B&W Charters Inc. is a middle-man in terms of the service it provides.
The 37-year-old, Kalamazoo-based charter bus company connects groups of local people primarily to special events – across town, across the state or across the country.
That includes class trips, weddings, retreats, shopping trips, amusement park visits, and sporting events. Transporting high school teams to out-of-town games and meets is a healthy chunk of B&W’s business
during the school years. But that work and most of its other bookings came to a screeching halt in March when schools were shut down to stop the spread of the coronavirus (COVID-19).
At that point, it had no groups traveling and no recreational venues to connect them with.
Gene Wright says his 37-year-old business looks forward to re-connecting people with the venues they enjoy.
“We didn’t have any restaurants or sporting events or anything operating so there was no place for me to go,” B&W Co-owner Gene Wright says early this week with a good-natured laugh.
As Michigan Gov. Gretchen Whitmer eases restrictions that have kept all but life-essential workers at home and all but specified businesses closed, Wright says he sees things starting to improve. But he says, “It’s very slow.”
“I think last Saturday was the first time we’ve done anything (for the last two weeks),” he says. “We only had three small coaches out last Saturday. This week we probably have three or four out.”
He said two 16-passenger vans were hired for weddings and two were hired to transport members of the U.S. Army Reserves to camps.
Looking down the road
What’s down the road for his small business and others in the Kalamazoo area?
“We’ve had some rebound (in business activity) because of a combination of things -- because of regulations or restrictions being relaxed around the country, plus some people feel safer going out shopping and working,” says Tim Bartik, senior economist for the Kalamazoo-based W.E. Upjohn Institute for Employment Research. But he says that situation will reverse if the coronavirus resurfaces in a significant way.
The health of B&W Charters and many other small businesses may ride on huge actions taken -- or not taken -- soon by the federal government, Bartik says. And by scientists’ ability to find treatments for the COVID-19 that instill a greater sense of security in consumers.
Key things he says he is watching, going forward, are the disease itself (whether the spread of COVID-19 is lessening and whether vaccines and other treatments for it are on the horizon) and whether federal efforts are taken to help state and local governments recover from major losses in revenues that are soon to surface as a result of the pandemic. With many businesses shut down for months, Michigan and the other 49 states have lost hundreds of millions of dollars in revenues from sales taxes, income taxes, gasoline taxes, and various fees that are paid by consumers.
That will leave each state with less money to provide for public services, including schools. As a result of the pandemic’s impact on state revenues, the public school systems in Kalamazoo and Portage anticipate millions in lost operating income for the coming year. All of that has an effect on the local economy and small businesses.
Consumer demand is important
“You have to keep up consumption demand and investment demand,” Bartik says.
B&W Charters Inc. has 12 vehicles, including 15-, 16- and 30-seat vans and mini-buses, four 56-passenger buses, and a trolley.
Consumer demand, in a nutshell, is people stoking the economy by buying things from businesses. Investor demand is businesses and others deciding to reinvest.
“If there’s no consumer demand, businesses are not going to employ as many people,” Bartik says. “And if they’re not employing as many people, and they don’t see demand, they’re not going to be investing. Why invest to expand if you’re not going to have more customers?”
Passed in late March, the CARES Act (the federal Coronavirus Aid, Relief and Economic Security Act) provided more than $2 trillion in stimulus funding to help pandemic-stressed businesses and workers, including a forgivable loan program for businesses (the Paycheck Protection Program), expanded unemployment benefits for pandemic-effected workers (an additional $600 per week) and $130 billion for state governments (to be used for such things as disease-related expenses that were not previously budgeted by a state).
Timothy Bartik, senior economist at the W.E. Upjohn Institute for Employment Research
But Bartik says businesses could use more help. Workers who lost jobs as a result of the COVID-19 shutdown need an extension of unemployment benefits, and estimates indicate the states may need about $1 trillion to stem their losses.
How important is more stimulus funding?
“If this money is not forthcoming, you’ll see more cutbacks in public services,” Bartik says. “If school actually resumes, which of course is in question, you’ll see larger class sizes. But even if schools return ‘virtually,’ you’ll see cutbacks in staff and the schools will not be able to do as much. And, of course, you’ll see cutbacks in other services as well.”
He expects states will have to cut their revenue-sharing plans with municipalities. “So cities will have to make budget cuts in whatever they’re doing in terms of fire and other services,” he says. “And there’ll be furloughs of state employees and things like that.”
Cutbacks in state and local spending will have a negative ripple effect on the economy, he says.
