years of my life on the train!”

A century later, Americans can relate. If not on the train, millions of American workers spend more than 90 minutes commuting each day. As the French would say, the more things change, the more they stay the same.

The COVID-19 pandemic is not the first time observers have predicted the demise of the city. Other technologies that were forecast to send urban residents scattering include electricity transmission, telephones, and the internet.

The pandemic-induced shock of six months working from home may prompt lasting changes to commuter culture. The Washington metro may be ground zero for these changes, with one in two workers able to work from home, according to a University of Chicago study. Only Silicon Valley has a higher share.

That means a new premium on the places people want to live. Contrary to popular belief, this is not necessarily a windfall for suburbs at the expense of cities. Like population growth, job growth is fastest in the suburbs; cities are expensive to live in not because of short commutes, but because people prize their amenities, social networks, and quality of life.

Still, there’s no doubt that many aspects of American life that went online in March will stay there, from college lectures to grocery shopping. The infrastructure of the internet must expand to meet this newfound need.

New data centers will rise. Home offices will blossom.

Broadband internet will become as indispensable to 21stcentury households as running water seems to us now.

Doctors will have video-chat technology as a matter of course, giving rural and city residents alike access to more specialized care and saving time and expense.

Continuing pre-pandemic trends, automation and gig work will further change traditional notions of work.

Higher ed will change, too, as colleges reckon with the financial fallout of the pandemic. Some may continue to realign from the expansive, humanist, liberal arts tradition toward a leaner program of coursework that’s more explicitly tied to workforce development.

The pandemic has also revealed weaknesses in supply chains, whether they are dependent on one factory in China or concentrated in one facility in the United States.

Many companies may look to localize production and sourcing of materials while building in redundancies to diversify risk.

COVID-19 is challenging the presumed benefits of consolidation in our society, from skyscrapers to single-source supply chains to industrial agriculture.

For most of us, the disruption offers a chance to make fresh choices, starting with the basic question of what the future of American work, education, and life looks like. VEDP posed this question to a number of thought leaders in various topics and industries. Here’s what they had to say.

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CONTEXT

Back to the Future DEREK THOMPSON Staff Writer, The Atlantic @dkthomp THE COVID-19 CRISIS is simultaneously

thrusting Americans into the pre-urban homestead economy of the 1830s, recreating the Depression-era joblessness of the 1930s, and pulling forward the virtual economy of the 2030s.

In the agrarian economy of the 19th century, Americans lived more selfsufficient lives on small farms, where they handled more child care, education, home repair, and cooking. This was decades before the urbanization push of the early 20th century, which gave rise to the modern retail and services industry. But the pandemic paused that retail and services revolution, forcing many Americans to recreate a kind of old-fashioned autarky, where working parents have to do everything themselves, like home repair, teaching, and child care. This is what I mean by the return of the 1830s.

More obviously, the pandemic marks the revenge of depression economics. In the spring, new jobless claims topped 40 million, new bankruptcy filings reached their post-Great Recession peak, the managing director of the International Monetary Fund called the pandemic “the worst crisis since the Great Depression,”

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and unemployment soared to its highest level since Franklin D. Roosevelt’s first term. This is what I mean by the return of the 1930s.

But thanks to government stimulus, overall income in April and May increased, and Americans shifted their spending to the virtual economy, compressing 10 years of anticipated e-commerce growth into a matter of weeks. This acceleration was painful for some companies, as Amazon and others ran out of some supplies and had to delay deliveries of nonessential items. But from an online retail perspective, you could safely say that 2020 saw a revolution that many expected to come around 2030.

That means the homebound lifestyle of the 1830s has combined with the Great Depression-era joblessness of the 1930s, which coincided with the online retail dependency of the 2030s. If you’re having a hard time understanding the economy, that’s because this economy is hard to understand. The plague is a berserk time machine collapsing 200 years of economic development into one messy moment.

CITIES AND TOWNS

Will Small Towns Become Magnets for Talent Recruitment?

ANITA BROWN-GRAHAM Professor of Public Law and Government and Director of the ncIMPACT Initiative, University of North Carolina School of Government IN THE WAKE OF COVID-19, many foresee a great reshuffling in the geographic

distribution of our nation’s talent. With high-skill jobs now untethered from city office buildings and the growing sense that density equals danger, some local officials in small towns anticipate workers will elect now to live in their less-crowded communities. These local officials eagerly applaud the tremendous opportunity in each indication that the forced experiment of remote work is here to stay.

I offer the following thoughts to small towns: ◾ Continue to focus on growing your talent from within. For some high-skilled individuals, the availability and advantages of remote working will motivate a move to less-compact communities. However, most big-city dwellers will stay where they are after COVID-19. Of those who do leave big cities, many are likely to follow the trend that began before the pandemic, favoring college towns or amenity-rich mid-sized cities. Retention of talent, rather than recruitment, will continue to be the more effective strategy for small towns. ◾ To retain local talent, keep assembling authentic amenities that showcase what makes your town special. As was the case before COVID-19, in the era of “safer at home”, workers will continue to crave communities that offer peer groups and places that foster creative consumerism. Small towns need to cultivate and support the local entrepreneurs who boost creative connections and placemaking. ◾ Compete on your own terms. Cities will adapt quickly. COVID-19 will spark smart city upgrades. Governments will turn to digital infrastructure and the private sector will expand the use of automation for transportation and work duties. Small towns will not have the resources to move as swiftly. To be in the game, you will need to remember: COVID-19 taught us that broadband is the starting place for talent development and economic development.

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CITIES AND TOWNS

Rethinking Cities for the COVID Aftermath RICHARD FLORIDA University Professor, University of Toronto School of Cities and Rotman School of Management @Richard_Florida OUR CITIES WILL SURVIVE the

COVID-19 pandemic, but the extent to which they return to the way they were before will depend on our response.

According to some projections, as many as three-quarters of small businesses could go bankrupt as a result of the virus. This would be devastating to the economy and our social fabric alike.

Every effort must be made to keep our commercial districts alive, whether in the form of financial assistance or technical and management advice. Both will almost certainly be necessary.

The businesses that survive will look different in the future. Stores, restaurants, offices, and factories will have to make design changes to allow for physical distancing. Similar retrofits will be necessary in airports, arenas, public transportation, and other high-capacity spaces. Enhanced infrastructure for pedestrians and bikers will allow for safer commuting. Businesses must also make

allowances to minimize crowds, allowing remote work to the extent possible and staggering start and closing times.

Just as important are the workers crucial to sustaining and rebuilding the economy.

Research based on Bureau of Labor Statistics and Department of Homeland Security data indicates that roughly 30% of U.S. workers operate in close proximity to their co-workers and customers. Nearly 70% of them are blue-collar or low-wage service workers. We must support and protect them as they put their health in danger for the sake of the economy.

Cities, and the concentration of talent they contain, have always driven economies. They will be crucial to the post-COVID recovery. But the pandemic has exposed weaknesses in the way our cities operate and the extent to which they rely on vulnerable workers. We must account for both as we make decisions today and after the virus subsides.

According to some projections, as many as threequarters of small businesses could go bankrupt as a result of the virus. This would be devastating to the economy and our social fabric alike.

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CITIES AND TOWNS

Reconsidering the Push for Density JOEL KOTKIN Presidential Fellow in Urban Futures, Chapman University THE CORONAVIRUS PANDEMIC will

be with us for a long time. Months of massive layoffs will devastate economies for large firms and be particularly devastating to smaller ones. Worst of all will be the impacts on low-wage service workers, particularly in fields like retail and hospitality.

Once things calm down, localities will have to reconsider what has become standard practice. For one thing, the rush to densify cities should be reconsidered, given the strong tie that exists worldwide between density and exposure to the pandemic. This pattern has existed since classical times. Also needing reconsideration may be the emphasis on conventional mass transit, which is also linked with exposure to the pandemic.

Of course, these assertions can be debated, and there is always room for nuance. But planners, often inured to the public’s preferences, still ignore that recent Census data surveys have already revealed a secular shift to smaller, less dense places — both suburbs and cities.

This trend will only grow, as recent surveys show that nearly 30% of big-city residents are considering a move out to a less dense place.

Perhaps the biggest imperative, particularly for a place with as many knowledge workers as Virginia, will be accommodating the growing numbers of home-based workers. Of course, some will look forward to getting back to work, but, once again, survey data suggests that most would prefer to stay laboring at home for the foreseeable future. Social-distancing restrictions will also make office space more expensive and lead companies to embrace either telecommuting or locating in less expensive places.

Retail locations will be particularly hardhit. The shift to online purchases has been rising for a decade and now has become fairly universal. Some retail businesses may come back, but many others, large and small, may never. This could present a great opportunity for communities to build small, single-family homes, complete with home-work features, for local residents.

H O W L I K E LY A R E Y O U T O M O V E O U T O F D E N S E LY P O P U L AT E D A R E A S A N D T O W A R D R U R A L A R E A S O N C E T H E PA N D E M I C E N D S ?

Very likely Somewhat likely

13% 16%

Source: The Harris Poll COVID-19 Tracker, April 25-27, 2020

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CITIES AND TOWNS

How Could COVID-19 Permanently Change Our Communities?

KARL STAUBER, PH.D. Former President and CEO, Danville Regional Foundation SHORT ANSWER: WE DON’T KNOW.

We don’t know the duration of the health crisis, how severe the economic crisis will be, or how large long-term government debt will grow.

This crisis will change the nature of sectors in the U.S. and the structure of communities. The longer and deeper the crisis, the more changes there will be. We’re not going back to what was. This is not a three-month event. It’s three to five years.

Decisions we make now will have positive and negative impacts for years ahead.

On the upside, crisis stimulates innovation. Automation and teleworking will increase in sectors benefiting well-positioned communities. Supply chains will get shorter and “just in time” will morph. This will benefit communities with logistics capacities and the ability to change quickly. Businesses and communities that have strong interpersonal relationships will have advantages over those which have been predominantly transactional. If your bank

or chamber of commerce will not return your call right now, it’s probably too late to build rapport now.

On the downside, crisis changes priorities.

If your organization is dependent on discretionary resources, the next few years will be very difficult. Many businesses and households that were on the margin in February will be in difficulty soon. That means more demand for government support, even as government resources are under pressure to do more.

Here are a few possible shifts that could be heightened by the crisis: 1) large urban areas will become less attractive, creating opportunities for agile, smaller communities; 2) communities must become much more strategic in their investments — regional approaches will be even more critical; 3) risk management will be as important as short-term profit maximization, and; 4) communities will become more divided. We were divided at the start of the crisis, but it could worsen with the crisis.

We’re not going back to what was. This is not a three-month event. It’s three to five years.

Decisions we make now will have positive and negative impacts for years ahead.

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E D U C AT I O N A N D W O R K

COVID-19 is Accelerating Our Digital Transformation BYRON AUGUSTE CEO and Co-Founder, Opportunity@Work @byron_auguste WHEN COMPANIES EVALUATE talent, they start with, “Do you have a degree?”

and “But where did you get it?”

Screening out workers who don’t have a four-year degree — paired with the COVID-19 pandemic — has led to a disproportionate economic impact on the 71 million workers in the U.S. who are Skilled Through Alternative Routes (STAR).

And while college is and always will be valuable to some, the rapidly accelerating digital transformation ahead will create a dramatic shift toward accepting alternative routes — including on-the-job learning, community college, and credentialing — as companies shift to skills-based hiring to fill the surge of new jobs on the horizon.

Recent research found that there are 30 million STARs who have the skills today to transition to roles that pay at least 50% more. Pre-COVID-19, 20 million of these “Rising STARs” were classified as “low-skill” because of their low wages.

But as our country has relied on them to keep working during this crisis, we now refer to them as “essential.”

As talk of how to create an inclusive recovery for essential workers in a postCOVID world continues, we cannot lose sight of STARs. We have gone from the unthinkable to the unavoidable when it comes to increased automation and artificial intelligence as human health has tipped the scales in many fields.

The research proves that STARs are ready for this change and have the training to solve the problems we face in recovery, but businesses must reward STARs for it.

If work is solving problems, there will be much more work to do. We must imagine, invent, fix, build, heal, care, teach, protect, and create a new labor market that leaves no one behind. And we’ll be needing all the tools and all the talents that STARs have to get us there.

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E D U C AT I O N A N D W O R K

Will Work Be Different After the Epidemic?

PETER CAPPELLI George W. Taylor Professor of Management, The Wharton School, University of Pennsylvania MY COLLEAGUE, the forecasting expert Phillip Tetlock, has found that most of us are really terrible at predicting the future. My simple-minded view is that the immediate future is like the past, only more so. There is enormous inertia in something as vast as the U.S. workplace.

It takes enormous forces to move it in any noticeable direction, and even then, they have to be underway for a while to make any difference. Take, for example, the 2008 financial crisis and associated Great Recession. After it began to lift, things in the workplace looked…remarkably like they did before. The talk was different — we all will be gig workers, we are facing massive labor shortages, and so forth — but all those arguments proved to be wrong.

It doesn’t make a very interesting story to say that things will look about like they did before when the economy crawls out of its virus suppression hole, and the topic on which speculation is most rife about the workplace after has to do with remote work. The claim that there will be a lot more remote workers after this is over does not seem very credible to me. Before the virus, as many as 72% of U.S. workers reported that they worked at home some already, although that could well just be

taking home work in the evening or the occasional staying home to finish writing a report. Will the fact that lots of people are now working from home full-time mean that they will keep doing it?

The place to begin answering that question is with another question: What’s the pressure to do so? I don’t think many people are still delighted to be working from home. Remember, this is quite different than the occasional “Stay home on Friday to get a jump on the weekend” remote work. We have no reason to think employers are delighted with this, either.

I suspect what we will see is this change: Before COVID-19, most businesses let their local managers decide who could work from home, and we saw enormous inconsistencies between offices and even employees in the same office. Companies have had to take authority away from local managers during the crisis and set up policies and practices that are consistent across the organization. Most employers are still in the process of doing so, and I wouldn’t say these processes are especially great, but they will be better than the status quo and will endure after the virus fades.

The claim that there will be a lot more remote workers after this is over does not seem very credible to me.

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E D U C AT I O N A N D W O R K

Many More Cheaper, Faster Pathways to Good Jobs RYAN CRAIG Managing Director, University Ventures @ryancraigap SINCE COVID-19 BEGAN throwing

millions of people out of work, Google has seen an explosion in searches for online courses. But we’re not seeing any uptick in searches for degree programs.

How can this be when we’ve just entered the biggest recession in nearly a century and when one-third of respondents to a new Strada survey say they’ll “need additional education or training to find another job with the same wages or income”?

Even before the pandemic, prospective students were increasingly focused on employment outcomes. A generation ago, only about 50% of students enrolling in degree programs indicated that employment was their primary or sole motivation.

Recent surveys consistently placed that number north of 90%. And with tens of millions of Americans newly unemployed or underemployed due to COVID-19, the market of potential students is now even more employment-centric.

The essential value proposition of the current universe of bachelor’s degrees is this: Pay upfront and work full-time for four-plus years for a chance at getting a

good job. For a market now firmly set on achieving a positive employment outcome in as little time and with as little financial risk as possible, it’s no wonder we’re not seeing an uptick in searches for degrees, and why colleges and universities are as nervous as cats in a roomful of rocking chairs about how many students will show up this fall, and for future falls.

Students are searching for faster, cheaper pathways to good first digital jobs. As COVID-19 has laid bare the gap between digital haves who can work remotely, and nondigital have-nots who must show up at a physical location, students will increasingly insist on pathways with a high probability of landing them in the former category. Some of these pathways may continue to require tuition. Others may not guarantee employment. But many will provide an improved value proposition for students.

