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The Shape of Things to Come

With the arrival of spring, stimulus checks, and vaccinations for growing numbers of residents, continued recovery from the steep economic decline of 2020 is in the forecast. But like the weather, economic rebounds are difficult to predict. With this recovery, there is still widespread speculation as to what shape it will take — U, V, W, K, even the Nike ‘swoosh.’ Myriad factors will ultimately determine that shape, from the ongoing threat of inflation to uncertainty about when and to what extent people will gather again, to questions about just how willing Americans are going to be when it comes to spending some of the money added to their bank accounts over the 12 months that ended in January.

$4 trillion!

That’s the amount Americans added to their bank accounts over the past 12 months or so, a savings rate perhaps never before seen in this country, which has hasn’t been known for that trait.

It came about because of all the things that people couldn’t spend money on, or didn’t see the need to spend on — everything from summer camp to vacation cruises; celebratory meals out at restaurants to new dress clothes; Red Sox tickets to visits to their favorite museum. Granted, there was some spending going on, especially when it came to things like pools, new flooring, and new deck furniture for the home — or a new home itself, be it a vacation home or a bigger primary residence.

“I am pretty optimistic that people are just to their wit’s end with being isolated; they really want to get out, do things, and buy things. They just want to live a normal life again.”

But, for the most part, Americans were saving in 2020.

And now that there is light at the end of the tunnel, and it seems like people will be able to spend some of the money they saved, the speculation involves just how willing they will be to go back in the water, if you will, and do some of the things they had to forgo for a year.

That’s just one of many factors that will ultimately decide the shape of the recovery we’re now in, and how quickly the nation will get back to something approaching normal.

As several of the stories in this issue reveal, the world, or at least this part of it, is returning to a sense of normal. Hotels are booking rooms again, airports are busy (or at least busier), Tanglewood and Jacob’s Pillow will have seasons in 2021 — albeit different kinds of seasons — and, overall, the state has entered into what Gov. Charlie Baker calls stage 4 of his recovery plan. This final stage will allow indoor and outdoor stadiums to run at 12% capacity, the state’s travel order to be downgraded to an advisory that recommends people entering Massachusetts quarantine for 10 days, public gatherings to be limited to 100 people indoors and 150 people outdoors, and exhibition and convention halls to operate if they can follow gathering limits.

It’s a big step forward, but much will depend on how willing people will be to gather in these places, and how confident they will be to travel. Meanwhile, there’s all that money that people saved and the latest round of stimulus checks now finding their way into people’s bank accounts. Will people spend them, and what will they spend them on?

And what if there is a spending frenzy and economists’ fears of inflation, potentially the runaway variety, become realized?

These are just some of the questions hanging over the job market and this overall recovery, which will, at the very least, be unlike anything else the country has experienced. Indeed, it has bounced back from recessions, tech bubbles, a 9/11 downturn, wars, and more. But it hasn’t seen anything quite like this — a pandemic-fueled economic crisis that wiped out millions of jobs, followed by, and accompanied by, federal stimulus on an unprecedented level.

Mark Melnik

Mark Melnik

“Just because we hear, ‘get back in the water, everybody,’ it doesn’t necessarily mean that folks will. I think there’s reason to be bullish about the Massachusetts economy in the second half of 2021 and the early part of 2022 because of the pent-up demand. But so many of these issues are going directly to the comfort level that people are going to have psychologically.”

“I’m a little less cautiously optimistic than some, but I am pretty optimistic that people are just to their wit’s end with being isolated; they really want to get out, do things, and buy things,” said Bob Nakosteen, professor of Economics at the Isenberg School of Management at UMass Amherst. “They just want to live a normal life again.”

Mark Melnik, director of Economic and Public Policy Research at the UMass Donahue Institute, concurred, but offered some caveats.

“There’s a psychological element to the economy,” he told BusinessWest. “Just because we hear, ‘get back in the water, everybody,’ it doesn’t necessarily mean that folks will. I think there’s reason to be bullish about the Massachusetts economy in the second half of 2021 and the early part of 2022 because of the pent-up demand. But so many of these issues are going directly to the comfort level that people are going to have psychologically.”

 

History Lessons

As they have many times over the past year, experts pointed to Worlds War II as the only recent point in history that can in any way compare with the ongoing pandemic, and noted that the comparisons hold when it comes to what happened when it was all over.

“During the war, people couldn’t buy a car, and there was a great deal of rationing,” said Nokosteen, adding that, as a result, people were saving. And while there was a lull right after the war ended, during which some feared the country would actually sink back into the Great Depression that officially ended with the war, people soon started spending — big time.

“Everyone wanted to spend money,” he told BusinessWest. “And they had some money — people started cashing in the war bonds they bought, and soldiers came home to the G.I. Bill. There were a lot of things that spurred the economy on, and it came back quickly after that initial slump.”

Experts are predicting something along those lines for 2021 and 2022, but there are a number of variables that could determine the ultimate shape of this recovery.

“In many ways, this recession has been the most unequal we’ve ever seen. And it has really exacerbated existing social inequalities, both in Massachusetts and nationally. People who were vulnerable to begin with are just made more vulnerable.”

“Looking at what’s taken place after the real substantial decrease in the first half of 2020, which was historic in terms of just how fast the economy contracted, and with the third round of stimulus hitting people’s bank accounts, we seem to have avoided some of the worst-case scenarios, which would have been a U-shaped recession, where we dragged along the bottom for a long time before we took off, or a very sharp, V-shaped recovery, which also would have been bad because of worries about inflation,” said Karl Petrik, a professor of Economics at Western New England University. “We managed to have missed both of those, and I’ve almost come to the opinion that we have a check-mark-like recovery.”

Elaborating, he said the country did see a recovery starting in the second half of 2020, and the second economic-stimulus package in January helped continue that momentum. The third stimulus package, coupled with pent-up demand and the ability to do things one couldn’t do in 2020 (spring break in Miami was one good example), should enable the economy to keep chugging, he went on, with the rosiest of forecasts calling for 6.5% growth, with the least rosy being around 4%.

“Both of which would be very good,” he told BusinessWest, adding that the expectation is that there will be a return to the ‘trend’ growth rate, which, after the Great Recession, was about 2.5%.