“If the government workers who got laid off or had their wages cut or hours cut -- or maybe the government contractors who had those things cut -- don’t have money, then they’re not going to be able to go to the store to shop,” Bartik says. “And so that’s going to decrease retail demand.”
He says one of the things that has been keeping the economy going to some extent has been the additional $600 per week in unemployment benefits that laid-off workers have received through government stimulus funding. It has given a lot of people the resources to buy groceries and/or pay rent, he says. If those benefits are not extended or replaced somehow, there are likely to be negative ripple effects.
The HEROES Act (the Health and Economic Recovery Omnibus Emergency Solutions Act), the U.S. House of Representatives’ proposed next economic stimulus package, calls for $3 trillion in tax cuts and relief funding. It was passed in the House in June. But the U.S. Senate, which has not voted on the proposal, is working to present a less expensive package.
A bold time to be in business
In the spirit of true entrepreneurship, any small business owner who is doing business right now is boldly moving forward, says John Schmitt, senior business consultant for the Michigan Small Business Development Center at Western Michigan University. He says they have seen the cost of doing business rise 1 to 3 percent as they provide workers with personal protection equipment.
John Schmitt, senior business consultant at the Michigan Small Business Development Center at Western Michigan University.
Many have also seen interruptions in their supply chains that may have prevented them from taking advantage of an opportunity. The additional $600 per week many are receiving in unemployment payments has made it more difficult for small businesses to call back laid-off workers or recruit new ones on a lower pay scale. And businesses have had to set up practices and procedures to help keep their staffs and customers safe while interpreting warnings from health experts and rules from state officials that could draw fines.
“The difficulty comes in just what measures should a small business, whether retail, food service, manufacturing, the service industry or the trades, take,” Schmitt says. “Any industry that has fewer ‘touches’ with their customers, like manufacturing and the trades, is able to focus on maintaining safety for their employees.”
About face masks and lawsuits
He says masks and face coverings are a constant struggle for the consumer industry because many customers refuse to wear them. “That is particularly acute in the restaurant industry and has become a little bit of a lightning rod currently,” he says.
The effort to help make customers feel safe over the last four months has spawned opportunities for businesses to allow customers to decide how they want to access the market, however. Those include quickly devised but effective drive-thru systems, selling products online, and using food-delivery companies like GrubHub.
“The past four months have greatly accelerated these trends and customers’ expectations have changed,” Schmitt says.
Asked if there is a lot of fear among business managers about being sued for failing to take proper measures to safeguard customers or workers from COVID-19, Schmitt said, “This is such uncharted water that there is some cause for concern but it hasn’t stopped too many from moving forward.”
Is there a road back to normal business?
Asked what will have to happen before things to get back to normal, Wright says, “For people to feel confident in traveling and going places. That’s basically it because we’re caught in the middle, in between the group and the venue. If the venue doesn’t open, then that cancels us out. It cancels the group out.”
“In July, (it’s) sports and weddings,” says Wright, who co-owns B&W with partner Paul Best. A lot of weddings have been postponed until next year, he says. B&W uses 15-, 16- and 30-passenger vans to transport wedding-goers to and from main events, receptions and hotels. It uses any of its four 56-passenger buses to transport fans of professional sports to such events as Tigers baseball games at Comerica Park in Detroit and auto racing at Michigan International Speedway in Brooklyn, Mich.
With Gov. Gretchen Whitmer’s executive orders to close public school and for workers to stay at home, all those bookings ended in March. But Wright says the business successfully applied for money through the Paycheck Protection Program and has stayed afloat by greatly reducing the work hours of its 12 drivers, four office staffers, four vehicle cleaners, and two mechanics. B&W has 12 vehicles, including the four buses.
Bartik agrees that the good times won’t roll again until people feel safe again.
“Regardless of what government orders or shutdown orders say, whether they are there or not, people are not going to go out to a restaurant -- or at least some people won’t -- if they’re afraid of catching the virus,” Bartik says. “So a resurgence of the virus threatens the economic recovery.”
He says the keys to helping businesses and the economy get back on track, involve consumer demand (people going out and buying things from businesses) and investor demand (businesses deciding to reinvest in their efforts).
“The key things are: 1. Can we keep demand up through stimulus of state and local governments and also keep the unemployment benefits up and other things?” he says. “And 2. Then can we do what we can to control the virus because if the virus is spreading rapidly, it’s kind of hard to reopen the economy.”
The debate over the next federal economic stimulus package will occur over the next few weeks.