Higher education’s message to the economic victims of COVID-19 cannot be that they should borrow tens of thousands of dollars for the privilege of sitting in classrooms for years on end with no guaranteed path to a good job.

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E D U C AT I O N A N D W O R K

Child Care: The Hidden Barrier to Recovery JOE FULLER Professor of Management Practice, Harvard Business School POLICYMAKERS, PUNDITS, and the capital markets are speculating which industries

will suffer the most as a result of COVID-19 pandemic. One that is seldom mentioned, but will soon be recognized as an important casualty, is child care. More than 12.5 million children go to a child-care facility in normal times, enabling their parents or caregivers to pursue their careers. It seems a virtual certainty, however, that much of that capacity will not come back on stream in the near future, if at all. A significant reduction in child-care capacity will affect the workforce broadly, inhibiting the recovery in personal incomes and consumer demand.

Child care has notoriously thin margins. Although profitability had improved in recent years, sites rely on operating at or near full enrollment to turn a profit. That reflects the cost structure of child care, which consists primarily of rent and salaries. Staffing levels are mandated by state regulations, effectively making staffing costs fixed. But many parents will be concerned about the health risks associated with their children being in groups, and states are highly likely to mandate a lower ratio of children to adult staff to create social distancing. Such steps are likely to reduce the industry’s capacity by between one-third and one-half. Add the costs of personal protective equipment, liability coverage if no safe harbor legislation is forthcoming, and cleaning.

Most sites won’t be economically viable at anything like their historical prices.

There is a further question: Will child care workers actually return to work? Childcare workers are paid poorly: 20% fall below the poverty line; the average hourly wage is $11. Many will prefer to rely on enhanced unemployment insurance or abandon jobs that involve frequent, close interaction with others.

High attrition among child-care sites will attenuate the recovery. Many workers who rely on the 80% of child-care sites that are private will find their space is gone or prices are suddenly unaffordable.

A significant reduction in child-care capacity will affect the workforce broadly, inhibiting the recovery in personal incomes and consumer demand.

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E D U C AT I O N A N D W O R K

COVID-19 Crisis Shines Light on Problems With Education System REBECCA TABER STAEHELIN Founder and CEO, Merit America OVER THE PAST few months, we’ve

already begun to see the ways in which COVID-19 is upending our education and workforce systems. The pandemic has exacerbated existing inequities that already pervaded the U.S. labor market.

Workers without college degrees continue to be the first fired and the last hired. As a result, the frontline workers who are literally keeping the country going are likely to face the greatest barriers as we chart a path to recovery.

That said, there may also be some silver linings to this crisis. By exposing the ways that the existing system has failed, we’re also galvanizing new efforts to fix that system. In the wake of the pandemic, the future of education and work in the United States may include more collaboration between employers and training providers to tightly connect learning and earning. It will likely include a growing embrace of online programs, provided that they include the right support systems to ensure that students

actually see tangible career outcomes. It will hopefully involve new approaches to financing education that don’t saddle learners with crushing debt before they’ve even had a chance to start their career.

We’ve seen firsthand how hardworking Americans can survive and thrive in this time with the right opportunities: people like Carlos Flores, who went from a front-line retail job to a high-paying career as a data center technician at Amazon because he was able to gain in-demand IT skills through accelerated, flexible learning.

Those of us on the front lines of education and work have an opportunity — and a responsibility — to make sure that Carlos isn’t the exception. Oncein-a-century events can shake us out of our complacency and enable us to more clearly see the cracks in the system. Let’s hope that we keep some of these lessons with us as we begin to navigate our way through the crisis in the coming months.

Once-in-a-century events can shake us out of our complacency and enable us to more clearly see the cracks in the system.

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E D U C AT I O N A N D W O R K

The Future of Education Will Include More Targeted Education MICHELLE R. WEISE, PH.D. Entrepreneur-in-Residence and Senior Advisor, Imaginable Futures, a Venture of The Omidyar Group @rwmichelle THE GLOBAL PANDEMIC OF 2020

makes clear that millions of people who are losing their jobs cannot just leverage their newfound “time off” to develop new skills. They are looking to survive.

Working learners need clear navigation, wraparound supports, and better guidance.

They do not have time to guess at limited options or take detours down dead-end paths. They need ways to unearth the hidden skills and capabilities they’ve honed over years of work experience and transfer them into new domains — and perhaps entirely new industries. They’ll still have gaps to fill, but they will not need a bundled, comprehensive program that could take years to complete — and may not effectively signal to employers what they can do.

But where are the on-ramps to better economic opportunities? Even before the emergence of COVID-19, more than 41 million working-age Americans were seeking more direct connections to good jobs, but they kept falling through the

cracks because of the limited ways we train and hire the workforce. But with millions more now newly unemployed, the void of flexible, targeted education options has become all too apparent.

Institutions of higher education and training providers that will survive will be the ones that pivot and tailor programs for the new majority of learners. They will build innovative models that help adults access the relevant information, advice, funding, support, and skills training they need.

Learners need access to precise, relevant education tailored to their needs: the right skills and the right pathways at the right time. They also need to know the education they choose will be worth the investment and will clearly signal value to a prospective employer. More precise or targeted learning experiences must not only provide the knowledge, but also the human and technical skills, professional networks, and hands-on practice that equip learners to be ready for work.

FIVE PRINCIPLES OF ANY NEW LEARNING ECOSYSTEM N AVIGABLE:

A birds-eye view of the current and former job market, including all of the career pathways open to learners.

SUPPORTIVE:

Comprehensive wraparound supports, to help learners overcome hurdles and manage multiple commitments and competing priorities.

TA R G E T E D : Tailored to learners’ needs — the right skills and the right pathways at the right time.

Source: Strada Institute for the Future of Work, “The New Learning Ecosystem,” November 2019

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I N T E G R AT E D :

The time, funding, confidence, and resources for working learners to juggle education and training.

T R A N S PA R E N T :

The hiring process must be unbiased, open, and fair, enabling job seekers to prove their competence and skills.

E D U C AT I O N A N D W O R K

Plus ça change, plus c’est la même chose The More Things Change, the More They Stay the Same BOB ZEMSKY Chair, The Learning Alliance for Higher Education TO UNDERSTAND HIGHER education post-pandemic requires an appreciation of the ironic. On the one hand, much will change: new ways to teach, alternatives for housing students, different calendars, and daily schedules. The pandemic has spawned an “anything goes” attitude that makes fundamental change more than possible.

On the other hand, much of what higher education does in the future will be shaped by a market that has hardly changed at all. That is the other half of my irony. The question Susan Shaman, Susan Baldridge, and I asked in “The College Stress Test: Tracking Institutional Futures Across a Crowded Market” was how many institutions needed to consider, “Is it closing time?” Our answer: Only about 10% of the nation’s baccalaureate institutions were at risk — mostly small, non-selective private colleges, often in the Midwest, often more rural than urban. What did we know that allowed us to make such a prediction? That for nearly a decade, the market for an undergraduate education in the U.S. has been consolidating: The rich have been getting richer and the big have been getting bigger.

Then came COVID-19. We knew almost immediately that our analysis of institutional risk would predict the pandemic’s impact as well. What lies ahead in the public sector is the turbulence that has historically accompanied rapid declines in public funding. The big flagships will be stressed, and their unions agitated, but none of them are going to disappear. The same can be said of the private medallion universities whose applicant pools have steadily expanded and whose coffers are literally bulging with the fruits of private philanthropy. The most troubling diminution will be among the nation’s private, not-for-profit colleges and universities that are already underfunded and underenrolled.

Their contributions to a national tradition of liberal education will be sorely missed.

What lies ahead in the public [higher ed] sector is the turbulence that has historically accompanied rapid declines in public funding.

23

M A N U FA C T U R I N G

Smart Manufacturing Technologies Reduce Contact, Increase Efficiency MANISH BHATIA Executive Vice President of Global Operations, Micron Technology, Inc. THE ENERGY CRISIS of the 1970s

caused the automobile industry to focus on vehicle fuel efficiency when higher oil prices altered the importance of miles per gallon to the car buyer. The COVID-19 pandemic will be a similar catalyst for change in many industries, including semiconductor manufacturing.

Micron’s semiconductor factory in Manassas has been leading in manufacturing innovations for the last decade. It was our first site to deploy a Remote Operations Center (ROC), which reduced the number of production personnel on the manufacturing floor.

The technologies that enabled the ROC, including the capability to remotely access equipment in the fabrication area, have been used to allow some of our team members to work from home. When the need for physical distancing passes, we will likely find that the configuration of our ROCs in Micron will be improved by permanently adopting changes we made during the crisis.

Communication channels at our manufacturing sites have also been radically altered by COVID-19. To reduce social contact in the fab, we are conducting most meetings through video conferencing, even with those in the same

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building. We found that this approach increases efficiency. Meetings start on time and participation is higher because everyone is seated in the “front row.”

Recently, Micron has been investing in smart manufacturing capabilities, resulting in improved quality, cost, and speed.

COVID-19 has been a catalyst to further accelerate adoption of new technologies.

One such area is in mobile and augmented/virtual reality technologies to help automate and improve end-to-end maintenance workflow processes. This is done by leveraging mobile apps for realtime tool event notifications, maintenance job allocation and execution, and spare parts delivery/replenishment. Remote AR capabilities enable our experts to remotely assist our technicians on the shop floors to speed up response time and reduce the need for travel.

While the world grapples with the immediate implications from COVID-19, we can already see the pandemic having a lasting impact on how manufacturing companies will operate in the future, where remote operations enabled by smart manufacturing technologies will become the new normal and lead to improved productivity and quality across our product lines.

M A N U FA C T U R I N G

U.S. Needs a National Manufacturing Strategy ELISABETH REYNOLDS Executive Director, MIT Industrial Performance Center and Task Force on the Work of the Future THE COVID-19 CRISIS HAS BEEN a painful wakeup call not only to

the loss of U.S. manufacturing capabilities as production and know-how have moved to China, but to the lack of a national manufacturing strategy as a matter of national security. Without seriously addressing these issues, the country could find itself at the next global crisis in the same terrible situation it finds itself today. However, if used appropriately, the crisis could permanently change the future of manufacturing for the better in several ways.

First, the crisis has exposed the vulnerability of global supply chains and the significant risks involved in sole sourcing from China. Firms are already looking elsewhere toward dual sourcing at a minimum, providing opportunities for rebuilding supply chains in the U.S., particularly for critical healthcare products if coordinating mechanisms and incentives are in place. These have clearly been missing.

Second, the crisis has highlighted the value of flexibility and responsiveness in manufacturing, including firms’ ability to ramp up or pivot in response to demand, as well as the value of new digital manufacturing tools and technologies such as 3D printing to produce critical parts or innovate around new products. There is newfound momentum to improve U.S. manufacturing capabilities through investments in digital manufacturing and innovation more broadly, which could translate into more distributed manufacturing and more robust regional manufacturing “ecosystems.”

Finally, the crisis has underscored the importance of manufacturing workers, many of whom have been deemed essential across multiple industries, including food processing, medical devices, and drugs. Given the critical role these workers have played during the crisis, it is hard (though not impossible) to imagine we would not ensure going forward that workers are safe and well protected, with access to training, employment insurance, and healthcare.

What’s required to ensure this future is a forceful national strategy that commits to building manufacturing capabilities for the 21st century through better information, coordination, investments, and commitments to U.S. manufacturers of products critical to public health and national security more broadly.

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T H E S U P P LY C H A I N

Major Supply-Chain Shifts Predicted After Global Pandemic MICHELLE COMERFORD Project Director, Industrial & Supply Chain Practice Leader, Biggins Lacy Shapiro & Co. @mmcomerford THE COVID-19 PANDEMIC HAS shined

a bright light on the fragility of global supply chain networks, causing many to reevaluate these strategies and overall manufacturing footprints. In the U.S., many government officials are calling for the reshoring of manufacturing operations, particularly those that supply and produce essential goods such as pharmaceuticals and medical supplies.

To be clear, the U.S. reshoring trend was already occurring for some operations, given changing global economies, risk mitigation, advances in automation and technology, and more recent trade wars. Further, supply chain strategies have followed various cyclical patterns over the past 40 years.

But given the severity of the disruption of COVID-19, there is no doubt that many supply chains will be changed for the foreseeable future. Companies will continue to shift to more “local” production.

Along with domestic production comes local sourcing for supplies, parts, and ingredients. Given the heavy concentration of offshored facilities for some sectors, many of those supply chains remain clustered abroad. As a result, the complete restoration of U.S. supply chains will be a lengthier process. Still, expect the pace of local production to soar, given the nation’s impressive technological offerings.

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Manufacturers bringing operations back to the U.S. will be greeted by rapidly evolving technology driven by artificial intelligence and machine learning. These advances will allow many traditional processes to be replaced by automation and robotics.

Additive manufacturing (also known as 3D printing) is also maturing in the U.S., with new materials that can be used and newfound efficiencies for mass production. In addition to making operations more efficient, this technology may also drive new innovation, filling the aforementioned supply chain gaps that currently exist in the U.S. Unwinding global supply chain networks is no easy task and will take some time to play out. That said, the benefits of a “local for local” manufacturing strategy may be worth the effort — effectively mitigating future risk.

It is likely, then, that the U.S. will see a sizable increase in manufacturing investment in the years to come, particularly from companies in the supply chain for products destined for U.S. customers.

T H E S U P P LY C H A I N

The Coronavirus May Change Supply Chains in Unexpected Ways PETER DEBAERE Professor of Business Administration, University of Virginia Darden School of Business IPHONES ARE NOT THE ONLY products with components from multiple countries.

Supply chains are increasingly complex and global. They enable companies to take advantage of lower production costs and better technology, which make products cheaper.

Maintaining international supply chains hinges on fast, inexpensive transportation, as well as on the information technologies that connect us. The coronavirus underscores how much modern production depends on such international production networks, and how vulnerable it is to their disruptions.

A limited number of multinationals dominate international trade. They are more productive than local firms and can absorb the significant costs of exporting and sourcing from abroad. They successfully handle foreign customs and regulations, find reliable suppliers, and set up foreign affiliates. As long as the pandemic was limited to China, it seemed to reinforce the call to bring production back to the United States.

Now that the crisis has reached our shores, that view may be changing.

Reshoring production tends to be viable only for goods that depend on timely delivery or changing customer preferences, or those for which automation can replace offshore production. For products that rely on low-skill labor, the significant gains from lower wages and expertise abroad are unlikely to disappear. Moreover, the virus ravaging the United States may call into question the wisdom of reshoring, or putting “all eggs in the domestic basket.” The poor handling of the pandemic — we have the highest number of cases and deaths, lagged testing, and uncoordinated reopening — makes our country a source of risk. Multinationals will likely want to retain supply lines abroad to diversify risk and ensure continued production. At a minimum, especially in light of the shortage of medical equipment, there will be calls to stock critical supplies, map out transparently existing supply lines, and monitor spare parts and essential inventory carefully.

The poor handling of the pandemic — we have the highest number of cases and deaths, lagged testing, and uncoordinated reopening — makes our country a source of risk.