“One of the worries when you’re coming out of recession is that you know you’re going to go back to your trend growth rate — that’s why it’s the trend,” he explained. “You just don’t want to go back too soon because it just prolongs the pain in terms of the economy having the ability to recover; that’s what we saw after the Great Recession. We never saw the real takeoff, just a slow, steady, gradual growth rate up to 2019.”

Such fears probably fueled anxiety about going too small with recovery packages, Petrick noted, adding that he believes the $1.9 trillion bill that ultimately passed is certainly big enough.

Karl Petrick

Karl Petrick

“One of the worries when you’re coming out of recession is that you know you’re going to go back to your trend growth rate — that’s why it’s the trend. You just don’t want to go back too soon.”

But questions abound about how this recovery will play out and who will benefit most. With that, Melnik talked about the growing sentiment that the recovery has been, and will continue to be, K-shaped in nature, with lines going both up and down, depending on which income bracket you’re in.

“We’ve definitely seen a bifurcation in terms of educational attainment in industry, wages, and who’s been able to work and who’s been more likely to be unemployed, and long-term unemployed,” he explained. “Those people who tend to have limited educational attainment who were working in face-to-face industries, service-type sectors, including food service, restaurants, and hospitality, and other services like barber shops, dry cleaners, nail salons, and auto-repair places … those kinds of industries have been hurt dramatically, and they really haven’t recovered many of the lost jobs.

“In many ways, this recession has been the most unequal we’ve ever seen,” he went on. “And it has really exacerbated existing social inequalities, both in Massachusetts and nationally. People who were vulnerable to begin with are just made more vulnerable.”

Looking ahead and to what course the recovery will take, Nakosteen and others said so much depends on how comfortable people will be to go back to what life was like pre-pandemic, if you will.

“How are people going to feel going out in public when the public isn’t wearing masks?” he asked, adding quickly that he doesn’t know the answer. But whatever that answer is, it will go a long way toward determining how quickly and how profoundly the country, and this region, are able to rebound.

“It isn’t just vaccinations and dealing with these new variants,” he went on. “A lot of what will determine if there’s pent-up demand and how it’s released is truly behavioral. There’s no economic reason for there not to be a sharp rebound; I think it’s behavioral, it’s epidemiological, it’s medical.”

 

What’s in Store?

As for spending … area retailers are obviously looking for the lid to come off, although in some cases, the lid wasn’t on very hard to begin with.

Dave DiRico, owner of the golf shop in West Springfield that bears his name, said that, after a very quiet early spring last year, there was a surge in spending on golf equipment and apparel as many people picked up the game, or picked it up again, because it was one of the few things people could actually do.

It’s early in the new year, but that trend is continuing, he told BusinessWest, adding that the store has been packed with players loading up for the coming year.

“We’ve been really, really busy, even for this time of year,” he said. “A lot of people have money to spend, and … they’re spending it. We’re seeing a lot of people coming in telling us they’re spending their stimulus money, and that’s a good thing. That’s what it’s for, when you get right down to it — stimulating the economy.”

Peter Wirth, co-owner of Mercedes-Benz of Springfield, expressed similar sentiments, noting that, after sales ground to a halt right after the lockdown of last March, they picked back up as stimulus checks came in, carmakers started offering almost unprecedented incentives, and consumer confidence picked up.

Granted, lack of inventory, fueled by supply-chain issues, slowed the pace of progress somewhat, but many consumers simply ordered vehicles and waited — sometimes for months — for them to arrive at the dealership.

“The main things for us is consumer confidence,” he noted. “If the consumer has confidence in the economy as a whole and in their own situation, where they don’t feel like they’re going to lose their job next week, that’s when they’re going to spend money. And that affects us just like it impacts any other business. And I think more and more consumers feel we’re going to come out of the woods on this year, this summer, whenever it is.”

The picture is improving when it comes to inventory issues, said Wirth, who expects the numbers of new cars on the lot to continue rising through the year. Meanwhile, manufacturers are keeping their foot on the accelerator when it comes to incentives. Overall, he expects 2021 to be another solid year — one comparable to those just before the pandemic in terms of overall sales and service volume.

“We feel pretty about this year,” he said. “One news story can certainly change that, but the outlook for now is good, and that line about a rising tide lifting all boats is true, and we hope that this rising tide will help those businesses in hospitality and other sectors that have suffered so much.”

One sector certainly looking for a different kind of 2021 is the clothing industry, specifically businesses focused on dress clothes. Many workers simply didn’t have to buy any in 2020, as they working at home or still toiling in the office, often with more casual dress codes to match those of people working from their kitchen table.

“As a business owner, 2020 was my most challenging year, bar none; I was faced with more struggles and complications and challenges and problems to solve and situations to fix than I’ve ever faced before,” said William Brideau, owner of Jackson Connor, located in Thornes Market in Northampton, adding that the store has managed to keep going through persistence — and a PPP grant. But the challenges have continued into 2021.

Indeed, the first quarter of this year has in many ways been his most difficult, he said, due to a gap between infusions of stimulus, when it became more difficult to pay the bills. As more support comes in, he’s feeling optimistic about 2021, but he needs people to start investing in new threads — and not just shirts that can be seen during Zoom meetings.

William Brideau believes many people are ready to get dressed up

William Brideau believes many people are ready to get dressed up, which bodes well for his store, Jackson & Connor, which suffered through a rough 2020.

“A lot of people aren’t going for pants or more formal things below the waist,” he noted. “A lot of shirts, sweaters, and sport coats — and things have certainly veered more casual.”

But he has observed a pendulum swing of sorts, with more customers coming in recently looking for suits and ties.

“One of our really good customers came in recently and said, ‘I’ve had it — I’ve been in sweatpants for months, and I’m sick of it. I need a sportcoat, I need a shirt and tie, I need trousers. I want to look like I used to look; I miss that,’” said Brideau, adding that he believes many more people harbor similar sentiments.

 

Bottom Line

Over the past 12 months, people have come to miss a lot of the things they once enjoyed. The extent to which they’ve ‘had it’ with these matters — everything from the clothes on their back to the restaurants they haven’t been frequenting — will ultimately determine not just the composite shape of the recovery, but how, and for whom, things bounce back.

