Uncharted territory: How Windsor-Essex businesses are surviving an unprecedented recession
Saturday, August 1, 2020
As a 41-year-old staple in downtown Windsor, family-run La Guardia restaurant has survived its fair share of recessions, but owner Michael Ciliberto says none compare to the one brought on by COVID-19.
The last time Ciliberto remembers business being this bad was during the 2008 recession, but even then, he said, it wasn't as bad as now.
"This is not even close to the last recession...it wasn't a big impact like this one," he said, adding that this year he was forced to lay off 17 staff members and only keep the "bare bones" of the restaurant operating for takeout orders.
Despite Windsor's rocky economic past, Ciliberto said La Guardia has never had to completely close its dining room to customers or lay off all serving staff — until this year.
And it's not the only business in uncharted territory.
CBC News spoke with businesses and economic experts across the region, many of whom felt the pain of the last major recession in 2008. All of them say the times we're living through now are unprecedented, and that nothing could have prepared them for the sudden loss of employment, the immediate closure of businesses and the uncertainty of an unknown disease.
Lazee G-Ranch owner Brenda Gagnon was one of many small businesses thrown for a loop when it had to completely stop offering horse riding lessons and close its stables to visitors for the first time in 30 years.
The ranch, which also offers March Break camps and hosts birthday parties, is Gagnon's only source of income.
Though times were tough during the 2008 recession she remained open and had a steady flow of clients, but with COVID-19 she was forced to abruptly shut down.
"Back then, I think we were okay … it was scary, but I think it was okay because we were still allowed to continue to work," Gagnon said.
"That's the big difference, shutting down and having no income whatsoever."
n recent history, the most comparable moment in time to what is happening right now with Windsor's economy and unemployment rate occurred more than a decade ago, during the peak of the 2008 recession.
With nearly 20 per cent of the city's working population unemployed as a result of the pandemic, local experts agree that the 2008 recession has met its match.
Except this time around, jobs and businesses aren't all that people lost. By the end of July, the region had 71 deaths as a result of COVID-19.
Underlying the two periods of economic turmoil, there's a few similarities: manufacturing and auto sectors were hit hard, businesses lost money and for the most part, people stopped spending.
But there are significant differences compared to 2008 — the main one being just how fast everything happened.
"The [last] recession, although there were some things that happened quickly — the increase in unemployment, companies closing and so on — it took place over a period of time, several years," manager of business retention and expansion for Windsor-Essex Economic Development Corp. Wendy Stark said.
"The time period was so much more accelerated for this."
When COVID-19 struck in mid-March, it was only a matter of days before businesses completely shut down and those who could work from home made the transition.
From February to June, the unemployment rate jumped by more than 10 per cent — an increase not seen in the last recession.
By May, Windsor's unemployment rate hit a record high of 16.7 per cent — the highest in Canada — but at its worst, the last economic decline saw an unemployment rate of 16.2 per cent in July 2009.
The difference this time around was that those who lost jobs could lean on government financial assistance programs like the emergency wage subsidy and emergency response benefit, known as CEWS or CERB.
These programs made a big difference, experts said, noting that the supports led to consumer confidence and allowed people to still spend money.
At the same time companies closed their doors, the Canada-U.S. border shut, preventing all non-essential travel.
The border closure didn't happen back in 2008, noted Windsor-Essex Regional Chamber of Commerce president Rakesh Naidu, meaning the tourism industry could stay afloat and businesses had a larger customer base to lean on.
"We rely significantly on people traveling and commuting between the two countries for work, but also visitors and travelers coming in from the U.S.," Naidu said. "There's quite a bit of money that comes in from the US visitors and that all has been affected."
While work from home capabilities allowed many companies to continue to operate, as a manufacturing hub, many in Windsor-Essex couldn't take their work home with them.
"Any business that required lots of close human contact to deliver its product or service, they got hit the hardest right away," Ontario's financial accountability officer Peter Weltman said.
Because Windsor's economy is so heavily dependent on manufacturing — the majority of which is for the auto industry — plants shut and people were forced to stop working.
Some companies quickly pivoted to produce medical supplies, including personal protective equipment and ventilator parts.
"This wasn't the case [back then]," Naidu said. "There were very few companies that actually had a plan of diversifying themselves away from the auto industry."
The diversification seen this time around has local experts hopeful that companies will embrace new customer markets.
But sales manager Tim Galbraith from Cavalier Tool and Manufacturing said he doesn't think that any company that transitioned to produce medical supplies can sustain the practice.
"There's just not enough demand right now for North American manufactured medical equipment," he said.
Despite this, he believes that the region's latest battle may be the wake-up call it needs.
"I think that these two recessions are close enough that you'll probably see some more diversification than you did after the last recession," Galbraith said.
"The automotive industry is just low fruit, it's easy, you can make money at it… [but] the next recession comes along and everybody chastises themselves and says 'yeah we got to diversify a bit more.'"
While the differences suggest that this economic decline may be worse, recovery might actually be easier or at least happen faster, both Naidu and Stark predict.
But retired University of Windsor business professor Alfie Morgan doesn't agree — he said recovery this time around might be impossible because we don't know when a vaccine will be discovered or whether a second wave will hit in the fall.
"Nobody knows," he said. "The uncertainty is [like a] very thick fog in which we cannot see our way through it."
While many struggled to adapt, it wasn't doom and gloom for all businesses.
Some, like publisher and independently-owned bookstore Biblioasis, managed to thrive during the pandemic by adopting new business strategies and maximizing their use of technology.
Owner Dan Wells said he planned on closing down Biblioasis' storefront just before the pandemic hit.
"When COVID struck we were sort of faced with an immediate choice," Wells said. "We could either say 'okay this is it,' and close shop and sort of hide under the COVID cover or we could try to reinvent the business."
And reinvent they did — they put their full stock on their website and created a new local delivery model.
"This is an entirely different situation with an entirely different result for us," Wells said, adding that sales were up 20 per cent from the start of the pandemic to June.
"In a way, this whole experience for us has been transitional and transformative."
But there was another factor at play — the push for people to shop local.
"I think everywhere there is a greater emphasis on buying local," Naidu said. "Here we are seeing that people are going out of their way to support small businesses and local businesses that have locally-made products.
And I think that's going to help us in reopening and recovering faster."
But once the government's financial assistance programs dry up, the true devastation might show itself, Naidu said.
Not only that, but should an anticipated second wave of COVID-19 occur, renewed closures and additional job cuts could have a crushing impact.
More than a month into Stage 2 of reopening, La Guardia is somewhat back up and running — the tables are set and the candles are lit, but guests still haven't physically entered the restaurant.
Dining indoors is still not an option, so restaurants have had to adapt and many are constructing outdoor patios for the very first time.
"Business has been really good, people want to get out from being locked up for the last four months," said Ciliberto, whose company added a large raised wooden patio to service customers.
Though workflow is a bit different, with every table, chair and menu requiring constant sanitization, Ciliberto said the new patio has added a completely different dining experience.
With the course of the pandemic unknown many businesses are realizing they can only take it one day and stage at a time.