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TECH

The Future of the Tech Sector Outside of Silicon Valley STEVE CASE Co-Founder, AOL CEO, Revolution @SteveCase FOLLOWING THE ONSET of the COVID-19 pandemic, some people opted to

migrate from densely populated coastal metropolitan areas to smaller cities, suburban enclaves, and rural towns. Yes, many will return once stay-at-home orders are lifted, but some may choose to stay, accelerating the talent boomerang of people moving back to their hometowns, or places where they went to school. The resurgence of smaller cities has been underway for years, driven largely by the high cost and challenge of living in dense urban centers like New York and San Francisco, as well as the growth of remote working arrangements and distributed workforces.

In an attempt to capture talent from the coasts, a growing array of state and city governments have focused on building their own innovation ecosystems. This includes everything from legislating angel tax credits to fund local startups, to developing onceforgotten — and often neglected — downtown areas into vibrant business and cultural districts. Now that these communities offer much of what makes the coastal tech hubs so attractive, without the cost of physical proximity, they should become even more attractive places to live and work. But they will only do so if federal and local policymakers view the startup ecosystem as a key part of any economic recovery plan.

Rebuilding can — and must — include a plan to help grow the jobs of tomorrow.

Rebuilding can — and must — include a plan to help grow the jobs of tomorrow.

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TECH

Harnessing Innovation Will Be More Important Than Ever BRIAN HUSEMAN Vice President, Amazon Public Policy @b_huseman IN THE WAKE OF the COVID-19

pandemic, we’ve watched the world adapt to a new way of life. We’ve figured out how to effectively work from home, continue our children’s educations online, and stay connected with friends and family from a distance. Put simply, this crisis has forced every person — and every industry — to become more creative in identifying solutions needed to improve our lives and keep our economy going. The tech sector is no exception.

Innovation has been key in helping companies face the new challenges this pandemic has presented. For example, as cities and states develop and implement reopening plans, Amazon is relying on innovative systems and tools to

determine how we can ensure employee safety through scalable testing. If every person, including those with no obvious symptoms, could be tested regularly, it would greatly impact how everyone returns to the office.

In addressing the challenges brought by COVID-19, it’s clear that innovation is not just a novel idea, but rather a necessary core principle that permeates the full scope of our operations. It has allowed Amazon to rethink our approach to how we effectively do business and solve problems that were once thought impossible. As we emerge from the pandemic, the tech industry will lead the way forward by harnessing the power of innovation.

As we emerge from the pandemic, the tech industry will lead the way forward by harnessing the power of innovation.

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TECH

The Pandemic Might Help Tech Spread Out MARK MURO Senior Fellow, Metropolitan Policy Program, The Brookings Institution @markmuro1 FACEBOOK’S ANNOUNCEMENT that it

will allow many employees to work from home permanently was a huge deal in the annals of office life.

And yet the announcement, following a similar one from Twitter, may be equally important for what it forecasts for the nation’s traumatized economic geography.

Suddenly it looks like the COVID-19 pandemic and its aftermath could bring a more fundamental dispersal of at least some of America’s high-tech employment into regular, lower-priced America.

Such dispersal would be a welcome change. Big Tech has been widening the nation’s regional divides thanks to its heavy concentration of its workers in a short list of coastal tech hubs.

Just five metropolitan areas — San Francisco, San Jose, New York, Seattle, and Boston — concentrated more than onethird of all of the nation’s digital services growth in the last decade, according to Brookings calculations. As a result, growth

CHANGE IN SHARE OF DIGITAL SERVICES JOBS Largest 100 metros, 2010-18

2.5%

2.0% 1.5% 1.0% 0.5%

San Francisco-Oakland-Hayward, Calif.

San Jose-Sunnyvale-Santa Clara, Calif.

Austin-Round Rock, Texas Seattle-Tacoma-Bellevue, Wash.

-0.5%

-1.0% -1.5%

-2.0% 30

-2.5%

Source: Brookings analysis of Emsi data

has been stymied elsewhere, to the point that just 16 metros in the largest 100 managed to increase their share of the nation’s digital services economy by more than a tenth of a percentage point.

This job concentration, prompted by self-reinforcing agglomeration economies and management group-think, has driven a truly ruinous degree of territorial polarization. In the superstar metros, spiraling home prices and gridlock were making life intolerable. Elsewhere, true tech gains were elusive.

Which is why the Facebook and Twitter announcements are such a big deal. The new announcements forecast a degree of tech decentralization.

To be sure, such decentralization has been predicted before and never happened.

Yet even if staffing adjustments like Facebook’s shifted just 10% of the tech sector’s employment over a decade into towns and cities all over America, the change would achieve a genuine benefit.

D ATA C E N T E R S

Data Centers Rise to Challenges of New Era JOSH LEVI President, National Data Center Coalition THE COVID-19 PANDEMIC has dramatically changed our daily work, school,

and home lives. It has accelerated the pace at which businesses, governments, and individuals are pursuing all-digital solutions, transitioning to online platforms, and migrating to secure cloud services. Data centers are powering this transition, and Virginia has a central role as the world’s largest data center market.

Data centers provide the underlying infrastructure and services that support distance learning, remote work and collaboration, telehealth, video conferencing, exchange of news and urgent information, social media, e-commerce, government agencies and programs, entertainment, and many other technologies central to our daily lives. They have met the challenge of absorbing and supporting exponential growth in the use of these technologies due to COVID-19. Additional capacity will be required to meet growing demand.

COVID-19 has heightened awareness of the essential role data centers play in powering our global economy. Prior to the pandemic, data centers were primarily known for their impact on local and state economies stemming from their capital investments and construction projects, substantial tax revenues, and the robust supply chains and ecosystems that develop around their facilities.

Data centers have also continued to innovate and adjust operations and procedures to mitigate the risk of viral transmission. For example, they employ stringent health and safety protocols for on-site staff, are adapting to a larger off-premises workforce for nonessential staff, and are expanding remote monitoring and management capabilities for their workers, partners, and clients. Some are even reevaluating security protocols that require multiple physical touch points such as biometric hand readers. Many of these changes will last beyond COVID-19.

Data centers operate in a 24/7 environment supporting mission-critical operations.

They anticipate, plan, and drill for natural disasters and other threats, including pandemics. COVID-19 has tested and validated their business continuity protocols and guidelines. These measures will be evaluated and adjusted in the wake of COVID-19 to incorporate lessons learned and further strengthen data center preparedness and resiliency as they support our global economy.

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CLOUD COMPUTING

Cloud Solutions More Important Than Ever for Schools, Businesses SHANNON KELLOGG Vice President, Public Policy — Americas, Amazon Web Services WHILE THE OVERALL trend among employers and education institutions has

been moving towards more flexible remote work and learning policies for years, the recent implementation of stay-at-home orders to address the COVID-19 pandemic have greatly increased the demand — and underscored the need — for technology and policies to enable remote work and learning. This was particularly noticeable in education.

As K-12 school systems and higher education institutions around the world transitioned from in-person classrooms to virtual environments, educators had to quickly ensure continuity of learning. Each school, university, or college had its own unique challenges and opportunities as lessons migrated online. Institutions that were less prepared were forced into a position of reactivity, while other schools that were operating in cloud environments were able to more quickly scale their learning management systems and other education technology tools.

When schools begin to open again, the cloud capabilities realized in the current landscape will create a new reality for education institutions. The widespread adoption of online learning has generated positive interest from educators to continue to integrate education technology into the classroom. Schools and school systems, like the Los Angeles Unified School District, and education technology companies are creating opportunities for educators to customize teaching experiences, monitor student engagement to improve academic outcomes, and take further training to develop advanced skills to use cloudpowered education tools. Modernizing education systems will not only position institutions for the future and enhance learning, but also serve as a safeguard against other unforeseen scenarios.

Modernizing education systems will not only position institutions for the future and enhance learning, but also serve as a safeguard against other unforeseen scenarios.

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R E A L E S TAT E

An Acceleration of Existing Trends MATT KELLY Chief Executive Officer, JBG SMITH Properties, Inc. HISTORY TELLS US that the long-term

effects of pandemics can be profound, often in ways unseen at the time. As one of the largest owners of commercial, residential, and retail properties in Virginia, it is in our interest to plan for that future and to think about how the COVID-19 pandemic may change real estate for decades to come. For starters, it seems like an easy conclusion to assume that office users will, over time, take advantage of more widespread adoption of telework to consume less office space and gain access to employees who live farther away.

While we continue to believe that consumers will demand well-amenitized, walkable urban places, these trends may make non-gateway cities with lower-cost housing more attractive. While we will seek lower density in buildings during periods of social distancing, cost and our social human nature will draw us back to high-density living when this crisis is behind us. Some forms of office space, such as coworking, will suffer a shakeout in the short term, but that will have more to do with the financial viability (or lack thereof) of certain providers

than any aversion to dense office occupancy over the long term.

Widespread adoption of remote working should lessen the pressure on access to labor, transportation, and housing costs in densely populated urban employment centers with insufficient (and therefore expensive) housing supply. With more people working from home, we may see demand for larger housing units take root.

While this downturn will likely accelerate the already-unfolding decline of many forms of brick-and-mortar retail, it will also reaffirm our human desire to connect and congregate (we will do this again!) in public spaces and eater-tainment retail. E-commerce will continue to gain share at the expense of existing retail, driving sustained demand for data centers and warehouses.

This is a terrible crisis by any measure, but one hopes that the collective action we are forced to take to solve it will better prepare us to face future crises requiring collective action, such as climate change and addressing growing inequality in the world.

While this downturn will likely accelerate the already unfolding decline of many forms of brick-and-mortar retail, it will also reaffirm our human desire to connect and congregate.

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PROFESSIONAL SERVICES

Helping Transform a Transformed World PAUL A. LAUDICINA Chairman Emeritus, Kearney Founder, Global Business Policy Council @PaulLaudicina THE OVERUSED EXPRESSION “new normal” began during the days of

the Great Recession, but few would doubt that COVID-19 will have a far more profound impact on business, society, and personal behavior. In this environment — the contours of which are still highly uncertain — firms will need to rethink and reboot to survive and thrive. The professional services industry is certainly no exception.

Even before the onset of the pandemic, the profession was undergoing fundamental changes in both the nature of the services it provided and the ways in which it interacted with clients. This transformation has been accelerated and amplified by the turbulent conditions created by COVID-19.

Three dimensions of our “new normal” have already surfaced. First, in an era marked by rapid growth in AI capabilities, the value proposition of professional services practitioners is shifting. Technological innovations will accelerate the move of professional services from the development, analysis, and application of data (which AI/ML will be able to deliver at a fraction of the time and cost of humans performing these tasks) to providing more seasoned judgment on leadership and decision-making questions critical to enhancing performance at every node of the value chain.

Second, remote work will become even more pervasive. The current pandemic-mandated modus operandi is a dress rehearsal for a climate change-induced need to curtail long-carbon-tail travel, while substantially reducing cost of delivery. This will bring with it not only prospects for improved environmental conditions, but also enhanced quality of life for traditionally peripatetic professional services practitioners.

Finally, in a rapidly changing global environment beset with a kaleidoscopic series of new existential risks and opportunities, professional services will need to be more creative and farsighted than ever. Those only able to meet the client’s expectations will be overtaken by those who can also help the client adapt to a transformed future.

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PROFESSIONAL SERVICES

What Will Change in High-End Professional Services?

PATRICK VIGUERIE Managing Partner, Innosight

of underlying assumptions — some explicit, some unstated. In many high-end professional services businesses, a critical assumption is that high-level advisory work is carried out by teams working physically together and traveling as needed to work with colleagues and clients.

◾ Enhanced collaboration: In our firm, we have had great success holding large Zoom meetings with multiple breakout groups, using digital collaboration tools to help groups of executives wrestle with and align around complex issues — meetings that previously could only be held in physical rooms with long lead times.

COVID-19 changed this overnight as offices closed, people stopped traveling, and physical meetings were suspended, replaced by Zoom calls, and assumptions built up over decades about the limits of digital collaboration were challenged.

◾ Less travel: A single business trip with a three-hour flight each way consumes 10 - 12 hours of total time traveling. The benefits of greater time at home, less wear and tear from travel, and increased productivity are significant.

Are digital collaboration and remote work here to stay? In thinking through why this shift might stick, it helps to understand whether the change provides real benefits or if it’s just a compensating mechanism to deal with the sudden change in circumstances. Surprisingly, digital collaboration has revealed interesting benefits:

There are also some big issues for firms to consider: How can they replicate the creativity that working side by side facilitates? How can they build teams that bond with each other on a personal level? How can they create community and build culture across a team of professionals? Which interactions absolutely need to be face-to-face and which can be virtual?

BUSINESSES OPERATE WITH a set

◾ Agility and responsiveness: Meetings that previously took weeks to schedule because of travel and calendars can now be scheduled and held more quickly, accelerating decision-making cycles. Resources in different locations can be seamlessly deployed against client needs anywhere, immediately.

The past few months have provided an object lesson in applying digital collaboration at scale. Collaboration tools will undoubtedly get better. More ways to work effectively together will only improve professionals’ ability to provide value for their clients.

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H O S P I TA L I T Y

Building Back Better: Restaurants Will Survive This Crisis and Learn to Thrive KATHERINE MILLER Vice President of Impact, The James Beard Foundation @table81 MARCH 2020 IS WHEN the American

restaurant industry changed forever.

Millions of restaurant workers were unemployed within days. Thousands of restaurants shut their doors never to reopen, and farmers, fishers, and small purveyors around the country were collateral damage as a trillion-dollar industry collapsed.

Driven to figure out how such a dynamic industry was so ill-prepared to withstand even a few weeks without customers, restaurateurs quickly set out to reimagine how they could build back better for the environment, their communities, their customers, and their employees.

More restaurants will turn to service charges. Before COVID-19, only seven states (and Guam) applied the same minimum wage to tipped and non-tipped employees. Fewer than 20% of restaurants have replaced tipping with service charges, and fewer than 20% provide health insurance or other benefits to their employees. Labor shortages will continue, and restaurants will need to increase financial incentives to attract new staff members and entice others back to work.

Relationships with local and regional producers and suppliers will expand.

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Contractions and disruptions in the global food supply chain will push restaurants to build more durable, long-lasting relationships with their local and regional suppliers. This will help send billions of dollars to farmers, fishers, and bakers around the country.

Convenience will rule the industry.

During this crisis, Michelin-starred restaurants shifted to meal kits and James Beard Award winners flipped kitchens to supply takeout and delivery orders for the first time. This level of convenience will continue, especially where takeout and delivery orders also include batch cocktails and dessert kits.

PPE is the new matchbox. Every restaurant will be required to take further precautions to help protect its staff and customers. Expect branded masks and hand sanitizers to supplant notepads, pens, and matchboxes as keepsakes from a favorite restaurant.

It’s hard to imagine sitting in a crowded restaurant or standing three-deep at a bar, but we will return to bars and restaurants.

While some of our favorites won’t make it, the restaurants that commit to a different way of operating will not only survive, but learn to thrive in a post-COVID world.

H O S P I TA L I T Y

How Hilton Is Preparing for the Future of Travel CHRIS NASSETTA President and CEO, Hilton AT HILTON, WE’RE PROUD of our 100-year legacy as a business of people

serving people. Throughout our history, our team members have created a home away from home for our guests, providing exceptional experiences and caring for them while they travel.

That said, the COVID-19 pandemic is unlike anything we’ve ever experienced. I’ve spoken with countless guests who can’t wait to safely travel again — a consistent theme across every conversation. Consumers are looking to us to provide reassurance and peace of mind that we’re doing everything we can to protect their health and that of our team members. As travel begins to pick back up, we’re expecting to see a major focus on cleaning practices and contactless delivery of hospitality. That’s why we’ve pioneered a new standard of hotel cleanliness: Hilton CleanStay™ with Lysol® protection. This initiative — created in collaboration with RB, maker of Lysol and Dettol, and in consultation with the Mayo Clinic — builds on our already rigorous on-property hygiene standards and cleaning protocols to ensure our guests and team members feel safe and protected at any of our 6,100 hotels worldwide. And we’re exploring new ways to leverage the digital offerings our guests love, such as Digital Key and Connected Room, for a seamless, technology-enabled experience that still feels welcoming.

