Of the lessons learned in my years working in the Pacific Northwest timber industry, the most significant has been the importance of taking the long-view. This way of thinking is an inherent part of an industry that takes decades to bring a product to market and requires large-scale investment in infrastructure, time, and people to be successful. This focus on the long-view is the backbone of sustainability and what has allowed our company to endure the slings and arrows of 80 years in a volatile and changing industry.
Today, we are facing a complex health crisis for which we have no recent experience and its effect on the economy is hard to anticipate. The global COVID-19 pandemic may very well plunge our economy into another recession. A recession—defined as two quarters of negative GDP—used to occur every 4-5 years and is not unusual from a historical perspective.
Stocks have plummeted as investors try to find the right valuations to reflect future earnings. This will have significant impact on short-term investors and public pension funds like Oregon’s already struggling PERS system. Things look dire now, but there are a number of factors that make me optimistic about the future. During my time on the local Federal Reserve Board I learned to respect the Fed’s expertise in managing financial markets. Currently the Fed is pumping unprecedented amounts of money into the financial markets to make sure credit continues to be available. When the crisis abates and we begin to recover, low interest rates and gas prices will help our economy snap back quickly. There will also very likely be large pent up demand for housing, travel and other services. Long-term, we are going to be okay.
In the short-term, however, it’s going to be rough. People are anxious about their health and the health of their loved ones. We’re all concerned about the capacity of our healthcare system and the safety of health professionals who are on the front lines of this pandemic. Parts of the economy are already suffering as the world comes to grips with this crisis. Airlines, hotels, restaurants, bars, and retail establishments are among the hardest hit at this time. Layoffs are occurring across the country as businesses attempt to weather the drop-off in economic activity. Curtailments hurt businesses and they hurt families. Our industry knows this perhaps better than most and we feel for all those who find themselves out of work during this crisis.
While not among the most directly affected at this time, our industry is certainly not immune. With the COVID-19 virus spreading in Canada and the U.S., we have taken measures to protect the health and welfare of our employees, their families, and the communities in which we operate. We are also trying to maintain our business, which includes deliveries of lumber to satisfy customer orders. Last month, housing starts remained high (though this may change rapidly as the crisis unfolds) and we are still seeing significant demand from many customers throughout the U.S. However, some customers, such as those in hard-hit urban areas have stopped operations due to shelter-in-place requirements.
In the U.S., elected officials finally seem to be taking serious stock of the situation and instituting much needed emergency measures to support the economy and limit the spread of the disease. While these are promising developments, the lack of testing capacity in the U.S. to date has been hard to understand. U.S. and global health officials have been sounding alarm bells since the disease first took hold in December. The American public is being ask to shoulder significant economic and social hardship to slow the spread of this disease through social distancing and shutdowns, and yet, in many places, including here in Oregon, testing is limited and it is still taking a week or more in many cases to get COVID-19 test results back from state labs. As we know from our continuous improvement efforts at Hampton, if you can’t measure something, you can’t understand it let alone fix it. Social distancing and good hygiene will continue to be key to helping to reduce transmission but to be most effective, we need to have the resources to understand the scope of the problem. This will be essential if we are to relieve the burden on our healthcare system and restore normal economic functions as quickly as possible. I hope our state and federal governments have learned a lesson from this weak initial response and put measures in place to ensure we are better prepared in the future to deal with such health crises.
Swift and decisive response from government is essential but in times like this the private sector also has a significant role to play in alleviating the hardship on our communities. As with many businesses nation-wide, we have instituted new policies to protect our workforce. Part of this requires maintaining clear lines of communication with our employees, health agencies, and community leaders. We are also reaching out to local community organizations to see how we can assist their work and support those who have been most effected by the health crisis. It will take an all-hands-on-deck approach to weather this storm. Fortunately, I believe our communities are up to the task. Hang in there. Stay calm. Have patience. Take practical precautions. Listen to the advice of health experts. And take care of each other. We will get through this and recover together.