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Local businesses see impact from shutdown

The impact of the COVID-19 pandemic on the local economy is difficult to estimate.

“I don’t know that we really have any valid point for comparison,” Laura Connolly said. “There’s nothing that quite mirrors everything that happened and how quick it happened.”

Connolly is assistant professor of economics at Michigan Technological University. She said the economic impact might be compared to the Great Recession, but that event happened over a much larger time frame. This pandemic’s speed and the swiftness with which stores closed and events canceled are what sets it apart, and how it will end is up in the air and on everyone’s mind.

“There’s not really any industry that’s isolated from the negative effects of this,” Connolly said.

For local businesses, it has meant making cuts, applying for help, and adapting strategies to stay in business until financial help arrives or their customers return.

“Everybody’s in this together, there isn’t anybody who is not affected,” Jeff Ratcliffe said.

Ratcliffe, executive director of the Keweenaw Economic Development Alliance said coming up with money to cover overhead costs is the largest, universal challenge.

“Everybody has mortgage payments, utility bills, insurance payments,” he said.

KEDA has been the local conduit for Michigan Economic Development Corporation’s grant and loan applications, which means Ratcliffe has been busy for weeks helping businesses find the funds to cover their costs until people feel safe enough to return to work, shop and travel.

“There isn’t any sense that things are just going to turn back on and we’ll be right back where we left off,” Ratcliffe said.

However, those funds have not been widely available.

“The amount of money we had from the state was very very limited,” he said.

He said there were $2.2 million in applications in just Keweenaw, Baraga, and Houghton counties, the three KEDA represents, but the state only allocated $133,000 for the western six counties of Michigan’s Upper Peninsula.

He said the money being distributed by the Small Business Administration to support payrolls and other overhead costs across the nation ran out last week, too. Congress has been debating adding more money to that fund.

Dave Donnay, who owns and operates the Eagle Harbor Inn with his wife Joan, said they applied the first day the new loans were available, but did not get approved for anything.

“We’re in a good position, we’ll be able to weather it,” Donnay said.

The banks they work with are open to working with them, and they’ve scaled back their operation significantly. Donnay said the Inn did well through the winter, and right now is usually their slow season, when they are only open weekends for a few weeks, mainly serving locals. However, sales are still only about 65% of a normal year.

“It’s a pretty big drop off,” he said.

Normally at this time of year, they would have 10-12 employees, but they have only been able to keep two. Donnay said after Memorial Day, when the summer tourist season has started, they would usually have as many as 20 employees. Reservations for their seven rooms have been getting canceled, with no new reservations coming in.

Donnay said he’s disappointed Gov. Gretchen Whitmer does not seem to recognize how the situation is unique in the Upper Peninsula in her press releases and conferences.

In Copper Harbor, The Pines Resort and Zik’s Bar laid off all their employees and closed in mid-March when the executive order first came down from Gov. Whitmer.

“We hope to have them back,” owner Vicki Stigers said.

She said they also have not heard back on their loan applications, and the good winter season can only carry them so far.

“The longer it goes, the scarier it gets,” she said.

She said they will reopen as soon as they can and deal with any additional social distancing or health regulations. They have people toward the end of May still holding on to room reservations in hopes of using them.

“It’s such a weird time to be running a business like this,” said Donna Jarman, who owns and operates the Mosquito Inn and Dee’s Base Camp with her husband.

They completely closed their operation, too. While their location is great for snowmobile and ATV seasons, they didn’t feel they could afford to keep a cook and waitress around for local to-go orders alone.

She said that the winter season was good but it got cut short by a couple weeks. They had to turn a couple groups away, but they do normally close for a couple weeks to deep clean in the spring before the summer tourism season starts.

“So I’m hoping that it doesn’t re-explode and we have to do this again in July,” Jarman said. “Then I don’t know what would happen.”

She said she has been doing a lot of grant and loan paperwork for both businesses, and has received “some good news.” They still have rooms booked for Memorial Day and have gotten a couple new reservations for June, too.

The Village Gift Shop in L’Anse also received some help in the form of a $1,300 grant from the MEDC. 

“We closed up before they told everyone they should,” said Payne Chassen, who operates the shop with Bill Steinhardt.

With the shop closed, the classes they host have also been postponed or canceled, however, nobody has taken the offered refunds. She hopes that means people plan on returning for lessons once they reopen, which they’re expecting to be able to do.

“It’s not killing us too much right now, but we do have vendors in our store that rely on that little bit of income they get from selling their art in the gift store,” Chassen said.

A block away, Skipper’s reopened for curbside service after being closed for more than two weeks. Owner Sylvia Harrison said they cleaned and sanitized the restaurant for safety and peace of mind. The newly opened operation has changed drastically from normal, though.

“Without having dine in, you don’t need any servers, so it’s really hard to keep those employees on,” Harrison said.

Initially, she laid off all her employees. Now some have returned to work during their reduced hours of operation. Harrison plans to have a few more return on May 1. She had applied for the SBA loans hoping to keep staff employed through the whole Stay Home order.

“Still haven’t gotten it, and I applied the day it came available for us,” she said.

For now, she’s waiting to be able to reopen the bar, and catering to locals with different menu options on different days of the week, as well as discount meals on Tuesdays supported by volunteer workers.

“The governor has definitely put us in a pickle,” Harrison said.

Copper Country Ford was recently able to resume sales, although the showroom remains locked. Employees there have returned to work and can sell and service vehicles again.

“We’re facilitating that through the phone and email,” said General Manager Corey King.

Aspirus recently announced the closure of several Upper Peninsula clinics, including the one in Lake Linden.

“Our staff have been redeployed,” said Mandy Shelast, regional director of clinics for Aspirus.

She said that the staff have been sent home or to the hospitals to train and prepare for a potential surge of COVID-19 patients. Shelast hopes there is not a surge, but “if there is, we want to be prepared for that.”

Some training is being facilitated at home with online courses, and some staff are being trained into critical care. They have also created “well spaces” and special respiratory wards in each of their hospitals to keep the healthy away from potential COVID-19 exposure.

“We just want to give our patients confidence that they’re safe,” Shelast said.

Something everyone seems to agree on is that the longer the forced economic slowdown lasts, the more difficult it will be to recover. However, Connolly points out that the lifting of an executive order won’t mean the instant restoration of the local economy.

“It might take some time for individuals to decide it’s safe to go out to eat,” she said.

And the same applies to shopping at local stores, traveling to resorts and hotels and attending local entertainment events.

Ratcliffe acknowledged that 12 to 18 months of waiting for a vaccine is actually pretty fast, even though it feels like a long time.

“I think there is a recognition by everyone that we do have to exercise care,” Ratcliffe said, adding there’s a strong desire to see businesses reopen.

He said in the meanwhile, if businesses need help they should reach out to KEDA. They have staff ready to answer questions and provide information. They can also email Ratcliffe directly at jeff@kedabiz.com.

“We don’t want them to be alone,” Ratcliffe said.

Another thing people agree on, which is not at all new, is the importance of shopping locally.

Connolly said businesses that are entirely closed are probably being hit the hardest, and people might be able to support them by purchasing gift cards for later use. She also recommended spending money at locally owned take-out restaurants over frozen meals. The money helps a local restaurant more than it helps Wal-Mart, she said.

“It’s never been more important to keep your money local,” King at Copper Country Ford said.

Shelast at Aspirus said their non-profit hospitals have received greatly-appreciated donations of masks, face shields, gloves, food and more from local individuals, organizations and businesses.

“We’re very thankful for the communities… we want to be here for the people who trust us,” she said.

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