As Melnik noted, just because the ‘go back in the water’ advisories are out doesn’t mean people will heed them. And if they don’t, more of that $4 trillion will stay in bank accounts. And that might ultimately push back the date when we can really say the pandemic is behind us.

 

George O’Brien can be reached at [email protected]

Construction Special Coverage

Building Momentum

The past year has been an unusual time for the construction industry — one marked by project postponements, soaring prices for materials, and the establishment of strict COVID safety protocols on job sites. But for most builders, it wasn’t a devastating year, and, in many cases, it led to a surprisingly promising 2021. After all, the need for projects to be completed hasn’t gone away, and the backlog is actually creating a surplus of projects to bid on. The aforementioned challenges still remain, contractors say, but the work rolls on.

Laurie and John Raymaakers

Laurie and John Raymaakers say there’s plenty of infrastructure work available — and that trend should continue in the coming years.

 

By Mark Morris

 

For Dan Bradbury, 2020 was “a year of pivoting and finding new ways to get the job done.”

As director of sales and marketing for Associated Builders, Bradbury saw a slowdown at this time last year as several projects that were scheduled to break ground were instead postponed indefinitely.

By including construction as an essential industry, Gov. Charlie Baker allowed job sites to stay open and keep workers employed while following pandemic protocols. While Bradbury appreciated the ability to keep projects moving, other slowdowns were out of his control.

“There are a lot of hurdles to get over in a large industrial or commercial project, and COVID hit the brakes on all of them,” he said, noting in particular the new challenges surrounding what in the past had been routine business with municipal governments.

“We already had some projects scheduled to start this spring, but, more importantly, we’re starting to fill our pipeline again with projects that will take us well into the fall of this year and potentially into 2022 as well.”

“Because municipalities had to move to fully remote meetings, they occurred less often, which made it difficult to get building permits, zoning-board approvals, and the other essential documents we need to start and finish a building project,” Bradbury said, adding that Associated has projects in the works in a number of different sectors. One example is a 30,000-square-foot building in Bloomfield, Conn., where a local chemical company will occupy part of the building and lease the remaining space.

His company’s experience isn’t unique. BusinessWest spoke with several area construction managers to discuss how their industry looks this spring compared to a year ago, when COVID-19 suddenly changed the world — and the main takeaway is one of optimism and promise.

A significant part of Houle Construction’s business involves interior renovations for medical facilities. Company President Tim Pelletier noted that, when COVID first struck, business came to a complete halt as medical professionals were dealing with rapidly increasing numbers of COVID patients. One year later, he’s optimistic about the increase in construction activity.

“It’s absolutely busier than last year,” he said. “We’re seeing more projects taking shape, especially with our hospital clients.” In the meantime, Pelletier has picked up renovation projects at organizations that offer hall rentals, such as the Masonic Temple in East Longmeadow.

“The temple has not been able to host gatherings for the past year, so they are using the downtime to make renovations for when they can open again,” Pelletier said, adding that it’s a way to take advantage of what everyone has gone through and find a positive side.

An aerial view of Worcester South Community High School

An aerial view of Worcester South Community High School, one of the many recent school projects undertaken by Fontaine Brothers.

Bradbury credits pent-up demand for the increase in projects his company has been taking on this year.

“As soon as the calendar page turned to 2021, our phones started ringing,” he said. “We already had some projects scheduled to start this spring, but, more importantly, we’re starting to fill our pipeline again with projects that will take us well into the fall of this year and potentially into 2022 as well.”

Dave Fontaine Jr., vice president of Fontaine Brothers, said his company has been fortunate to have several projects ongoing since before the pandemic hit. Many of his largest projects involve building schools, for which budgets are approved long before breaking ground, so funding for them was not affected by COVID concerns. Since the pandemic hit, Fontaine said some towns have delayed public funding approvals, but not as many as he had anticipated.

“In the last six to eight months, we’ve picked up more than $400 million in new work,” he noted. “Some of these projects are in pre-construction now and will start this summer.”

Among the projects scheduled to begin in June are the $75 million DeBerry-Homer School in Springfield and the $240 million Doherty Memorial High School in Worcester.

Infrastructure construction also experienced steady business last year. J.L. Raymaakers and Sons Construction specializes in installing water and sewer lines as well as site excavation for municipalities, airports, and private companies. After a busy 2019, co-owner John Raymaakers said 2020 was nearly a record year for his company, and he’s on pace to fill up the project list for 2021.

Associated Builders project in Bloomfield, Conn

In this Associated Builders project in Bloomfield, Conn., a local chemical company will occupy part of the building and lease the remaining space.

“It’s amazing the amount of infrastructure work that is out there for bid,” Raymaakers said, explaining that his company subscribes to a register that lists all the new public and private projects available for bid. Since the middle of last year, he has seen no slowdown in the volume of bidding opportunities. “Looking only at our category of construction, there were five to six new projects announced just last week.”

Raymaakers predicted bridge construction, another area of expertise for his company, will also see increased activity.

“In the next few years, I think we are going to see a lot of work on replacing aging bridges in New England,” he said, adding that this should happen even without a federal government infrastructure bill, citing two recent bridge-replacement projects his crews are working on in Stockbridge and Pittsfield. Still, he’s hopeful that some kind of infrastructure legislation passes, saying it would be “a huge boost to us and others in our industry.”

 

Help Wanted

While business activity is brisk for everyone BusinessWest spoke with, they’ve all faced recent challenges; some are unique to doing business in the COVID environment, and others are chronic problems made worse by the virus. The issue of having enough workers was a challenge on both fronts.

“We’ve definitely lost people from the workforce due to COVID concerns,” Fontaine said. “They might be taking care of a family member, or they might be in a group that has underlying health concerns.”

He added that managing COVID on the job site is also difficult. “Anytime someone tests positive for COVID, that individual and anyone in close contact with them has to go home and quarantine for the time period,” he explained. “That can result in a lot of labor disruption on a daily basis.”

COVID also exacerbated the long-running problem of fewer workers in skilled-trade and general-labor jobs. Raymaakers said finding help in construction is a constant challenge. Co-owner Laurie Raymaakers pointed out that heavy-equipment operators and construction laborers can make a good living.