While this is a tough time for our industry and for the world, I’m confident there are brighter days ahead. Though the world will be different as we recover from the impacts of this crisis, some things will never change. People will always crave connections with one another, and they’ll want to experience what lies beyond their front door. Eventually, people will travel again — and when they do, our team members will be ready to welcome them back with our signature Hilton hospitality.

We’re exploring new ways to leverage the digital offerings our guests love… for a seamless, technology-enabled experience that still feels welcoming.

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CONSTRUCTION

The Post-Pandemic Outlook for Construction KEN SIMONSON Chief Economist, Associated General Contractors of America ALTHOUGH CONSTRUCTION WAS

generally considered an “essential” activity during the shutdowns triggered by the COVID-19 pandemic, the industry sustained long-term damage.

Most types of construction clients — ranging from potential homebuyers to businesses, institutions, and government agencies — are likely to postpone construction they would otherwise have undertaken in 2020 and 2021.

semesters moved online. Meanwhile, their endowments have shrunk along with the stock market, and capital campaigns may have been put off. Some colleges may never have the need for additional classrooms and dormitories, and many hospitals are likely to go bankrupt. Cultural institutions such as theaters and museums will also have to forgo construction.

Commercial construction may suffer the most displacement. Retailers that were on the verge of expanding may never reopen. Office tenants will decide they can have more employees permanently working from home or remote locations.

Travel-oriented businesses such as hotels may find businesses and individuals more reluctant to spend money or venture far from home. In contrast, demand will be even higher than before for local distribution facilities and data centers.

The outlook for public construction varies with the funding source and the rate at which demand recovers. Public-school construction should fare better than most categories. Highway projects should get back on track once traffic and fuel tax revenues return, or sooner if Congress enacts an infrastructure bill. Transit systems, in contrast, may experience a long-term loss of riders that will doom construction funding. And airports, which rely on airline and passenger fees and concessionaire rents, may have to wait before resuming their ambitious expansion programs.

Hospitals and universities have experienced punishing declines in cash flow as elective surgeries were postponed and spring

On balance, the outlook for construction is for a delayed, and less vigorous, recovery than for many other sectors.

Transit systems…may experience a long-term loss of riders that will doom construction funding. And airports, which rely on airline and passenger fees and concessionaire rents, may have to wait before resuming their ambitious expansion programs.

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R E TA I L

Trust and Customer Comfort Will Shape Retail’s Recovery MATT POWERS Executive Vice President, JLL THERE ARE GOING TO BE dramatic changes to accommodate consumer

needs that will overhaul current shopping environments and experiences. Some changes will be temporary, but the need for catering to customers’ safety and comfort will likely remain. Trust between the retailer and consumer has now replaced convenience, value, and price. To ensure long-term success, retailers must share their sensitivity to this crisis and communicate the transparent initiatives that will be undertaken to redesign their stores to provide a cleaner and more welcoming environment for shoppers and employees.

Many companies that did not plan to have an online presence are now rethinking their brand strategy. Even when stores begin to reopen, many consumers will continue to feel more comfortable with shopping online in the short term.

Traditional retailers realize the need to realign supply chains and warehouses to accommodate the growth of direct-to-consumer e-commerce operations, creating new opportunities for industrial. Before the pandemic, grocery retailers were one of the final frontiers when it came to the evolution of supply chain networks. Now, as many consumers shelter in place, a demand for grocery delivery operations will cause the industry to quickly rethink expanding those operations.

This massive disruption in the grocery industry will result in increased demand for cold storage space, with developers more interested in spec development.

With the growth in online orders and the need for industrial space, many companies have refocused their efforts on improving last-mile services to ensure seamless delivery and build positive customer experiences.

Trust between the retailer and consumer has now replaced convenience, value, and price.

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A G R I C U LT U R E

The Dawn of the Digital Farmer JOSH KATZ Partner, McKinsey & Company MADISON PEARSALL Associate Partner, McKinsey & Company FIRST AND FOREMOST, COVID-19

is a global humanitarian challenge, with thousands of professionals across industries heroically battling the virus, putting their own lives at risk to protect and serve the public. The agriculture industry is no different as many fight food insecurity.

Traditionally, the agriculture industry has been somewhat safeguarded in times of crisis. To start, demand is durable and historically stable through economic cycles relative to other industries. When it comes to ensuring ongoing operations, food and agriculture is categorized as a critical infrastructure industry by the U.S. Department of Homeland Security, and the industry is relatively geared for uncertainty given its never-ending susceptibility to broad forces like weather and disease.

However, COVID-19 brings new uncertainties, notably the health risk to our workforce, along with global trade challenges and a strained supply chain.

Beyond our borders, the challenges are already more concerning and

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severe, given the economic impact on at-risk populations, existing ecological challenges such as locusts, and potentially greater risks in developing world supply chains.

We cannot claim to know what the “next normal� will bring for the industry.

China and others have taught us to not underestimate the magnitude of impact, but to respond with an abundance of caution, dedicated crisis response measures, and a broader demonstration of purpose.

One area where we could see a fundamental shift is in the acceleration of digital adoption across the agriculture value chain. Digital solutions can support productivity and strengthen supply chains in these times of uncertainty. New channels are proving critical to ensure vital delivery. Moreover, with profits strained, any on-farm solution that enhances productivity and savings for producers will be particularly attractive.

With farmers increasingly willing to engage with new tools and channels, this could mean the full awakening of the digital farmer.

A G R I C U LT U R E

COVID-19 and the Future of Agriculture DAVID ROSENBERG CEO and Co-Founder, AeroFarms AS WITH MUCH OF OUR LIVES, we are noticing that the future of AeroFarms and

the agriculture industry are changing in several ways, some with potentially lasting effects. Due to the COVID-19 pandemic, industries are reevaluating the risks inherent in their supply chains. I suspect some will question the model of large, centralized food processing and manufacturing. Large economies of scale drive down the costs of food; however, if or when these massive production facilities are challenged, the disruption is immense and can impact the whole country. Greater value may be placed on more distributed, democratized food and manufacturing systems. This will take the form of networks of local facilities that provide for their communities.

Centralized manufacturing carries other risks related to COVID-19. For example, many migrant workers in the industry live in high-density homes. Additionally, the work environment in large processing facilities does not easily enable social distancing. When COVID-19 hits this demographic, it may spread fast in a second wave of the virus.

On the topic of de-risking supply chains, customers will have a much greater awareness of the dangers and societal ramifications of pathogens. The industry will almost inevitably need to put into place many more processes to avoid contamination of our food sources. Blockchain will gain acceptance as greater priority is placed on knowing all inputs in manufacturing and being able to traverse the whole value chain.

AeroFarms is well positioned to add value in the vision of the future of manufacturing.

Our main value proposition is local manufacturing at scale. Our other main value proposition is full control of our inputs. We look forward to how we can continue to add societal value and de-risk our food value chain.

Customers will have a much greater awareness of the dangers and societal ramifications of pathogens. The industry will almost inevitably need to put into place many more processes to avoid contamination of our food sources.

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UTILITIES

Reliable Broadband, Clean Energy Highlight Future of Utilities TOM FARRELL Chairman, President, and CEO, Dominion Energy THE PRESENT EMERGENCY

around COVID-19 has reminded all of us at Dominion Energy Virginia of the importance of our longstanding commitment to around-the-clock reliable service. It also adds new urgency to the need to bridge the digital divide — those who do, and do not, have access to broadband service.

Our reliability is very strong. At a time when more and more of our community members are working and helping to educate their children from home, great reliability is not good enough anymore. We need to, and will, employ every technology and strategy needed to make our service and our reliability as strong as possible.

There is no “good enough” in our business when it comes to keeping the power on.

There is also no excuse anymore to delay in bridging the digital divide. In 2019, the General Assembly approved a pilot program for electric utilities to help solve the “middle mile” problem in broadband

deployment, partnering with internet service providers to address the last mile to homes and businesses. This work is underway, but needs to be accelerated.

Schooling in our state is being limited or shut down because the digital divide makes it both infeasible and inequitable to continue K-12 instruction online in the absence of universal access. We cannot let that happen again.

In the past, recovery from both natural and man-made crises has led to new opportunities, renewed growth, and a stronger society. This time will be no different. Legislation in 2018 and 2020 has positioned Virginia well to lead the clean energy revolution through offshore wind development, energy storage investments, wide-ranging solar energy deployment, transportation electrification, and transforming the electricity grid. Doing so will continue to create better service for our customers and much-needed new jobs and economic opportunity.

TRACTS WITH THE HIGHEST LEVELS OF POVERT Y H AV E T H E LO W E S T L E V E L S O F B R OA D B A N D A D O P T I O N 2018, 5- Y E A R E S T I M AT E S

Poverty Rate

<10%

10–15% 15–20% >20% 50%

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55%

60%

65%

70%

75%

Average Broadband Adoption Rate Source: Brookings Institution analysis of American Community Survey data

80%

85%

90%

GIG WORK

Gig Work Is Essential — Now Let’s Make it Sustainable MARY L. GRAY Senior Principal Researcher, Microsoft Research @maryLgray THE COVID-19 PANDEMIC BRINGS

with it a moment of reckoning. As we adjust to sheltering in place, we collectively jump in and out of work tasks around the edges of child-care schedules.

We scramble to find stable Wi-Fi and a cadence with remote work colleagues working all hours of the night.

Many of us must search for side jobs to fill the gaps in paychecks. And all of us must rely on public health departments to keep the virus from spreading. For those who were already earning a living in the gig economy — “alternative work arrangements” contractually organized around projects or tasks rather than a single employer — this feels familiar.

What we, collectively, do next with this newfound empathy could forever change the gig economy in two profound ways.

First, it could teach us that our economy can no longer afford employment-based healthcare. Climate change-induced shocks to public health, like COVID-19,

make this an inescapable fact. Everyone, regardless of employment classification, needs healthcare and a public health infrastructure in the name of public safety.

We are also learning that consumers and businesses depend on not just reliable internet, but a long supply chain of gig workers at the other end of it. The pandemic reveals how indispensable people delivering packages, food, telehealth, tutoring, therapy, and myriad other services via internet connectivity are to our economies and social lives.

Our social safety net — paid leave, employment insurance, job training, and retirement, designed for a pre-internet, 9-to-5 factory job — is outdated. It must be rebuilt to value and sustain digital economies and the gig workers that underwrite them. These changes are not foregone conclusions. Let the COVID-19 pandemic galvanize us, as citizens, consumers, and workers, to lobby for what our economy and the diverse workforce driving it need, moving forward.

LOSS OF WORK IN THE GIG ECONOMY 57% Have ceased their gig work since the pandemic hit 32% Are still working, but have much less gig work since the pandemic hit 4% Are working the same amount as they did before the pandemic Source: Emily Smith Cardineau, “Covid-19 and the Gig Economy: A Reckoning for the Insurance Industry,” April 2020

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H E A LT H C A R E

COVID-19 Accelerates Digital Health NANCY HOWELL AGEE President and CEO, Carilion Clinic WHILE THE EFFECTS of the coronavirus pandemic have been financially

devastating for hospitals and health systems nationwide — not to mention lifechanging for our employees and patients, and their families — it has catalyzed our transformation by accelerating progress in digital health.

Before COVID-19, health systems across the country were working to redesign care delivery to mirror the kind of convenience consumers have come to expect in other parts of their lives such as banking, air travel, and retail.

Strategic plans called for the widespread use of technology to support remote visits by telephone, video, and email, and utility of technology to provide patient and consumer information and convenience.

The pandemic gave a new sense of urgency to our plans, and with the unprecedented flexibility that came with hundreds of CMS emergency waivers, telemedicine rapidly advanced. At Carilion Clinic, for example, what we thought would take two years, we accomplished in a few days. Currently, 75% of our ambulatory visits are virtual, with patients and providers reporting high levels of satisfaction.

As we restore services, we’ll continue to see patients virtually and push for longterm policy change so patients in even remote areas have access to primary and specialty care from their homes. For those with complex conditions, such as COPD, heart failure, and diabetes, remote monitoring will become the norm, lessening the need for frequent in-person visits. And employers will have access to virtual clinics so their employees won’t lose productivity.

Face-to-face visits won’t go away, but patients will have greater choice in how they engage with health care providers and access health information. Space devoted to waiting rooms can be used instead for valuable clinical care. And with the aid of other technologies, patients will receive precisely the care they need, when and where they need it.

What we thought would take two years, we accomplished in a few days. Currently, 75% of our ambulatory visits are virtual, with patients and providers reporting high levels of satisfaction.

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H E A LT H C A R E

The Long-Term Impact of COVID-19 on Health Care VIVIAN RIEFBERG Professor, University of Virginia Darden School of Business (as of August) Director Emeritus and Senior Advisor, McKinsey & Company Board Member, Signify Health AS WE GRAPPLE with safeguarding

lives and livelihoods given COVID-19, myriad changes in healthcare are taking place. Those changes most likely to be permanent will address a combination of market imperatives, including: ◾ Addressing an unmet need in either supply or demand ◾ Satisfying consumers in better ways ◾ Increasing the alignment of economic incentives Considering these imperatives, here are seven possible permanent changes: Remote medicine: A convenient new method for care delivery wherever possible, complementing in-person visits whenever required. Payment is now in place, accelerating access. Many patients prefer this for ongoing service. Increased use of artificial intelligence will further enable this capability.

Avoidance of inpatient, skilled nursing facilities when possible, especially at the end of life: While truly necessary in-patient acute care should return, COVID-19 is likely to permanently reduce use of nursing homes, including for end-of-life care.

Significant modifications to the nonclinical experience: Goodbye waiting

rooms, hello phone notification to “come in,” with shorter office visits and welcome masks for all.

Addressing disparities: COVID-19 has laid bare something known but unaddressed: large disparities with a range of social elements that impact health outcomes. Expect this to get much greater attention and action regionally, and possibly nationally.

U.S.-based production: The pandemic has also made the global supply chain more transparent. U.S. production is possible, but beware. It went offshore for economic reasons, so dealing with the economics is necessary for a permanent return.

Changing physician structure and enhanced well-being: Accelerated market consolidation among physicians, particularly in smaller practices as many cannot handle the downturn and new operating approaches. Hopefully, the larger organizations will recognize the need to address provider well-being as part of a permanent change.

Addressing affordability through new incentive models: The U.S. healthcare system is expensive, with great quality variability and uneven coverage.

Action on value-based payment is here to stay to address the affordability, variability, and coverage challenges irrespective of the health challenge.

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SMALL BUSINESS

The Future of Small Business Depends on Adaptivity JOHN LETTIERI President and CEO, Economic Innovation Group AMERICAN SMALL BUSINESSES have suffered a staggering blow from the COVID-19 pandemic. Tens of thousands of businesses and millions of jobs have already been lost, and many more will inevitably follow. Meanwhile, major changes in consumer behavior, as well as the likelihood of similar threats in the future, have created new market opportunities for entrepreneurs to capture.

While much about the road ahead remains unclear, one of the lasting legacies of this crisis is likely to be a much greater imperative for adaptivity in all aspects of the economy, including the small-business sector. Policymakers must use every tool available to empower businesses to adapt to a transforming environment.

