Pandemic’s Economic Shockwaves Hit Big Business In St. Louis
Big businesses have more resources than mom-and-pop shops to withstand the economic downturn brought on by the coronavirus pandemic, but they’re beginning to struggle, too.
This week, Enterprise Holdings and Boeing — two companies that employ thousands in the St. Louis region — announced mass layoffs. Many companies have instituted furloughs to cut immediate costs during the height of the pandemic, but these announcements signify long-term changes coming to the travel industry.
Car rental giant Enterprise, which announced furloughs in March, said this week it laid off more than 2,000 employees. That includes the permanent reduction of more than 800 workers at a St. Louis County call center, as well as at other locations.
In a memo to the state about the layoffs, the company said it did not anticipate the economic slowdown would last more than a month. But with stay-at-home orders and social distancing guidelines extended, the company said it has experienced a “dramatic downturn in business.”
“Like others across the travel industry, we have witnessed a severe impact to our business with corporate business and leisure travel still at a standstill,” the company said in a statement, adding that it’s making decisions to support the long-term sustainability of its business.
Boeing, which has operated a defense-focused manufacturing plant in north St. Louis County for decades, on Wednesday announced a 10% reduction in its overall workforce. The company’s CEO cited specific concerns over falling commercial revenue.
Earl Schuessler represents more than 2,000 local Boeing workers who are members of the IAM District 837 union. He said none of his members' jobs are in jeopardy.
In fact, he’s still expecting growth this year among his membership at the plant, which employs about 16,000 people total. Schuessler said some non-union workers there were offered voluntary layoffs, but he is not aware of how many employees took them up.
Boeing has not specified how many employees could be affected by the cuts at various plants.
What this means for the local economy
While many small businesses are leaning on federal loans from the Small Business Administration, big businesses have their own ways of dealing with economic downs.
Jerome Katz, head professor of entrepreneurship at St. Louis University’s business school, said laying off employees until the market improves is one way of protecting its bottom line in the long run.
But a payroll reduction means less money flowing through the local economy — to other smaller businesses, like stores and restaurants.
“Until we get past this, the economy grows enough that the big companies start rehiring and running their plants or their operations again, financially, the bad news keeps trickling down.”
Katz said it could be months, or years, before businesses fully recover.
Mass layoffs mean a hit to local government budgets too, said Otis Williams, executive director of the St. Louis Development Corporation.
“When employees are not there to be able to pay earnings tax or there is no sales tax, those are major impacts,” he said. The city is facing a deficit of at least $40 million.
Williams said businesses of all sizes are taking big losses, but he’s optimistic jobs will come back once it's safe to begin reopening the economy.
“It may be slow, but I think companies are right-sizing for the moment based on where they are,” he said. “As they start to work again and get back to some sort of normalcy, they will be bringing back employees.”
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