“There’s a misconception that laborers aren’t paid well,” she said. “The pay and benefits at our company are pretty good; the reality is there are just fewer people who want to do this type of work.”

She added that it’s also misleading to suggest laborers are not skilled, pointing out that her company’s laborers are highly skilled at making sure pipes are situated properly and secured to withstand years of service.

“Our workers also put together fire hydrants, which require about 50 bolts that have to be tightened in a certain pattern. Hydrants are under constant water pressure, so if it’s not built correctly, parts of the hydrant will go flying in the air.”

As older craftsmen such as plumbers and electricians continue to retire, their ranks are not being filled by enough younger workers. With projects increasing, Bradbury said an already-competitive labor market gets squeezed even further.

Tim Pelletier, president of Houle Constrution

Tim Pelletier, president of Houle Constrution, at the Masonic Temple in East Longmeadow.

“Between the demand for commercial/industrial as well as residential, everyone in the trades is busy, and they can’t find enough workers,” Bradbury said. “On top of that, solar companies are hiring all the electricians they can find at a time when electricians were already in short supply.”

The biggest hurdle to doing business right now, according to Bradbury, involves managing enormous price increases for materials, in some cases rising by more than 100% compared to this time last year.

“Over a period of months, we’ve seen multiple price increases in steel and lumber products,” he said. “Those two create a trickle up that affects prices for every other building material.”

Bradbury noted that steel manufacturing has been affected by labor outages due to COVID, leading to product-supply shortages. He also pointed to increased demand for lumber, especially on the residential side, where housing starts are booming. In addition, his company and many others receive a great deal of lumber from Canada, where the U.S. still has tariffs in place on lumber.

Bradbury said COVID issues are not affecting project schedules because his firm will not start a job until it has a guarantee that materials are available. “We are also adding cost protections in our contracts as a way to guard against the constant increases in materials.”

It’s too early to determine what immediate impact the pandemic will have on building design, but Bradbury said clients from current and future projects have begun asking about air handling and filtration.

“For sure, air handling and using UV light to sanitize a space are areas where people have been putting more focus,” he said. “I think these requests will continue as there is an increased emphasis on clean air and other ways to keep facilities sanitized.”

At Worcester South Community High School, workers installed air-handling units that use bipolar ionization, or, as Fontaine described it, a system that cleans the air and removes many of the germs and bacteria from the building.

“The motivation to install this system was driven by COVID, but there are other benefits, too,” he said. “Systems like this provide a better environment for people with asthma and other health concerns.”

 

Spring of Hope

The arrival of spring and increased numbers of people receiving COVID vaccines gives all the construction managers we spoke to a sense of optimism about life and getting their projects done.

At press time, asphalt plants in the area had begun to open. Because the plants close for the winter, municipalities will not allow road construction because there is no access to repave the roads. So the plant openings are great news for companies like Raymaakers, which plans its water- and sewer-line projects around those openings.

Other managers look forward to a time when they do not have to socially distance their crews and wear masks all day.

“Masks are another nuisance to deal with,” Pelletier said. “If we can start to get distancing and masks behind us, it will speed things up on the job site.”

As part of planning for future business, Bradbury has begun to ask some fundamental questions about what lies beyond the horizon. “Where is the growth potential going to be as we come out of COVID, and which industries will still want to build and have the money to build?”

As he considers the types of industries that are prevalent in Western Mass. and Northern Conn., such as aerospace and manufacturing, he wonders if government spending will still drive those industries. He has also given some thought to the insurance industry.

“Typically, there has been a huge demand for office space for the insurance industry, and how they address that moving forward is a big question mark coming out of COVID.”

As the insurance industry reconsiders its needs, Bradbury added, there has been a sharp decline in demand for all office space. “We are definitely not building more office space anytime soon.”

But his and other firms are building — and that’s good news after a year of uncertainty and a pandemic that hasn’t yet gone away.

Special Coverage Tourism & Hospitality

Get Back Here

It’s called ‘revenge spending,’ or ‘vacation retaliation’ — the idea that people who were unable able to spend money on travel last year will go all-out this year. Surveys say it’s a palpable sentiment among Americans right now; the question is whether they will actually follow through on those plans, and how safe they’ll feel doing so. When they’re ready, area tourism and hospitality leaders say, Western Mass. will be an ideal destination, boasting the variety of indoor and outdoor experiences and affordability that travelers seek — an ideal answer to all that pent-up demand.

Gillian Amaral (left) and Stacey Warren

Gillian Amaral (left) and Stacey Warren, co-founders of Three Chics Hospitality.

Mary Kay Wydra learned a couple new phrases over the past few months.

“The buzz term is ‘revenge spending,’” the president of the Greater Springfield Convention & Visitors Bureau (GSCVB) said. “That is, ‘I’ll spend more on things I was denied because of COVID.’ Things like in-person entertainment, eating at restaurants next to people, and travel.”

The other buzzword making its way around the tourism industry is ‘vacation retaliation,’ and it means roughly the same thing.

She likes those phrases — or, more accurately, what those sentiments portend. “That bodes well for us as a region,” she told BusinessWest. “We are affordable and easily accessible — a destination with a lot to offer.”

Indeed, while COVID-19 has been far from a positive for the region, it did open many people’s eyes to what Western Mass. has to offer, particularly those who migrated here to escape New York City or Boston at the height of the pandemic. That’s evident in the surging real-estate market, but also in the optimism many in the tourism and hospitality sector are beginning to feel about what lies ahead.

It can be detected in Hampden County’s hotel occupancy, which was 39% in January — down from the 49% recorded a year earlier, but significantly higher than the statewide figure of 29%, and on par with national numbers.

“A great number of people are planning to travel, and Western Mass. is well-positioned to get summer travelers. We have that combination of indoor and outdoor attractions and all this green space for recreation.”

It’s also impacting surveys, like a recent ‘sentiment study’ conducted by American Express that found that 84% of Americans have travel plans in the next six months, the highest figure since the earliest days of the pandemic. And 69% of those intend to take advantage of ‘second-city’ destinations, Wydra noted — in other words, those outside of big cities and top tourist spots.

Places, she said, like Western Mass.