A multitude of existing policies dampen the adaptive potential of the American economy and constrain how small businesses are able to respond to changes in public health, consumer behavior, and access to workers. For example, policymakers should ease antiquated zoning, permitting, and licensing rules that prevent entrepreneurs from operating a business in their own home. They should abolish overly restrictive occupational licensing rules that create arbitrary and harmful barriers for workers and would-be entrepreneurs. And they should broadly limit the use of â&#x20AC;&#x153;non-competeâ&#x20AC;? agreements that stifle innovation and disproportionately harm minority and female entrepreneurs. Policymakers should also ensure small businesses have access to cheap and flexible sources of capital, such as grants and long-term loans, to help them weather periods of crisis and invest in technology that makes them nimble and competitive.

Taken together, policies like these will boost the dynamism and resiliency of the small business community, enabling it to adapt in the face of longer-term shifts that will reshape markets for years to come.

Policymakers must use every tool available to empower businesses to adapt to a transforming environment.

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SMALL BUSINESS

A Data-Rich Future for America’s Small Businesses KAREN G. MILLS Senior Fellow, Harvard Business School 23rd Administrator of the U.S. Small Business Administration @KarenGMills THE GREAT RECESSION and financial

crisis taught us a painful, but valuable lesson: Small businesses, particularly those dependent on credit, are especially vulnerable to economic downturns. This current public health crisis underscores those same pain points observed a decade ago. Closure orders for nonessential services have slashed small-business revenues, threatening already tenuous cash flows. Even as plans for reopening move forward, the uncertainty of this crisis is forcing owners to reevaluate their businesses. Yet there is still room for optimism, centered on three main lessons.

The small business lending landscape will change dramatically.

The implementation of the Paycheck Protection Program demonstrated the importance of having a banking relationship. While big banks struggled to quickly set up their lending portals, community banks and fintech lenders rose to the challenge, rapidly deploying technology solutions and doling out small-dollar loans. In the recovery, small businesses will require access to capital more than ever, but the ways in which banks and other lenders provide it will change. More small businesses will trust the digital lender that got them the loan and the community bank that was there for them when it mattered.

Small businesses and lenders alike will think differently about cash flow. COVID-19 will make small businesses more mindful of their cash

flows, leading to more efficient operations in the future. Banks and fintech lenders will use new technologies — artificial intelligence, machine learning, and Big Data — and create cash flow forecasting tools that help entrepreneurs predict when they need a capital injection to ride out cash crunches. Existing cash flow management products like Bank of America Business Advantage 360 and QuickBooks Cash Flow Planner will witness increased take-up, but also face competitors who sense the opportunity and build their own cash-flow tools.

Small businesses will innovate.

Even in this crisis, there is opportunity for innovation and reinvention. Small business owners can take advantage of the disruption to reevaluate their businesses with a fresh eye and better plan for the future. They should ask themselves: Am I efficiently utilizing the resources at my disposal and optimizing my operations? They will look to eliminate unnecessary expenses or redefine the customers they want to serve while narrowing the products and services that truly delight those customers and promise revenue growth. This crisis has demonstrated the importance of new selling channels such as online and delivery, and the utility of technologies like contactless payments and mobile apps.

Whatever the future holds, small businesses are the key to our nation’s economic dynamism. We must continue to support them and ensure that they make it through to the other side of this crisis.

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I N T E R N AT I O N A L T R A D E

U.S.-China Decoupling Meets Supply Chain Diversification DAVID DOLLAR Senior Fellow, China Center, The Brookings Institution @davidrdollar “UNCERTAINTY” IS THE watchword

of the day — uncertainty about when the world will firmly have the coronavirus under control, when economies can start rebounding toward normalcy, and what permanent changes in global trade will emerge as a result of the pandemic. Stressing uncertainty, there are nevertheless trends that can be discerned which are worth worrying about.

U.S.-China economic relations were in poor shape before the pandemic, and now they are deteriorating sharply amidst mutual accusations and acrimony.

Independent of that, multinational enterprises are taking a hard look at whether having such complex global value chains makes sense when a disruption in one location can bring global production to a halt. This is particularly relevant for autos and electronics, where a product typically involves a large number of firms spread around the world.

In the U.S., the assumption is that these two trends will result in reshoring of manufacturing. But that is unlikely. It is based on an old image of multinational entities carrying out labor-intensive assembly in China for export, which would be relatively easy to move.

However, most production in China now is for the domestic market, and foreign firms invest there to service that market, not as an export platform. So decoupling is likely to cut U.S. firms off from the largest, fastest-growing market.

Furthermore, Europe is not talking about large-scale decoupling from China. So, the result is likely to be an increasingly integrated Eurasian market that is several times larger than the U.S. market. Firms may adjust their value chains to build in diversity and redundancy, but that will be a modest adjustment. The big change in the world is that the U.S. is increasingly at risk of isolating itself through trade and investment restrictions.

C H I N A A N D T H E U N I T E D S TAT E S , 1970–2018 Exports as percent of gross domestic product (%)

United States

China

40 30 20 10 0 1970

1975

1980

1985

1990

Source: World Bank, World Development Indicators

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1995

2000

2005

2010

2015

I N T E R N AT I O N A L T R A D E

COVID-19: What’s Trade Got to Do With it?

JENNIFER HILLMAN Senior Fellow for Trade and International Political Economy, Council on Foreign Relations @J_A_Hillman BECAUSE COVID-19 IS A CRISIS on

a global scale, its spread has strained the worldwide system of trading for everything from medicines, medical devices, disinfectants, and soap to food, causing many in the United States to call for production of critical medical and technological supplies to be brought back home. Meanwhile, countries across Eurasia are battening down the hatches by forbidding the export of rice, grains, and more. The rise of global supply chains over the past 40 years has meant that production of almost everything is spread across factories and countries around the world, with medicines and medical products among the leaders of the parade.

Trade in medical products was more than $2 trillion last year, and the United States was more reliant on imports to meet its needs than any other country. This is why

the calls are the loudest in the U.S. to “reshore” production of critical medical and technological supplies. Whether and to what degree those calls are heeded will determine how substantially the international trade regime is altered by the COVID-19 pandemic.

If there is a large-scale move to have all critical products “Made in America,” then the longstanding global order, in which countries kept their ports open and counted on their trading partners to sell them critical goods when they need them, will come crashing down. Because now is not the time to cut ourselves off from our overseas supplies of medical goods, a far better approach would be to build some redundancy and resilience into our global supply chains — to keep trading and to work to shore up the rules-based trading system.

If there is a large-scale move to have all critical products “Made in America,” then the longstanding global order, in which countries kept their ports open and counted on their trading partners to sell them critical goods when they need them, will come crashing down.

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I N T E R N AT I O N A L T R A D E

Strengthening International Ties Is Crucial to Recovery RUFUS YERXA President, National Foreign Trade Council WE LIVE IN AN INTEGRATED WORLD, and maintaining global trade will be vital to our

post-pandemic recovery. Although global integration is challenging, we can only secure our future health and economic well-being by bolstering an orderly, rules-based global system that prioritizes public health. This will require American leadership that values cooperation over nationalism and supports global institutions. Absent a clear-headed global agenda driven by American ideals, the U.S. and the world will continue to struggle.

To succeed, it is important to differentiate short-term and long-term imperatives. There is a major distinction between the demands for fighting the pandemic and the need to restore our economy and prepare for the next emergency.

In the short term, our overriding goal is to make certain that global supply chains continue to operate effectively. These supply chains are critical, and disrupting them will ultimately end up hurting us all. During this pandemic, we have seen worrying signs of increasing protectionism as a growing number of countries implement export restrictions on essential medical supplies and food. In order to stem this wave, our government must show active leadership to discourage these trends and enhance cooperative outcomes.

The long-term goal is different, but the means are the same. The biggest threat to our recovery is that governments around the world will see tariffs, buy-national policies, and other forms of protectionism as panaceas for economic stagnation and a means to prevent future pandemics. Yet we know from history that this will backfire and only make us weaker. Instead, we must establish new global agreements and strengthen existing multilateral institutions (World Health Organization, World Trade Organization) in order to tackle new undertakings relating to global stockpiling of medical supplies, providing vaccinations, and other issues. The tasks are enormous, but trade and American leadership will be essential.

The biggest threat to our recovery is that governments around the world will see tariffs, buy-national policies, and other forms of protectionism as panaceas for economic stagnation and a means to prevent future pandemics.

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SITE SELECTION

Virtual Familiarization, Business Continuity Become More Important ROB BOEHRINGER Managing Director, KPMG SITE SELECTION IS A PEOPLE-ORIENTED BUSINESS. Regardless of the approach

taken to identify a qualified location, a final decision (once the economics are satisfied) is generally made based on “corporate fit and feel.” It is difficult to imagine any of my clients selecting a site without ever setting foot on the property or getting to know the community and its key stakeholders.

Measuring corporate fit is challenging to do virtually, but the COVID-19 pandemic may have permanently changed our approach and the data we evaluate before ever entering a market again in a socially connected way. I see the site selection process continuing to limit the number of tours. With the amount of technology and data at our disposal, I see more location and site qualification being done at a desktop level.

Where virtual tours and familiarization videos were once “nice to have” items, these may soon become a necessity during the request for information process. The challenge this creates for states and communities is how to execute on these initiatives in a meaningful way without being able to fully measure the return on investment, as there may be less direct feedback throughout the process.

The second change I see is more clients evaluating business continuity to determine who does what, where, and why. This evaluation could range from looking at data to understand how a state or community was impacted by the pandemic and how it responded. This change could potentially support rural or depopulated areas for manufacturing operations or influence the use of automation or dark factories to strengthen supply chains. Ultimately, these changes may permanently influence site selection and how investors evaluate locations and sites.

The information contained in this article is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. This article represents the views of the author or authors only and does not necessarily represent the views or professional advice of KPMG LLP.

Where virtual tours and familiarization videos were once “nice to have” items, these may soon become a necessity during the request for information process.

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SITE SELECTION

Location Selection in a Viral World MATT JACKSON Senior Managing Director, Business Consulting, JLL AS WE NAVIGATE the disruption of the

COVID-19 pandemic, companies must rethink the configuration of the operating footprint in terms of supporting the needs of the organization, ensuring appropriate flexibility, and how the footprint can evolve to mitigate risk (operational and employee). We suspect companies will rethink the level of importance placed on many of the typical site selection criteria, with more attention paid to: ◾ Supply Base: Evolution of the supply base to ensure seamless supply, focused on diversity, redundancy, and opportunity to achieve more localization. More emphasis will likely be placed on the evaluation of local suppliers. ◾ Supply Chain: Additional time expended evaluating the entire supply chain supporting production and the extent to which risk can be mitigated or eliminated. ◾ Production Platform: More emphasis placed on how a single facility is viewed from an entire platform perspective and a more optimal balance of in-country and in-region manufacturing, as well as the platform’s ability to respond to domestic surge capacity in larger consumer markets.

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◾ Occupancy Envelope: Acceleration of the adoption of alternative workplace strategies, to specifically include the percentage of employees working from home for business continuity (and cost) purposes. ◾ Landlord Selection: A greater focus on landlord responsiveness to tenant needs in times of crisis, particularly for critical leased space.

Companies may rethink how much production will be located within countries that represent the largest consumer markets. For high-cost countries, this will also likely accelerate the adoption of more automated manufacturing technologies in efforts to reduce the overall contribution of labor to the total cost of production.

The domestic market will be included as a candidate for projects that previously would have gone elsewhere.

How companies make decisions and the level of importance attached to different criteria will likely change, as well as the importance attached to financial, non-financial, and risk considerations. A reduction in the amount of company representatives deployed for field work activities is also possible, with more emphasis placed on online information gathering.

1. FRAME

2. ASSESS

3. VALIDATE

4. NEGOTIATE

Work with key stakeholders to develop the framework to guide the assessment

Conduct the assessment and develop analytical output that enables senior leadership to make informed decisions

Conduct field investigations to obtain insights that cannot be achieved with published data

Utilize all previous insights and findings to inform the negotiation strategy

SITE SELECTION

Black Swans: The Evolution of Site Selection DENNIS MESEROLL Co-Founder and Executive Director, Tractus Asia Limited @dmeseroll THE COVID-19 PANDEMIC is a black

swan event whose magnitude and consequences will be felt for generations.

It is already having repercussions in how corporations evaluate their supply chains, accelerating a trend toward more diverse regionalized manufacturing. This trend has evolved from a series of black swan events, many in Asia.

In 2011, the Tohoku tsunami closed manufacturers of strategic electronics materials, creating a ripple effect in electronics supply chains. Later that year, floods in Thailand shut 50% of the worldâ&#x20AC;&#x2122;s hard disk drive capacity, impacting the global computer sector. The COVID-19 pandemic, combined with the U.S.-China trade war, is the latest and most far-reaching. Each of these events, unexpected and consequential, has caused risk mitigation to rise to the surface as a driver of manufacturing site location.

Gone are the days when unique world-scale plants would be considered sufficient to supply global demand.

While there are scale effects to putting all manufacturing eggs in one basket

(plant or country), these benefits will be discounted more heavily against the risks of manufacturing concentration. Risk and scenario analysis will take a much more prominent role in site selection. In addition to political and natural disaster risk, companies will more heavily weigh regulatory, trade, supply chain disruption, pandemics, and other risks.

The pandemic has also accelerated companiesâ&#x20AC;&#x2122; adoption of virtual workforces.

Shared services, call centers, and other service companies are finding they can operate effectively with a larger contingent of virtual workers than they once thought.

When the world is your virtual labor pool, the decisions on where to locate take on an entirely new dimension.

COVID-19 is fundamentally changing the way companies and individuals consider risk in their decision-making, but some things wonâ&#x20AC;&#x2122;t change. The value in using a data-driven, objective, and disciplined process and utilizing independent experienced location advisers will become even more important to evaluate location strategies and site locations.

When the world is your virtual labor pool, the decisions on where to locate take on an entirely new dimension.

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ECONOMIC DEVELOPMENT

Investments Needed to Help Localities Recover From Pandemic TIMOTHY J. BARTIK Senior Economist, W.E. Upjohn Institute for Employment Research @TimBartik AFTER THE “PANDEMIC RECESSION,” needed economic development investments

will include recovery for the hardest-hit regions, added health systems capacity, and better remote access to work. The recession will be more severe in some local economies — areas with more virus cases, areas specializing in travel and tourism, or in the recession-prone manufacturing sector.

If a local economy loses more jobs during a recession, it may resume its prior growth, but the default is to never make up for the lost jobs. Federal, state, and local governments should be developing plans on how to help hard-hit regions offset these job losses.

Because future pandemics are inevitable, we will want to invest more in better health systems capacity: more hospital capacity, more and better medical equipment, improved testing capacity, and more biotech research on how to combat new viruses. State and local governments will do better in economic development if they invest more in healthcare capacity and biotech and help their small and medium-sized manufacturers pivot into expanded health-related markets.

The pandemic will accelerate trends toward more remote work. Taking advantage of these trends requires investments in better broadband infrastructure and remote work software.

State and local governments need to make needed public investments in this infrastructure and help their small and medium-sized businesses address these remote work needs.

State and local economic development policy will be more productive if it looks around the corner. This pandemic has caused regional problems and revealed problems in our health systems and remote work systems. Wise policy will invest in addressing these problems.

The pandemic will accelerate trends toward more remote work. Taking advantage of these trends requires investments in better broadband infrastructure.

