With no end to the coronavirus outbreak yet in sight, businesses are preparing for a prolonged slowdown in economic activity and adjusting to the new normal — operating with travel cancelled and many offices asking employees to work from home. 

Right now, according to George Mason University economist Terry Clower, the Northern Virginia region is likely better prepared to sustain the economic blow from the outbreak because of its close tie to the federal government, but employees and businesses should still anticipate, at the very least, a temporary decline in regional activity. 

Clower said the virus has reached an inflection point that surpasses the SARS outbreak of the early 2000s and the H1N1 outbreak of 2009, with a deeper economic impact expected.

“The closest event was probably post 9/11, where folks for roughly 45 days were simply glued to the TV. They weren’t going out, they weren’t going to restaurants, and you had disruptions to travel,” Clower said. “Certainly the segment of our regional economy that’s made up of hospitality, whether for tourism or for businesses, with meetings and conferences, things like that has really been affected already.”

Clower said the service industry will likely feel the brunt first. For restaurants barely above water, a protracted slump in revenues could be enough to push them out of business. And for employees living off tips in a region with a notoriously high cost of living, it’s unclear how that income can be made up. 

At the same time, he added, those workers are the least likely to have paid sick leave available, though Congress is deliberating on emergency legislation that could offer some, but not all workers, paid time off.

“Because of the nature of salary structures in the hospitality sector and our overall cost of living, it’s particularly hard on families of moderate or lower income,” Clower said.

But bigger employers in the region could also face major impacts. With travel to and from China effectively shut down, and some Chinese manufacturers closed because of the outbreak, companies that rely on Chinese products in their supply chains could see enormous disruptions.

Tom Dunlap, a partner at Dunlap Bennett & Ludwig, said he anticipates some issues enforcing “force majeure” contract clauses, which dictate the status of a contract in the case of unforeseen events. Contract for the delivery of materials from China could affect companies ranging from Apple to toy manufacturers, Dunlap said.

At the same time, American manufacturers that sell into China could also see declining international sales. Micron Technologies, which is nearing the completion of a $3 billion expansion to its Manassas plant, has felt the brunt of international disruptions before, particularly when the United States barred certain American manufacturers from supplying the Chinese telecommunications giant Huawei. 

The company had said it expected to rebound in 2020, but won’t disclose how the current outbreak is affecting its bottom line.

“We report earnings on March 25th so we are in a quiet period,” spokesperson David Oro said in an email to InsideNoVa. “We prefer to not answer external questions at this time due to federal securities law that limits what information a company can release to the public.”

Dunlap, whose firm has over 90 employees between Tyson’s Corner, Loudoun County and Richmond, said his company has been encouraging all clients to develop thorough contingency plans. His own firm, which has an office in Beijing, has been affected by the lack of travel to and from China. But he says they’re fortunate because much of their work can be done remotely.

Aside from sending memos about handwashing and CDC-recommended hygiene, Dunlap says companies should be thinking about exactly what can be done from outside the office, and what to do in case leadership needs to quarantine. 

“We’re telling clients to have contingency back-up plans, not only for remote work but for management and chain of command,” Dunlap said. “They should have a contingency plan if everyone goes down for a few weeks.”

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