“A great number of people are planning to travel, and Western Mass. is well-positioned to get summer travelers,” she added. “We have that combination of indoor and outdoor attractions and all this green space for recreation.”

One more statistic from the survey: 61% of travelers intend to spend more than normal because they couldn’t go anywhere last year.

That’s music to the ears of Stacey Warren and Gillian Amaral, two veterans of the hospitality industry who recently launched their own enterprise, Three Chics Hospitality, which seeks to market its clients to group-tour operators.

“Our clients are group-friendly restaurants and attractions interested in having motorcoach groups come to their establishments or attractions; we offer consulting and marketing for them,” said Warren, who has worked in the hotel field for 17 years.

She called such connections “vital” to the region. “Every single bus that comes in may need 20 or 25 overnight rooms, then you have 20 to 25 dinners at different restaurants, attraction tickets … one bus is really a big impact on the economy.”

Amaral agreed. “Based on multiple tours we can bring in, the economic impact to the region will be huge,” she said. “And just based on conversations I’ve had with people, they’re ready to travel, they’re ready to get out, but they’re also ready to have someone else do that for them. People are like, ‘I just want to go on a tour; tell me where to go, make it easy for me, and take me there.’ That’s our business model. It just makes sense to be ready when the environment is ready for us.”

That moment isn’t far away, Warren added. “People are ready, and we want to be here to help the restaurants and attractions capture that business while they’re here.”

Jonathan Butler, president and CEO of 1Berkshire, noted in a message to that organization’s members last week that sentiment around travel is starting to turn in a way that promises to benefit Western Mass.

“A year ago at this time, we were headed into two or three months of lockdown where nearly all economic activity ceased. A year later, we’re mostly headed in the other direction,” he said. “Vaccinations are finally beginning to add up, public-health metrics have improved, and statewide capacity and operating restrictions continue to be eased on an almost-weekly basis. Out-of-state travelers from neighboring states are now only subject to travel advisories, and within the next couple weeks, even those should continue to be relaxed.”

Sensing a changing tide, Butler noted, organizations like Tanglewood and Jacob’s Pillow (see story on page 39) both recently announced a return to live performances for the upcoming season, and will be joined by other institutions like Barrington Stage Co., Berkshire Theatre Group, and Shakespeare and Co. in bringing performing arts — and, in turn, visitors — back to the region.

“When you combine this exciting news with the continued momentum of the outdoor recreation economy, and our other major cultural properties operating closer to full capacity — now having a year under their belt in learning how to best operate during this pandemic — 2021 starts to feel far more exciting than a year ago.”

 

Taking the Long View

As director of Sales for Hampton Inn Chicopee/Springfield, as well as president of Hampton Inns of New England, Warren has her finger on the pulse of hospitality in the region, as does Amaral, an assistant professor of Management at Bay Path University who also runs Events by Gillian LLC, specializing in event management and consulting, and whose past event experience includes stints at the Eastern States Exposition, MassMutual Financial Group, Enterprise Rent-A-Car, and the Basketball Hall of Fame.

The third ‘chic’ in their new enterprise’s name is, well, hospitality itself, represented by the image of a pineapple. And they feel like Western Mass. has become more of a household name in tourism and hospitality — with the potential for an even broader reach.

Mary Kay Wydra says Western Mass. is well-positioned

Mary Kay Wydra says Western Mass. is well-positioned to raise its profile in the tourism world.

“A lot of the tour operators that have been bringing groups here would just use this as a stopover because they’re from all over the country, and a lot of them just think of Boston and the Cape,” Warren said. “But they’re starting to think of Western Mass., too, and wanting to do things to add on, to offer new and fun ideas for their clients and keep them coming back.

“There are so many great things they can do right here,” she went on. “We can keep them here for a couple of days and reap the rewards, and have their clients leave here happy and wanting to come back.”

Amaral said the two of them have talked about building a business around this concept for years, and felt like this was the right time — even during a pandemic.

“We felt like there was a need. People would come to the Massachusetts area and always go straight to Boston, but what about us here in Western Mass.?” she asked. “Fast-forward to a pandemic we’re almost out of, and we thought, this is the time for us to be positioned for the influx of travel that will come with group tours.”

With their deep knowledge of the region’s tourism industry, she added, they’re able to craft itineraries tour operators can sell to clients, and it’s not too soon to start making those connections, even when the economy isn’t fully opened up.

“Every single bus that comes in may need 20 or 25 overnight rooms, then you have 20 to 25 dinners at different restaurants, attraction tickets … one bus is really a big impact on the economy.”

“Everyone is poised and ready at this point to just go — let’s hit the switch and move forward,” Amaral said. “That’s why now is the time to launch, versus in July, when things are opening up and people are feeling comfortable. At that point, you’re behind.”

Wydra agreed, noting that statistic about 84% of Americans with travel plans in the near future. “People are creating destination wish lists, and simply having a future trip planned makes people happy. We’re optimistic people are going to visit this year. We pushed pause on marketing last year, but hope to start spending again.”

She said the meeting and convention business will be slower to return, simply because large events are often planned years in advance, and an organization that cancels an event here may not be able to return for a few years. Last year, 164 groups canceled or postponed events in the region, with an estimated economic impact of $97 million going unrealized. However, about half those who canceled plan to come back in a future year, she added.

In the meantime, the GSCVB is engaging in some creative sales pitches for the region by planning virtual site visits at destinations like the Amazing World of Dr. Seuss Museum, MGM Springfield, and the Basketball Hall of Fame.

“We’re showcasing the attractions because these attractions set us apart,” she said, adding that the bureau is equally intent on highlighting the many different meeting spaces available. “We want to make sure Western Mass., as a brand, stays out there in front of meeting planners.”

Lindsey Schmid, vice president of Tourism & Marketing for 1Berkshire, recently told Berkshire Magazine about a multi-pronged marketing approach, promoting all there is to do virtually in the Berkshires, as well as continuing to feed travelers ideas and imagery that will inspire them to plan a Berkshire getaway now and more extensive travel later. Part of that message is the outdoor recreation opportunities that helped the region’s tourism sector stay afloat last summer.