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ECONOMIC DEVELOPMENT

Manufacturing Presents a Return to Stability JEFF FINKLE President and CEO, International Economic Development Council THE COVID-19 PANDEMIC has revealed

that unstable global supply chains for medical equipment and pharmaceuticals pose a serious threat to our national security and health. While pleas from our nationâ&#x20AC;&#x2122;s hospitals make the lack of medical supplies and personal protective equipment a top-of-mind concern, the threat of instability of global networks will continue, especially as our economy faces oncoming crises due to political instability and global climate change.

This will be a wake-up call for economic developers, provoking an examination of supply chains â&#x20AC;&#x201D; not just in healthcare supplies but in industries such as technology, defense, and agriculture. In the coming months and years, economic developers at the local level and policymakers at the federal level will necessarily turn toward rebuilding a generation of manufacturers, both by supporting homegrown companies and welcoming new or returning firms from abroad.

Arguments for reviving manufacturing are myriad. Companies with dispersed

production face increased costs of monitoring and quality control, uncertain protection of intellectual property, and exposure to natural and man-made threats. Consolidating production locally leads to stronger economies, as trade is focused internally, and well-paying jobs, especially for those without higher education. While this will be a national effort, regions will need to build on the strength of their human and intellectual capital.

A comprehensive agenda must be undertaken that is inclusive of trade, tax, innovation, entrepreneurship, and workforce policies. The economic development community has extensive experience in all of these matters, but would do well to renew their efforts to connect with workforce organizations, private and public institutions, and elected officials in the spirit of collaboration.

The role of economic developers in the manufacturing resurgence will be similar to their traditional role, that of a convener of stakeholders and resources working toward a common strategic objective: a robust, resilient, and inclusive economy.

In the coming months and years, economic developers at the local level and policymakers at the federal level will necessarily turn toward rebuilding a generation of manufacturers, both by supporting homegrown companies and welcoming new or returning firms from abroad.

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ECONOMIC DEVELOPMENT

An Opportunity for Structural Change AMY LIU Vice President and Director, Metropolitan Policy Program, The Brookings Institution @amy_liuw THE COVID-19 PANDEMIC will accelerate the evolution of economic development away

from transactions and toward helping industries adapt and workers become a force for growth.

In this unprecedented crisis, business and economic development leaders are being tapped to staff, chair, or participate in state and local COVID-19 economic recovery efforts. These leaders are well-positioned to shape a new generation of policies that matches the scale and nature of the moment: an economic crisis already worse than the Great Recession and the systemic inequalities the virus has exposed.

Rather than be distracted by the occasional firm that will threaten to relocate to more friendly states — triggering a counterproductive incentives game — leaders must contend with the bigger, structural challenges in their own backyard. These include thousands of businesses struggling to survive as well as graduates and dislocated workers eager to secure meaningful careers.

What new types of economic development initiatives will emerge in the post-pandemic era? ◾ Even more sophisticated, industry-specific services. Local intermediaries will be helping firms across sectors rethink every aspect of their operations — from product offerings to staffing strategies — so existing businesses can adapt and thrive in the new normal. As a start, the Central Indiana Corporate Partnership produced workplacereopening playbooks for three industries in its state — logistics, manufacturing, and warehousing — on reopening safely while restoring productivity. Playbooks for offices and service-related industries are next. ◾ Talent-centered economic development. Economic development officials will support the rapid reskilling of existing workers for in-demand opportunities and ensure firms have access to them. Birmingham, Ala., recently approved the reallocation of $1 million in economic development incentives to train and place unemployed workers for new jobs created by the pandemic. The Indy Chamber in Indianapolis created a Rapid Response Hub to help small businesses find talent and capital, including making resources available in Spanish.

This is essential economic development in the post-pandemic era — delivering valuable business intelligence, prioritizing workers, and embracing diversity and inclusion.

Rather than be distracted by the occasional firm that will threaten to relocate to more friendly states ... leaders must contend with the bigger, structural challenges in their own backyard.

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Thank you to our contributors DEREK THOMPSON THE ATLANTIC • ANITA BROWN-GRAHAM UNIVERSITY OF NORTH CAROLINA • RICHARD FLORIDA UNIVERSITY OF TORONTO • JOEL KOTKIN CHAPMAN UNIVERSITY • KARL STAUBER DANVILLE REGIONAL FOUNDATION • BYRON AUGUSTE OPPORTUNITY@WORK • PETER CAPPELLI UNIVERSITY OF PENNSYLVANIA WHARTON SCHOOL OF BUSINESS • RYAN CRAIG UNIVERSITY VENTURES • JOE FULLER HARVARD BUSINESS SCHOOL • REBECCA TABER STAEHELIN MERIT AMERICA • MICHELLE WEISE IMAGINABLE FUTURES • BOB ZEMSKY THE LEARNING ALLIANCE FOR HIGHER EDUCATION MANISH BHATIA MICRON TECHNOLOGY • ELISABETH REYNOLDS MIT • MICHELLE COMERFORD BIGGINS LACY SHAPIRO & CO. • PETER DEBAERE UNIVERSITY OF VIRGINIA DARDEN SCHOOL OF BUSINESS • STEVE CASE REVOLUTION • BRIAN HUSEMAN AMAZON MARK MURO BROOKINGS • JOSH LEVI NATIONAL DATA CENTER COALITION • SHANNON KELLOGG AMAZON WEB SERVICES • MATT KELLY JBG SMITH • PAUL LAUDICINA KEARNEY PATRICK VIGUERIE INNOSIGHT • KATHERINE MILLER THE JAMES BEARD FOUNDATION CHRIS NASSETTA HILTON • KEN SIMONSON ASSOCIATED GENERAL CONTRACTORS OF AMERICA • MATT POWERS JLL • JOSH KATZ MCKINSEY & CO. • MADISON PEARSALL MCKINSEY & CO. • DAVID ROSENBERG AEROFARMS • TOM FARRELL DOMINION ENERGY MARY GRAY MICROSOFT RESEARCH • NANCY HOWELL AGEE CARILION CLINIC • VIVIAN RIEFBERG UNIVERSITY OF VIRGINIA DARDEN SCHOOL OF BUSINESS • JOHN LETTIERI ECONOMIC INNOVATION GROUP • KAREN MILLS HARVARD BUSINESS SCHOOL • DAVID DOLLAR BROOKINGS • JENNIFER HILLMAN COUNCIL ON FOREIGN RELATIONS • RUFUS YERXA NATIONAL FOREIGN TRADE COUNCIL • ROB BOEHRINGER KPMG • MATT JACKSON JLL • DENNIS MESEROLL TRACTUS ASIA LTD. • TIMOTHY BARTIK UPJOHN INSTITUTE JEFF FINKLE INTERNATIONAL ECONOMIC DEVELOPMENT COUNCIL • AMY LIU BROOKINGS

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Just miles from the Virginia Beach oceanfront, Sandbridge offers a sedate, small-town experience and serves as the point of access to 58 State Park.

False Cape

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Range: The Case for the Liberal Arts A Conversation with Katherine Rowe Dr. Katherine A. Rowe is the 28th president of William & Mary, a position she’s held since 2018 after serving as provost and dean of faculty at Smith College in Massachusetts. She’s also co-founder and CEO of Luminary Digital Media, a developer of apps enhancing engagement and learning of classic Shakespearean texts. She has published three books: “New Wave Shakespeare on Screen” with Thomas Cartelli, “Reading the Early Modern Passions: Essays in the Cultural History of Emotion” as co-editor, and “Dead Hands: Fictions of Agency, Renaissance to Modern.” VEDP President and CEO Stephen Moret spoke with her about integrating digital literacy with a classic liberal arts education, running a university during the COVID-19 pandemic, and more.

Stephen Moret: I hope you don’t mind if we start off with a question that’s at the heart of something you’re quite passionate about. Why is a liberal arts education important for college students in the 21st century? And on that note, what skills do the liberal arts instill that are relevant to today’s businesses?

Katherine Rowe: The first big-picture answer is that a liberal arts and sciences degree is the best preparation for the 21st century for professional life, for citizenship in a world that’s changing as rapidly as ours is. The distinguishing qualities of talent are going to be adaptability and

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range, and that’s what a liberal arts and sciences education produces.

One of the premises of a liberal arts and sciences degree is that you are going to think about big problems that we’re grappling with now — new problems, one that haven’t been addressed before. And, you’re going to do that from multiple angles with multiple kinds of expertise and methodologies to bear.

David Epstein, in this wonderful book, “Range: Why Generalists Triumph in a Specialized World,” makes the point that the world we’re in, modern work, modern

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A C O N V E R S AT I O N W I T H K AT H E R I N E R O W E

citizenship, demands knowledge transfer, “the ability to apply knowledge to new situations and different domains.”

He says, “Our most fundamental thought processes have changed to accommodate increasing complexities and the need to derive new patterns rather than rely on only familiar ones. And it’s the conceptual classification schema across different ways of thinking, different modes of work. If you can move between those different schema, that’s the scaffolding for connecting domains of knowledge, making the accessible and flexible.”

So think about the challenges we’re facing right now with COVID of scaling up testing, which is one of the critical first steps in combating the pandemic and returning to work and returning to life as we want to live together. We need the specialists very much to develop the science that’s going to get us a robust array of tests, but we need the generalists.

Moret: One of the things you’ve talked about that has really inspired me has to do with this notion of integrating digital literacy into liberal arts education. It would be great if you could talk a little bit about how a university can best prepare students for the professional world through the combination of digital literacy in a classical liberal arts education.

Rowe: I started my life as a Shakespeare scholar. I went back to graduate school as an adult, as a full professor, and retrained in media studies. That accelerated my interest in how new tools, digital tools included, can help us answer longstanding questions, can help us teach better, pursue new knowledge more effectively, and communicate what we’re learning to each other more effectively. That kicked off my life as an entrepreneur, developing, with a partner and in partnership with the Folger Shakespeare Library, an app for learning complex knowledge like a Shakespeare play.

It became really clear to me that hallmarks of professional life and citizenship now and for the century

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to come are going to be our ability to embrace change in technologies, understand what we gain and what we lose when we move across platforms, keep an eye on mission and core values of an organization, a business, a university, and express those as fully as possible in the new technology.

communicate with each other, and they socialize with each other on an array of digital platforms. But to me the question is sophistication. As those platforms change, are there questions about business mission that are raised? Are there questions about ethics that are raised? Are there questions about community values that are raised?

One of the real strengths of a liberal arts and sciences degree that’s infused with new technologies is that graduates are both tech-savvy and they have the classic liberal arts skills: exceptional communication, the ability to think outside of the box and look around the corner, to bring in ethical questions, and anticipate ethical challenges to new kinds of work, and to be innovative.

That’s what the breadth of preparation in a liberal arts and sciences degree gives you. The ability to see change, to think through what could be the rebound effects. Will there be backlash? Where are the unexpected opportunities? How about we solve a problem we’ve not been able to solve before? So I think the pace of technology change is not going to slow. If anything, it will accelerate.

Another example is when thinking new ways about the structure of the curriculum. We are implementing this summer a standalone minor in data sciences so that in a single summer you can go from zero to 60 in data sciences from never having taken a class in Python, never having really thought through data visualization, not having had a stats class, and to be able at the end of the summer to have a complete minor.

The consequences for democracy in the ways we communicate with each other, in the ways we share knowledge, the ways we present evidence or make arguments, those are only going to become more important. And as technology becomes more complex, it will be harder to understand how it works.

The goal of this standalone minor is to take a student who might be an art history major or a math or sociology major, and to add to that sophistication in statistical analysis and in data analytics, data modeling, computational modeling, so that they can use the human questions coming from the other major and have the skillset of a data scientist to bring to bear on those questions.

Moret: What do you see as really driving the increased importance of digital literacy? We could argue it was important maybe 10 or 20 years ago, but it seems to be even more important now.

Rowe: Let’s talk a little bit about what digital literacy means for me, because many of our students are relatively fluent in new tools, social tools. They write, they think, they make videos, they

Moret: Thinking back to your inaugural address as William & Mary’s president, you referenced the tension between sustain and advance, tradition and innovation. What are the challenges in keeping one of the country’s oldest universities moving forward?

Rowe: This is the best platform ever for moving forward because we have 327 years of innovation under our belts.

For two-thirds of our history, we were a private institution, and we pivoted to become public, something I embraced with real delight, but people forget that. We changed in a moment of crisis fundamentally, and we’ve done that over and over again. During COVID, it’s been instructive to think about how this institution has persevered under extraordinary challenge, wars and prior epidemics, depression, and so many shocks. What we’ve got is a long history of innovation and resourceful and creative pivoting to new approaches. And

that buoys us all. I think we claim it with a lot of pride.

Moret: What do you see as William & Mary’s role in economic development in Virginia?

Rowe: We are an essential part of the region’s prosperity as I view that.

I see us as having a really important responsibility to collaborate with the business community and with the state government to think about how we can create competitive advantage for Virginia and for our citizens here.

I’m thrilled that we are part of the tech talent push. As I said earlier, I see our distinctive space in the world of STEM education as STEM-plus. With a William & Mary graduate, you’re

going to get somebody who may be a data scientist, but they’ll also be thinking about design aesthetics, human experience, history. We’ve got real breadth and range in that human being as a colleague, as an employee, as a member of your community.

As we think about the challenges of COVID, the commitment to returning our economy to prosperity is one that I know all of Virginia higher ed is deeply, deeply, compellingly drawn to. And as we’ve worked with the governor and his team, we’ve been thinking really hard about how we can adapt so that we are helping to speed our recovery economically.

Moret: We’ve talked a little bit around the pandemic. What’s the role of the university president in getting

an institution through this kind of unprecedented situation, and what guiding principles have you drawn from in terms of leading William & Mary through the pandemic era?

Rowe: Well, the great leader of American Express during 9/11, Ken Chenault, says, “It’s the role of leadership in crisis to convey reality and instill hope.”

The first principle is that you have to say what’s true. You have to be truthful about the challenges we face, how profound they are, or people won’t trust you. We are facing existential challenges for higher ed around the country right now, and certainly in Virginia this coming year.

You can talk about that in a way that’s grounded and real and also chart a path to respond to those challenges. There’s

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so much that we are doing and can do to respond to those challenges.

making where we can so we have the best information possible.

I think a couple of other principles that we’ve used create the space to respond to the human experience, so much feeling of loss and grief. So many of us know people who have passed or have friends that do. We know, we have family who are on the front lines in healthcare who have been incredibly brave and courageous this spring in protecting our communities, and we’ve been all-in to support that in a way that’s incredibly important. But taking the time to acknowledge what we’ve lost, how hard it’s been, and who’s really leaned into that has been incredibly important.

Moret: Two other really unique things from my perspective have really stuck with me. One is that very few presidents have been entrepreneurs in their career, and you have been. Likewise, in a different sort of unique feature, you’ve actually spent more than a decade coaching ultimate Frisbee and have actually led multiple teams to state championships in Pennsylvania.

One of the principles for navigating the pandemic that we’ve used has been to make decisions in a phased way. To think in a disciplined way for the short and medium term and defer decision-

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I’d love to hear you talk a little bit about how you think those experiences, being an entrepreneur, being involved in ultimate Frisbee, how they influence your leadership style and your approach to William & Mary.

Rowe: I am classically trained as a scholar and teacher, and I’m a classroom

teacher. Loved teaching with a passion my whole career, but I come from a family of entrepreneurs. So in some ways, the movement into entrepreneurship was sort of an arrival back to roots.