It’s a widely understood selling point; U.S. News & World Report’s recent “Best States” feature ranked Massachusetts the ninth-best state in which to live, based on eight factors ranging from healthcare and education to public safely. In the category of natural environment, the Commonwealth ranked fourth.

“Our region leans on the combination of natural beauty and cultural offerings that serve as anchors to drive economic activity; right now, those anchors are preparing for big things in the summer of 2021,” Butler noted.

He added that “the pandemic has tempted us all to lean on pessimism when thinking about the future, but the progressing conditions around us truly call for more cautious optimism. We shouldn’t be so naïve as to think that the summer of 2021 will mark a return to pre-pandemic activity, but we should absolutely be preparing ourselves for a far more robust season than a year ago.”

 

Up in the Air

Certainly, optimism is in the air, although it’s still mixed with some uncertainty. Gathering limits are still a thing, most live performances remain firmly lodged in the future, and some attractions have given no definitive answers on when they’ll open, and to what extent.

For instance, Six Flags New England held a large hiring event last month to fill 3,000 seasonal positions, but the company has issued no definite opening date yet — though it is expected to decide soon, looking to state guidance and the realities of its own business model.

It will do so with heavily publicized safety protocols, like every other tourist destination — an element of the sector Wydra is particularly proud of.

“We’re climbing out of this with precautions still in place,” she said. “I’m very proud of our attractions, with all the protocols put in place, the cleaning and everything else they’re doing to keep visitors safe. You’ll see a lot of that continue.”

Warren said visitors will want to feel safe before the sector really opens up. “There are still some people who are nervous, but we’re able to show them what we can do — what plans the restaurants and attractions have in place to keep them safe when they come — and that’s making them feel very comfortable and ready to visit.”

Amaral cited research showing that people are more comfortable and apt to travel when adequate protocols are in place.

“Being knowledgeable about what to expect ahead of time puts them at ease,” she added. “And, of course, so many people being vaccinated is helping as well. The apprehension, even from six months ago, is much different than it is now. People are just ready to go — with caution, but nonetheless, they’re saying, ‘let’s go.’”

Wydra agreed. “There’s definitely some optimism as we move forward with the vaccines. We’re always hearing about new ones being introduced, and the government keeps making people eligible for it — that’s great news.”

Butler tempered that optimism with the other side of pandemic reality — which is, we’re not out of it yet, and people shouldn’t just abandon the common-sense behaviors that keep case counts down.

“Any increase in business needs to be done with public health and safety as the foremost consideration,” he said. “But all of the larger-picture conditions that have fueled growing visitor and economic activity throughout the past two decades are aligning well.”

Warren has been in the hospitality field long enough to ride a few economic cycles, but she’s never witnessed anything like last year — “and I never want to see it again,” she said. “I’ve never had to cancel so many groups and lose literally millions of dollars in revenue. So I’m looking forward to coming back strong this year and help everyone to bounce back.”

She’s heard from tour operators that they do, indeed, want to come back. But they’ll be returning to a changed tourist economy, and change isn’t always a bad thing, Amaral said.

“This has been a wake-up call to most businesses to think differently, which is exciting to me. Let’s not wait for a pandemic or tragedy to happen to think about a different way to do business or attract a target market or a different product line. If there’s anything we can take from this, it’s don’t get into the same rut. Think about different ways to improve your business.”

Amid the changes, of course, some normalcy is more than welcome.

“Who would have thought, a year ago, that we couldn’t go into a bar and have a drink?” Wydra said. “I want to meet friends after work for drinks. And I’m excited, because I think we’ve got some positive stuff happening in the future.”

 

Joseph Bednar can be reached at [email protected]

Modern Office Special Coverage

Weathering the Storm

Ned Barowsky

Ned Barowsky says flexible leases, as offered in the co-working world, will be more in demand in the future, and rigid, long-term leases less so.

Since launching Click Workspace a decade ago, Mary Yun has seen nothing but growth in one of the region’s first co-working ventures.

That growth led her to abandon her original 1,000-square-foot facility in 2015 and develop a 9,000-square-foot building in downtown Northampton, which, at its peak prior to the pandemic, hosted 80 members and a host of community arts and cultural events.

“That was a good number for us, where we could operate with a full-time member advocate and myself as executive director overseeing all the operations and also working on events,” she said. “We’re mission-driven, bringing in the community through art shows and music; that was my wheelhouse.”

With 80 members, all the private offices and dedicated desks were filled, as was the shared open space, for the most part, while a meeting room holding 24 people was regularly put to use by the community. In short, Click was … well, clicking.

And then COVID-19 arrived.

“We’re finding, now that the vaccine is being distributed and the sun is shining, so to speak, we’re getting a surge of new interest recently as people are starting to feel more comfortable coming back into the world. People are sick of working from home.”

“When the closures happened, we closed down like all businesses, and we still had members supporting us, paying their monthly dues for a while. We had members who were now working remotely from home,” Yun said.

But the erosion began almost immediately.

“We had always maintained a good number of members who had private offices that were being funded by their companies. At their businesses, they were the remote workers,” she went on. “But, because everything was now remote, that benefit went away for a lot of our members, so we lost a handful.”

When Click reopened at the end of May, around 55 members were still supporting the space, paying their dues, even though not everyone was coming in regularly — usually, no more than a dozen at a time through last summer. A few members actually joined during the pandemic — some with their career situations in flux, others who needed a place to work because their homes were suddenly too crowded by partners and kids working and learning remotely.

Mary Yun expects membership to rise to its former high levels

Mary Yun expects membership to rise to its former high levels after the pandemic fades, but it may be a gradual process.

But it wasn’t enough. “Right now, we’re down to less than 30 members, which is a huge drop in revenue,” Yun said. “Right now, our membership is lower than when we first moved into this building almost six years ago.”

The basic concept behind co-working is simple. It’s a workspace where people can share a table or an office; access fast internet service and shared resources like a copier, conference rooms, and audio-visual equipment; and make the kinds of connections that inspire further growth and success.

The pandemic has impacted the model in the short term, but the people operating area co-working spaces believe it’s a model with plenty of potential in the long term, and perhaps even more than before COVID-19.

“Like most businesses, we definitely lost some business,” said Jeff Sauser, who co-owns Greenspace CoWork in downtown Greenfield with Jeremy Goldsher. “No one knew what to expect, and we managed to be as flexible as possible with members; those relationships are important to us. We gave every opportunity to pause membership and make changes.

“We lost a chunk of memberships — not everybody; some stayed on, even though they weren’t coming as often — but we were able to stay afloat and survive,” he went on. “We’re finding, now that the vaccine is being distributed and the sun is shining, so to speak, we’re getting a surge of new interest recently as people are starting to feel more comfortable coming back into the world. People are sick of working from home.”

As a consultant for a Boston-based company that used to have four offices there and now maintains just one, Sauser sees first-hand the way workplaces are evolving — and in a way that may benefit co-working facilities.

“People don’t come into work every day anymore. We expect more people will have more flexible working arrangements with their employees.”

Yun agreed, noting that many of Click’s members left because their kids were learning at home — which is sure to be a temporary situation; in fact, many schools have already invited students back to campus. She believes an increase in membership at Click is inevitable, though it may take some time.

“People are saying, ‘I’m sick of living in the city and running the rat race. I can live where the living is good but keep my big-city job.’ I feel co-working spaces are an early indicator of trends that will benefit towns, especially towns with great, walkable downtowns.”

“I think what’s going to happen is, when kids go back to school in the fall full-time, parents will be like, ‘maybe I can make it work at home,’ and continue to work at home, and in a couple months, they’ll start to get lonely — professionally lonely — and start to come back, which is why they came here in the first place,” she told BusinessWest. “Really, I’m hopeful and optimistic.”

Stroke of Inspiration

Ned Barowsky was certainly optimistic when he launched a franchise of the national co-working company Venture X in Holyoke, right next to the Holyoke Mall.

He’s owned the retail and office complex at 98 Lower Westfield Road for 25 years, and faced a series of vacancies over the past couple of years the departures of Pier One Imports, Kaoud Oriental Rugs, and a series of mattress stores. For six months, two brokers assigned by a large, national real-estate firm had been trying to fill the vacancies, to no avail. That’s when Barowsky was inspired to by the co-working model.

“I had done a couple franchises in the past; I was familiar with franchising, so I started looking at co-working spaces,” he said. “I just knew that everything was being shut down, and when people come back out, they’re not going to go back to these five-year leases, 10-year leases. People aren’t going to do that anymore. They’re going to want flexible plans — ‘I want to be here for a month, three months, six months, a year, and with a smaller footprint.’”

When he started researching a few companies, he was “blown away” by Venture X, which tags itself “the future of workspace.”

“That’s our tagline, but it literally is the future of workspace. It’s flexible — you decide how many of each kind of office you want,” he said, noting that some franchisees opt to emphasize shared space, but his facility includes fewer shared stations and about 65 offices, in several sizes, to house any number of workers. “I wanted more offices, so that’s what I did — I put in more offices.”

Jeremy Goldsher (left) and Jeff Sauser

Jeremy Goldsher (left) and Jeff Sauser say robust co-working spaces can be economic drivers for communities.

Sauser sees the potential, too, in companies downsizing their space and offering more flexible arrangements to workers — partly because of what they learned during the pandemic, when they saw how productive employees could be while working remotely. And that has implications for entire communities.

“I think co-working spaces are very well-positioned to receive those people,” he said. “I’m an urban planner — I’ve been thinking about this stuff long before the pandemic hit. A lot of trends show that, if people can work more flexibly, and make decisions about where they live based on lifestyle and not where the jobs are, people can move where they want to.”

He pointed to surging real-estate sales in Western Mass. and in the suburbs outside large cities like Boston.

“People are saying, ‘I’m sick of living in the city and running the rat race. I can live where the living is good but keep my big-city job,’” Sauser said. “I feel co-working spaces are an early indicator of trends that will benefit towns, especially towns with great, walkable downtowns.”

A lot of towns in Western Mass. offer that already — Greenfield has a walkable downtown, with opportunities to work in a co-working space, so it can be more competitive attracting new residents,” he went on. “I think of it as economic development for communities, not just for businesses like ours.”

Several years ago, Sauser and Goldsher met at a Franklin County Community Development Corp. event and were soon talking about the co-work concept, which Goldsher had seen flourishing while living in New York City. They say members are attracted to co-working for a number of reasons, among them lower prices than traditional office rent, flexible leases, and shared resources ranging from a printer, projector, meeting space, and wi-fi to a kitchen with free tea and coffee.

The pandemic actually revealed new opportunities for co-working spaces, Sauser added, from remote workers who live in rural communities with poor broadband access to college students who needed the space when campuses were closed, to working parents who craved a break from their suddenly bustling house.

“And we were honored to see a lot of members choose to stick with us and extend their membership even when they weren’t using the physical space,” Goldsher added. “Before this, the concept of co-working was a novelty, but we brought an urban concept to a smaller community and showed the model does translate in a different way. Now a lot of other opportunities are presenting themselves.”

Bills, Bills, Bills

Yun had a broader vision as she grew Click — one centered around the arts as an economic driver, with gallery shows, music performances, literary events, and the like, to emphasize Northampton’s cultural heritage while exposing new faces to Click’s eclectic space. That aspect of the complex has been wiped out during the pandemic.

“It’s been a hardship for the people who have been coming in — there’s very little community left right now with so few coming in,” she said. “We’re eking by, but we’re going to make it. I think a lot of it is because we operate as a nonprofit, so we had reserves built up, and we’re dipping into those reserves now.”

PPP loans, a Massachusetts small-business grant, and rent reduction have helped, but the complex will eventually need to boost its membership back up.

“It doesn’t matter whether you have one person here or 50; you have all these fixed expenses,” Yun said. “There may be a little bit of give in the rent, but we have to pull in fiber-optic internet — that’s a huge cost for us, almost $900 a month. All the utilities are fixed. Last summer, I said to myself, we need to be able to sustain ourselves until the summer of 2022 because I felt like that was going to be when the recovery was in full swing for us.”

That timeline seems more accelerated now, but she feels like the return to normalcy will still be a gradual one. “Do all the former members come back? A lot have moved on, and co-working is such that people come and people go all the time.”