I think, above all, the importance of working in an iterative way, a phased way, testing an idea, piloting, getting feedback, refining and rolling those refinements into the next phase. When I talk about decision-making under COVID as phased decision-making, that’s exactly what I’m thinking about.

We have found that many of the resourceful strategies we have used under COVID are ones that we’re going to roll into the future of William & Mary forever, permanently.

A terrific example would be we had to take our entire admissions program online, the No. 1 thing about William & Mary that

A C O N V E R S AT I O N W I T H K AT H E R I N E R O W E

converts students, prospective students, into William & Mary students who are visiting is our campus. It’s beautiful. It’s a place that calls you in to convene and study and think with other people. And so we had to figure out how do we convey that call-in, that sense of community, at a distance digitally, and we developed strategies for digital toward the campus that showcases the faculty, forms for prospective students, one-on-one conversations, that we’re never going to go back from.

People around the country said, “This is great. I wouldn’t have been able to come to William & Mary to visit campus, but now I feel as if I have.” So that kind of gain via piloting and experimentation is a core principle of entrepreneurship, and it’s been thrilling to see the whole university embrace that under the pressure of the pandemic.

For my athletic life, there are one or maybe two things that I derive from my life as a coach and as a competitive athlete. I competed internationally at really high levels in my sport. As a coach, it’s the importance of ensuring that you’re thinking long term and that you’re connecting what we do every day to those long-term goals in a way that’s flexible so that as we compete, as we bring new players onto the team, we have one goal, which is to win the state championship.

Everything we do over the course of the season in our exploratory and experimental way is about making sure that everybody on the team is fully participating and has a chance to advance that goal.

As an athlete, it’s having an understanding that there are modes of competition, collective modes for the team, which are constructive. Before that, I think I’d seen my own competitiveness as something that maybe wasn’t socially constructive. But discovering team sports for me was about discovering how to be joyfully competitive on behalf of a group, an organization, a team.

Moret: You’ve had some time now living in the president’s house. What is your

favorite thing about Williamsburg that you’ve discovered since you moved there?

Rowe: Besides the students who aren’t here right now? Students are always the favorite thing. The food, culture. I didn’t know this was such a foodie town. The restaurants are amazing and varied and wonderful, and there’s a real appreciation of local, locally grown recipes.

More broadly in the region, Jamestown Island — the archaeology that’s happening there, the dig. It’s unbelievable.

Unlike anything else in the United States.

Moret: How do you think America and/or American higher education could permanently change after everything going on with the pandemic has been settled?

Rowe: We’re in the process of discovering the answer to that question.

At William & Mary, I can say a couple of things that I see happening right now.

First of all, nobody in the country would have ever called higher ed nimble, right?

And yet across the country, universities and colleges moved to distance modes in the space of a few short weeks.

At William & Mary, we took 2,000-plus courses online in less than 10 days.

And when I say online, this isn’t online learning as we classically understood it, courses that are designed for a specific purpose. We resourcefully used every technology available to take courses that had never been imagined that way, with faculty and staff who’d never done that work before, and students who’d never experienced that before, and together we brought ourselves into distant learning and finished the semester.

And the challenges of that — it was far from perfect — weren’t about the technology. They were about quarantine.

A student said something really brilliant to me about a month in: “It’s not that this is so hard because we’re learning from home. It’s that we’re trying to finish the semester under quarantine.”

The resilience of our students and our faculty and staff has been phenomenal.

We know, and this generation knows, that it can take something extraordinarily hard and be successful with it. But the great lesson in resilience that this generation is learning is really profound.

Moret: That’s wonderful, Dr. Rowe. It’s always a great pleasure talking with you. Is there anything else you’d like to share that we haven’t covered?

Rowe: I’ve been so grateful for the collaborations I’ve found here. I arrived from western Massachusetts having been able to build a collaboration between industry and higher ed that I was really proud of to launch a new data sciences major in the five colleges with Mass Mutual. And I wondered whether I could find that kind of partnership here. We’re so fortunate to come to Virginia where the higher ed leadership, the business community, and the Commonwealth leadership were already thinking in that collaborative way and recognizing what a competitive advantage it would be for Virginia for us to be able to retain talent.

And that’s something we have to focus on, right now and in the years to come, is how to keep our extraordinary talent in Virginia. I’m really looking forward to working with you all to make sure we can.

Moret: We are thrilled to have you in the Commonwealth of Virginia. We’re so fortunate as a state to have so many incredible higher education institutions, William & Mary among the many finest — not just in Virginia, but around the world — and excited to collaborate with you in the years ahead. Thank you so much for joining us today.

Rowe: It’s been a real pleasure.

Thank you.

For the full interview, visit www.vedp.org/Podcasts

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VIRGINIA COMPANIES

ANSWER THE CALL With the country in turmoil from the effects of the COVID-19 pandemic, the reaction of many companies inside and outside Virginia was: How can we help? Numerous Virginia companies have shifted operations in recent months to supply products necessary to fight the novel coronavirus, from hand sanitizer to personal protective equipment to medical devices. These illustrative examples are just some of the countless instances of Virginia companies stepping up to help out in a time of need.

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DuPont ramped up production of its water- and microbial-resistant Tyvek material, used in protective garments worn by medical professionals and first responders, at its Spruance plant in Chesterfield 67 County.

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Virginia Beach company London Bridge Trading Co., which manufactures tactical nylon equipment for law enforcement, government agencies, and the military, shifted production to reusable surgical masks for Sentara Healthcare employees. The masks are made from a copper-infused fabric donated by Cupron Inc. in Richmond.

Albemarle County-based Caretaker Medical, a manufacturer of medical monitoring systems, shifted production to touch-free monitoring devices for use in intensive care units.

Hollingsworth & Vose in Floyd won a $2.2 million U.S. Department of Defense contract under the Defense Production Act Title 3 to increase production of filtration material for N95 ventilators and respirators.

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Solid Stone Fabrics, a manufacturer of fabric for active apparel based in Henry County, began producing masks, acrylic protective shields, and gowns for healthcare workers.

Nurses at LewisGale Hospital in Pulaski wear face masks and ear guards manufactured by Volvo Trucks employees at the companyâ&#x20AC;&#x2122;s New River Valley manufacturing plant.

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Consumer packaging manufacturer Berry Global Group shifted to PPE production in its Waynesboro facility and ramped up production of caps for household cleaning items at its Woodstock plant.

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Fairfax-based apparel manufacturer Custom Ink began producing face masks at its Charlottesville facility.

Spectrum Brands shifted production at its Blacksburg plant, which normally produces Cutter Insect Repellent, to manufacture hand sanitizer.

Charlottesville shoe manufacturer OESH pivoted to produce 3D-printed respirator masks for medical professionals.

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VIRGINIA UNIVERSITIES APPLY EXPERTISE, RESOURCES TO COVID-19 ISSUES The threat presented by the novel coronavirus and its related illness, COVID-19, has sent researchers at universities across the country into overdrive attempting to develop treatments and other ways to mitigate the damage. Here are some illustrative examples of how Virginia universities are using their expertise and research capabilities in the fight against COVID-19.

REPURPOSED ROBOT ALLOWS UVA TO REUSE PPE To reduce pressure on a strained supply chain, many Virginia manufacturers have shifted production from existing product lines to personal protective equipment or materials used to manufacture it. The University of Virginia Medical Center is attacking the problem another way.

UVA Medical Center staff identified a robot, Tru-D — short for Total Room Ultraviolet Disinfection — normally used to disinfect patient rooms, and created a system in which the robot could

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disinfect personal protective equipment within a specialized chamber created in a repurposed classroom. The setup allows Tru-D to disinfect hundreds of masks in a 20-minute cycle, allowing the reuse of approximately 6,000 masks each day.

“We have never in our lives been faced with anything like this, and drastic times require drastic measures,” said Dr. Carlene Muto, assistant professor of infectious diseases and international health at UVA. “It’s really forced people to be innovative thinkers. There has never been a time where the need was so great.”

Tru-D, short for Total Room Ultraviolet Disinfection, has been repurposed by the University of Virginia Medical Center to disinfect large quantities of personal protective equipment in a specially designed chamber.

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V I R G I N I A U N I V E R S I T I E S A P P LY E X P E R T I S E , R E S O U R C E S T O C O V I D - 1 9 I S S U E S

VENTILATOR INNOVATION AT VIRGINIA TECH Virginia Tech mechanical engineers, in partnership with a physician at Carilion Clinic in Roanoke, developed a way to upgrade bilateral positive airway pressure (BiPAP) machines, commonly used for treating sleep apnea, into makeshift ventilators.

“Right now, ventilators are well in hand, but we know that proactively preparing for the worst-case scenario, while hoping for the best, is the smartest move we can make,” said Edmundo Rubio, Carilion’s chief of pulmonology and critical care medicine, and a professor of medicine at the Virginia Tech Carilion School of Medicine.

CRUCIAL CLINICAL TRIALS AT VCU, UVA Researchers at Virginia Commonwealth University and the University of Virginia conducted clinical trials on antiviral drug remdesivir and its effectiveness in treating COVID-19, and preliminary results indicated that the drug was effective.

Following the success of a similar trial from the National Institutes of Health, the Food and Drug Administration then issued an emergency use authorization allowing its use in treating COVID-19 patients.

Dr. Arun Sanyal led VCU’s trials, while Dr. Patrick Jackson led UVA’s.

WILLIAM & MARY MAKERSPACE MANUFACTURES FACE SHIELDS Jonathan Frey, an instructor at the College of William & Mary’s Department of Applied Science, and a team of students from the university are manufacturing protective face shields for local police departments and hospitals.

Instructors and students at William & Mary created protective face shields for local police departments and hospitals, including this delivery to Sentara Williamsburg Regional Medical Center.

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Frey runs William & Mary’s Makerspace, a collaborative work space that provides equipment such as 3D printers, vinyl cutters, and stitching machines for the use of students, faculty, and staff. Students in Frey’s Introduction to Engineering Design course designed face shields made from clear lamination plastic and 3D-printed plastic headbands.

Our top priority is repurposing FDAapproved drugs from other viral infections that could potentially be used for COVID-19.

FATAH KASHANCHI Director, George Mason University Laboratory of Molecular Virology

GEORGE MASON RESEARCHERS FOCUS ON TREATMENT George Mason University professor Fatah Kashanchi and his team are also researching experimental treatments for COVID-19. His research, however, is focused on drugs that have already received FDA approval.

Kashanchi, a professor of virology and the director of GMU’s Laboratory of Molecular Virology, is experimenting with drugs that can be rapidly absorbed into the lungs to treat COVID-19 and ease discomfort in patients.

“Our top priority is repurposing FDA-approved drugs from other viral infections that could potentially be used for COVID-19,” Kashanchi said. “The drugs have been tried and tested on patients before, so we know that they are not toxic. And the delivery is very easy.

The absorption is very rapid. That’s the key to all this.”

Fatah Kashanchi, director of George Mason University’s Laboratory of Molecular Virology, is researching experimental treatments for COVID-19 using drugs that have already gotten FDA approval.

ODU ANSWERS THE CALL FOR PPE Old Dominion University’s Advanced Manufacturing Lab, responding to a plea for help from Norfolk-based Sentara Healthcare, began 3D printing a face mask developed by Sentara Respiratory Clinical Specialist Justin Seemueller that combined a positive pressure face mask with a viral filter to create an easily sterilized, reusable mask.

Seemueller had developed the design, but needed help with production. He requested two types of masks: one that doubled as a face shield and another for

healthcare workers who wear glasses.

Within hours of his request, Tony Dean, associate professor and assistant dean for research at ODU’s Batten College of Engineering and Technology, handdelivered a prototype.

COVID-19 imperils our universities’ business model while engaging their greatest strengths: scientific expertise and a deep supply of students and professors hungry to make their mark on the world. The leadership of Virginia’s universities shows through in their response to the most difficult challenge of many of their lifetimes.

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The Spearhead Trails in Southwest Virginiaâ&#x20AC;&#x2122;s Appalachian Mountains boast more than 500 miles of ATV, bike, and hiking trails of varying difficulties convenient to the towns of Coeburn and St. Paul.

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MORGAN OLSON RAMPS UP IN DANVILLE Van Manufacturer Utilizes Virginia Talent Accelerator Program to Quickly Build Workforce IN THE COMPETITIVE ARENA of

economic development decision-making, answering the “Where are we going?” question leads to an equally critical query: “How fast can we get there?”

Fueled by the new Virginia Talent Accelerator Program, the Commonwealth now has a simple answer for companies and site consultants: “Faster than ever.”

In partnership with Michigan-based Morgan Olson, North America’s leading manufacturer of all-aluminum walk-in step vans, the Virginia Talent Accelerator Program is conducting its first speed test: recruiting and training 700-plus assemblers and fabricators for the company’s new facility outside Danville in Southern Virginia.

Morgan Olson, Danville

“The process has been great, and the resources to get us established in a new area have been phenomenal,” said Morgan Olson Vice President of Human Resources Brent Butler. “The Virginia Talent Accelerator Program has been an extremely valuable resource to partner with.”

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MORGAN OLSON RAMPS UP IN DANVILLE

customized training solution through the Virginia Talent Accelerator Program.

The timing synced up ideally for Morgan Olson to become the first company to benefit from the program.

“It was a very, very attractive package to help with training, tax rebates, credits for investments,” Halladay said. “Just a very attractive package from the state of Virginia.”

THE FIRST LEG

Morgan Olson, Danville

UNDER THE HOOD The Virginia Talent Accelerator Program launched in 2019 as a collaboration between VEDP and the Virginia Community College System. Its objective is to do exactly what it states — accelerate the hiring and training timetable so that new and expanding companies can ramp up their new operations as quickly as possible. The program’s world-class instructional designers, 3D animators, videographers, and graphic designers make this happen in partnership with the company by creating customized recruitment and training services at no cost to the company.

It’s not the only workforce development incentive that Virginia is using to influence companies to consider the Commonwealth. They can also opt for the Virginia Jobs Investment Program (VJIP), an existing grant program designed for companies who want to develop recruitment and training in-house.

Anticipating the impact it could have on their start-up time, Morgan Olson opted for the full-service approach offered by the Virginia Talent Accelerator Program.

WHEN THE RUBBER MEETS THE ROAD When IKEA announced in July 2019 it would shut down its 925,000-sq.-ft. facility

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at Cane Creek Centre Industrial Park, eliminating 300 jobs, the facility wasn’t on Morgan Olson’s radar. But it set the stage for a frenzied few months.

Morgan Olson had been performing reconnaissance around the country to secure the site of its fourth expansion in six years. The company started with ambitious site selection criteria: an existing building with ceilings of 26 feet or higher, a minimum of 500,000 sq. ft. of manufacturing floor space, and 100 acres of developable real estate. After a nationwide search that included other Virginia options, the company narrowed the search to four sites.

“Things skinny down really quickly when you’re looking for a big space like that,” said David Halladay, vice president of operations for Morgan Olson.

With several of Morgan Olson’s vehicle production programs evolving and several promising new programs on the horizon, the company decided a 500,000-sq.-ft. facility would no longer be sufficient.

“That’s when VEDP brought to our attention the IKEA factory,” Halladay said.

With a real-estate option in hand, Virginia was now able to offer a

In October 2019, just three months after IKEA announced its departure, Virginia Governor Ralph Northam, Morgan Olson leadership, and other key players gathered in Danville to make the official announcement. It was now time to get rolling: hiring, onboarding, and training the 703 new employees who would contribute to the assembly of the aluminum walk-in step vans making deliveries to homes and businesses across the country.

After the announcement, Virginia Talent Accelerator Program staff and representatives from Danville Community College (DCC) traveled to Morgan Olson’s plant in Loudon, Tenn., to gain a complete understanding of the company’s plans, requirements, and vision for the Danville facility. This included observing the assembly process and conversing with Morgan Olson’s operations, human resources, and training leaders, along with subject matter experts in every aspect of the operation. Development of custom materials to support Morgan Olson’s pre-hire screening, job-specific training and leadership development progressed for the next three months to get ready for instruction that began in March.

Former IKEA employees received priority consideration for Morgan Olson’s open positions. Once candidates applied, they were screened in pre-hire sessions focused on core skills: assembly, riveting, and measuring.

“In general, the pre-hire screening was valuable and saved us time,” Butler said.

“It gave us a broader look at individuals.”

MORGAN OLSON RAMPS UP IN DANVILLE

I’ve worked with workforce development programs in four different states throughout the Southeast… [the] Virginia Talent Accelerator has been the most engaged that I’ve worked with. They have such a talented and diverse team that covers all the needs for a company new to the area.

STEVEN PARKER General Manager, Morgan Olson

Assembly illustration of Morgan Olson step van

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Morgan Olson, Danville

Training began in March at the nearby Institute for Advanced Learning and Research. There, eight Virginia Talent Accelerator Program trainers began their instruction aided by simulations, broadcast-quality videos, and 3D animations illustrating Morgan Olson’s production processes.

Training for production team members includes an introduction to tools and equipment, safety procedures, and skills such as riveting and quality inspection.

The technical training culminates with trainees building the cab of a step van.

Soft skills, including communication skills and Lean principles, are equally important components of production training.

Team leads, supervisors, and managers are immersed in a 160-hour Leadership Academy to equip them with skills that enable Morgan Olson’s collaborative culture, tackling topics including emotional intelligence, managing conflict, and managing across generations. By the end of April, the Virginia Talent Accelerator Program hit the milestone of delivering 500 training hours.

Steven Parker, general manager at the Danville-Pittsylvania facility, has been Morgan Olson’s boots on the ground from the start, working closely with the Virginia Talent Accelerator Program.

“I’ve worked with workforce development programs in four different states

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throughout the Southeast. They all have amazing qualities that make their states proud and able to draw business,” Parker said. “[The] Virginia Talent Accelerator has been the most engaged that I’ve worked with. They have such a talented and diverse team that covers all the needs for a company new to the area. They’re proficient with training, recruitment, applicant screening, Lean principles, leadership development, and standardized work.”

SHIFTING GEARS As the Virginia Talent Accelerator Program team delivers training for the start-up, the other key cog in the collaboration, DCC, is providing additional support while gearing up to serve Morgan Olson’s long-term needs.

“Morgan Olson has already hired six welders from our non-credit program and one welder from our credit,” said Debra Holley, DCC’s vice president for academic and student affairs. “Once students can return to campus, DCC plans to incorporate Morgan Olson materials and welds into the project work that is part of the credit programs.”

Even before the Morgan Olson announcement, the college was working to increase student capacity investing in state-of-the-art facilities. DCC also developed the model and led the effort for the current regional engineering and manufacturing career development

pathway that starts in the sixth grade and runs through high school into the community college.

At the completion of the company’s ramp-up, DCC will be positioned to assume the training functions, with a focus on further advancing employee skills. Holley said the college will support Morgan Olson’s long-term needs through traditional workforce development programs as well as two-year degree programs. They will also set up specialized, short-term training.

“I have no doubt that when it’s time for us to take over addressing Morgan Olson’s training needs, the transition will be smooth and efficient,” Holley said.

LOOKING AHEAD With Morgan Olson on the fast track, the halo effect of the Virginia Talent Accelerator Program is already being felt in Southern Virginia. Regional leaders are starting to hear from companies in the Morgan Olson supply chain that are interested in making the move as well.

This is a bigger story than what’s happening in Southern Virginia, with new chapters unfolding across the Commonwealth. The Virginia Talent Accelerator Program is the Special Forces of Virginia’s arsenal of services, designed to be rapidly deployed anywhere in the Commonwealth to deliver results quickly and efficiently.

E-Commerce in the Time of COVID-19 THE COVID-19 PANDEMIC likely will

have long-lasting impacts on global economies. Most nonessential businesses have been shut down and people are observing social distancing by staying home, resulting in a huge surge in online shopping. For many of us, this is beginning to feel like a “new normal” — we have adapted our lifestyles to include e-commerce as a preferred way to shop.

Many of us will likely continue to shop this way even after the pandemic has passed. In turn, manufacturers and distributors must adapt and be flexible to meet quickly changing consumer needs.

E-COMMERCE ON THE RISE E-commerce was already taking up an increasing share of the market before COVID-19 struck. According to U.S. Census Bureau data, e-commerce made up 11.4% of quarterly U.S. retail sales in fourth quarter 2019, up from 4.2% in first quarter 2010. Now, with the pandemic in full force in the U.S., online shopping has been hurled into complete overdrive.

Listrak reported a 40% increase in e-commerce since March 12. The increase started in February, with online orders up 108% year over year, according to digital analytics firm Quantum Metric.

“We attribute this growth to lack of

availability of local brick-and-mortar supplies due to out-of-stock consumables shipped from China inventory, and an overall desire to limit in-store exposure,” says Tamara Gaffney, Vice President of Decision Strategy for Quantum Metric.

READY FOR A NEW NORMAL? Many consumers will return to their previous shopping habits once the pandemic is over. However, those who found value and satisfaction in their online experiences will probably continue shopping this way. “There is a good chance for the emergence of a ‘newer normal’ where consumption habits become dualistic, with consumers continuing to buy online even as they return to their old habits of tactile consumption,” said Chong Guan, Associate Professor and head of the marketing program at the School of Business, Singapore University of Social Sciences.

Although COVID-19 is a huge blow to the economy, it presents a huge opportunity for online retailers to increase market share and brand value if they are willing to invest in technology and innovate.

This includes updating IT systems and developing contactless delivery methods.

“Companies need to pay extra-special attention to their digital and e-commerce

experiences right now,” said John Copeland, Vice President of Marketing and Customer Insights for Adobe.

“Consumers are less forgiving during a time like this, and the companies that meet and exceed their needs will build loyalty and lifetime value.”

Many of those consumers will be firsttime users driven to online shopping by circumstance rather than preference.

The opportunity to win lifelong loyalty, especially among new customers, is enormous.

Getting prepared includes utilizing technologies such as artificial intelligence and automation, which can help retailers analyze the large increase in sales data from online shopping, to better understand consumer demands and priorities.

“Artificial intelligence and automation are helping brands do all the hard work by segmenting consumers into new customers, existing customers, and defected returning customers, as well as assessing lifetime value of customers, and more,” says Alex Timlin, Senior Vice President of Verticals for Emarsys, a provider of customer engagement software. “By using this information, brands can set up targeted and personalized digital campaigns for each type of customer.”

E-COMMERCE RE TAIL SALES AS A PERCENT OF TOTAL RE TAIL SALES 12 11 10 %

9 8 7 6 Q1 2016

Q3 2016

Q1 2017

Source: St. Louis Fed Analysis of U.S. Census Bureau Data

Q3 2017

Q1 2018

Q3 2018

Q1 2019

Q3 2019

Q1 2020

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ON THE FRONT LINES Kollmorgen Ramps Up Production to Support Global COVID-19 Response EMPLOYEES AT KOLLMORGEN’S Radford

facilities go to work each day knowing they’re helping to save lives as the world faces the COVID-19 crisis.

The international manufacturer of high-performance motion control products and systems makes critical components used to manufacture everything from personal protective equipment to diagnostic machines to ventilators. “We don’t make the N95 masks that everybody’s looking for, but we provide the solutions that automate the manufacturing of those masks,” said Kollmorgen General Manager Peter Dempsey.

Kollmorgen, a division of Altra Industrial Motion, first joined the global fight against COVID-19 in late January, shortly after Chinese officials placed Wuhan, ground zero of the outbreak, on quarantine. Clients asked Kollmorgen, which has a manufacturing facility and several offices in China, to increase production of motors and drives used in CT scanners.

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“The CT scanners that use our motors are some of the most accurate in terms of the pictures they provide,” Dempsey said. “The 3D imaging allows doctors to differentiate amongst conditions and better understand when looking at the lungs what kind of virus might be attacking the system. And so in Wuhan, our motors, with the help of our customers who built the machines, were on the front lines.”

The Chinese government extended the Lunar New Year holiday to keep most factories and businesses closed as part of an effort to slow the spread of COVID-19. With Kollmorgen, though, officials requested that the company open and increase production at its manufacturing facility in Tianjin.

After their experience in China, Kollmorgen executives prepared to increase production for companies in the United States. In early March, shortly after the first reported death from COVID-19 on U.S. soil, Dempsey began to hear from American clients.

ON THE FRONT LINES

Kollmorgen, Radford

Kollmorgen has provided motion solutions to ventilator and respirator suppliers for more than a decade. When leaders at many of those companies learned the nation lacked the necessary ventilators for critical patients and personal protective equipment for health professionals, they wanted to help by increasing production. Other executives of companies which had never manufactured these items wanted to buy components from Kollmorgen that would allow them to start new manufacturing lines. Dempsey also heard from company heads wanting to increase or start production of other essential items like test kits, diagnostic machines, and CT scanners.

To fill the urgent need, Kollmorgen managers decided that all motion solutions ordered by businesses manufacturing products to diagnose or treat COVID-19 would go to the front of the queue.

“Any time we get those types of orders, we’re just bringing them right to the top,” said Roy Mitchell, a Radford operations manager for Kollmorgen.

Case in point: A company that produces blood-gas analyzers, which can aid in monitoring critical COVID-19 patients, had long ago placed an order for 600 motors from Kollmorgen to be delivered April 7.

On March 19, an executive with the company asked workers to send as many motors as they could, as soon as they could.

The next day, 400 motors were shipped out.

In the days and weeks that followed, Dempsey said, “The need for these blood-gas analyzers has continued to soar, and the customer has placed orders for approximately 10,000 additional motors.

We are manufacturing for this customer and shipping on a continuous basis.”

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ON THE FRONT LINES

Kollmorgen, Radford

A GLOBAL EFFORT Friedrich Kollmorgen founded the company in 1916 to provide periscopes for U.S. Navy submarines during World War I. Since then, Kollmorgen has evolved into a global manufacturer that creates motion systems and components for industrial automation and aerospace and defense. Since opening its first shop in Radford in 1958, Kollmorgen now operates two manufacturing facilities and an office building in the city where more than 600 of the company’s employees are based.

The company, which operates under a philosophy that its facilities should be built near areas where its products are heavily used, has locations all over the globe.

Kollmorgen increased its international presence after completing VEDP’s Virginia Leaders in Export Trade (VALET) program in 2015. The two-year business acceleration program serves qualified

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Virginia companies who want to grow their business through international exporting.

“We were really trying to expand our presence overseas and continue our expansion from being a North Americacentric company to expanding into high-growth markets,” Dempsey said.

Through VALET, Kollmorgen received extensive market research and invaluable guidance on navigating new markets from a team of experienced international service providers like attorneys, bankers, and freight forwarders.

“The resources that we were able to access with the help of VALET were critical,” Dempsey said.

A FOCUS ON EMPLOYEES While employees at Kollmorgen’s Radford facilities race to meet the needs of manufacturers who want to produce

ON THE FRONT LINES

Kollmorgen, Radford

equipment needed to diagnose and treat COVID-19, they’re also juggling their normal workload.

“We have other demands we need to make sure that we’re also fulfilling,” Dempsey said. “We do a lot in the food and beverage industry, and obviously that’s essential right now.”

Early in the spring, managers at Kollmorgen were weighing whether or not to add machinery to their Radford production facilities and also considering opening a dedicated line just to fill orders related to the pandemic. “We’re trying to do everything we can to support that demand,” Dempsey said.

In March, Kollmorgen employees in Radford began putting in extra hours.

“We’ve been working overtime to meet some of the demands — Saturdays and the occasional Sunday,” Mitchell said.

Keeping employees healthy was a top priority for managers of the Kollmorgen facilities, which follow safety recommendations from national health organizations.

“It’s mostly keeping the folks safe and keeping them in a good spot where they feel comfortable,” Mitchell said. “We want them to know that that’s absolutely the No. 1 priority.”

One thing that has helped mitigate COVID-related stress, Mitchell found, is displaying letters from customers explaining how design and production of Kollmorgen motion systems aids in the products they’re manufacturing to help in the fight against COVID-19. Almost every time he walks by the bulletin board, he spots an employee standing there reading. “It really helps folks to stay motivated,” he said.

It’s mostly keeping the folks safe and keeping them in a good spot where they feel comfortable.

We want them to know that that’s absolutely the No. 1 priority.

ROY MITCHELL Radford Operations Manager, Kollmorgen

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Economic Development Partners in Virginia VEDP works in close partnership with local and regional economic development organizations. For a full list of local and regional partners, visit www.vedp.org/Regions In addition, VEDP regularly works with a wide network of statewide partners, including: State Leadership Partners

Project Delivery Partners

Governor

Center for Innovative Technology

General Assembly

Policy and Programmatic Partners

Major Employment and Investment (MEI) Commission

Colleges and universities across the Commonwealth (e.g., UVA, Virginia Tech, William & Mary)

Secretary of Commerce and Trade

CSX, Norfolk Southern, and short-line railroads

Virginia Department of Small Business and Supplier Diversity

Secretary of Finance

Dominion, AEP, and other electric utilities

Virginia Department of Taxation

The Port of Virginia

Virginia Department of Transportation

Virginia Community College System Virginia Department of Agriculture and Consumer Services

State Council of Higher Education for Virginia

Virginia Chamber of Commerce, as well as many local and regional chambers of commerce

Virginia Agribusiness Council

Virginia Economic Developers Association

Virginia Association of Counties

Virginia Farm Bureau

GO Virginia

Virginia Department of Housing and Community Development Virginia Department of Rail and Public Transit

Virginia Business Council Virginia Business Higher Education Council Virginia Cable Telecommunications Association, Manufacturers Association, Virginia Maritime Association, Virginia Realtors Association, and many other trade associations

Virginia Tobacco Region Revitalization Commission Virginia Tourism Corporation

Virginia Department of Environmental Quality

Virginia Municipal League Virginia Planning District Commissions Virginia Rural Center

220

Virginiaâ&#x20AC;&#x2122;s Technology Councils

64

220

Roanoke Region New River Valley

460

23

58

Southwest Virginia

19

220

19

81

221

I81-I77 Crossroads 77 58

88

460

Northern Shenandoah Valley

7

Washington, D.C.

66 81

Northern Virginia

211 33

17

Shenandoah Valley

250

Greater Fredericksburg

Central Virginia

301

95 81

Northern Neck

33

64

29

17

15

360

Eastern Shore

Middle Peninsula 13

Greater Richmond Lynchburg Region

60 288

360

64

295

Greater Williamsburg

460

Virginiaâ&#x20AC;&#x2122;s Gateway Region

460

29

501

South Central 360 Virginia

Southern Virginia

85

58

17

460

95

Hampton Roads

168

501

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Many companies across the U.S. are shifting a significant portion of their workforce to permanent telework. That wave of increased telework also will affect how companies make decisions when evaluating locations for future projects.

The Commonwealth of Virginia has adopted new statutory language that enables VEDP to take telework positions, held by Virginia residents, into account when offering performance-based economic development incentives for new, competitive site-selection projects.