The pandemic saw an influx of residents from New York to Western Mass., but many of them have purchased large homes with home offices, so it’s unclear what effect that migration will have on co-working. “It seems daunting, but we’ve been open for over five years here now, and I feel like we’re here to stay. Who knew we’d have a pandemic?”

To counter that still-active pandemic, Click, like every other workspace, has launched a series of safety protocols, from requiring masks when moving about to regular sanitization to pumping in fresh air.

Air quality was a big concern for Barowsky at Venture X as well. “During COVID, I was very cognizant of air-filtration systems. I spent well over $100,000 on seven rooftop units,” he said, in addition to investments in touchless bathrooms, numerous hand-sanitizer stations, and a keyless entry system.

Greenspace takes safety seriously as well, Sauser said. “From a COVID safety standpoint, we follow all the state guidelines and have protocols in place — cleaning, masks, sanitizers.”

Goldsher added that the state’s rules early on made little sense, noting that Greenspace was not designated an essential business, but — unlike Click — stayed open throughout the pandemic anyway because one of the companies it houses was deemed essential, and had to continue using the space.

“While I think we proved that we are a very necessary asset in the community, there’s this strange dichotomy being open for essential business and not being considered an essential business ourselves.”

Here to Stay

But those who own co-working spaces in Western Mass. — other prominent centers include AmherstWorks, 734 Workspace in Longmeadow, and Cubit Coworks in Holyoke, to name just a few — say they are indeed an essential part of the 21st-century economy.

“I think the future of the workplace is very much up in the air. There’s no way to predict what the open concept will look like in five years time, but we have some good ideas,” Goldsher said.

Sauser agreed that the future of the workplace is in flux, but suggested that the office of the future might look much like co-work spaces of today, “where flexibility is the emphasis, in part because office managers and companies dedicate less space to individual employees when employees are not coming in every day.”

Yun added that companies have decisions to make about whether to extend their traditional leases or move toward more flexibility and smaller footprints. That, in turn, could drive the next surge of growth in co-working, and she welcomes more such facilities, because each new complex will raise awareness of the model and its benefits.

“We don’t know how all this will shake out,” she said. “But the more co-working spaces exist, the better.”

Joseph Bednar can be reached at [email protected]

Tourism & Hospitality

Big Steps Forward

The productions at Jacob’s Pillow

The productions at Jacob’s Pillow for the 2021 season will all be outdoors, many at the Inside/Out stage, seen here.

For Jacob’s Pillow in Becket, the nation’s largest and longest running dance festival, 2020 was a lost year in almost every respect.

That’s almost, and we’ll get to that silver lining, if it can be called that, shortly. First, all those losses.

Jacob’s Pillow lost an entire season of live performances and all the revenue that comes with it, forcing a 50% reduction in the budget, layoffs, and other cutbacks. It also lost some momentum when it comes to fundraising, especially for a much-needed renovation of its main stage, the Ted Shawn Theatre, or the ‘Shawn,’ as it’s known. Then, in November, the company lost its smaller, more intimate performance space, the Doris Duke Theatre, or the ‘Duke,’ to a fast-moving fire, the cause of which has still not been determined.

But from the ashes, figuratively but also quite literally, Jacob’s Pillow has plans to roar back in 2021, said Pam Tatge, executive and artistic director. It will be a different kind of year, one with performances in outdoor settings only and to limited audiences, but one in which the company plans to lay a solid foundation for its 90th birthday in 2022, and for the decades to come.

Indeed, ambitious plans are in place to modernize the Ted Shawn Theatre, add air conditioning and new ventilation, and enlarge and improve the stage. Meanwhile, plans are expected to emerge for a new Duke, one that will be conceptualized and designed with input gathered from audiences and artists alike.

“We’ve embarked on a research study to really understand what audiences and artists loved about the Doris Duke Theatre, what they want to retain, and also what artists need for works being made in the 21st century,” Tatge noted. “We’re building a space, hopefully, for the next 90 years.”

While doing that, Jacob’s Pillow will also put on a season of live performances, the pieces of which are still coming together. It will run from June 30 to Aug. 29 and, for logistical reasons and lingering restrictions on travel, feature mostly performers based within driving distance of the 220-acre campus.

Audiences will be smaller and spaced apart for safety reasons, severely limiting in-person attendance. Which brings us to what would be considered the one bright spot for 2020, a schedule of 38 performances from years past — with new pre- and post-performance talks — presented virtually and to huge, global audiences, a development that made it possible for people who could never before get to Becket to take in a performance at the ‘Pillow.’

“We realized an audience for our virtual festival that had thousands more people than we could ever accommodate on the Pillow campus,” Tatge explained. “And 80% of those people were new to us — they had not been on our list before, and that was a great revelation; people know of Jacob’s Pillow, but they haven’t been able to make their way here. So in terms of accessibility and reaching people of different economic means and physical abilities, this was an amazing way to have the magic and joy that we experience on campus at the Pillow shared far more widely.”

For the 2021 season, most performances will again have virtual access internationally, a step to broaden audiences that Tatge called a “a big experiment.”

“We’ll want to see if the audience engagement is as great — it’s summertime, and things are opening again, so we’re going to see,” she said. “But I know a virtual platform has been in Jacob’s Pillow’s mission delivery, and it will continue to be a way that we deliver our mission into the future.”

 

Staging a Comeback

Tatge was at her residence in Connecticut when she got the phone call early in the afternoon on Nov. 16, delivering the terrible news that the Duke was on fire. She raced north as fast as she could and arrived in Becket just as the last remaining portions of the wooden structure were being consumed by the flames.

The loss of the beloved theater that hosted smaller productions seemed to provide a surreal ending to a terrible year that was all too real, and all too painful.

Looking back on it, Tatge said the Pillow, like every other live performing-arts venue, was severely tested by all the pandemic bought with it.

“With the cancellation of the season, we lost all of our earned-income potential — 40% of our budget is ticket income,” she explained. “We had to lay off 35% of our staff. Ultimately, we ended the year OK because we received a PPP grant. Without that grant, we would not have made it through as successfully.”

For 2021, there will be a new, very tight budget, hopes for a second round of PPP, and some high fundraising goals, Tatge went on, adding that there are many unknowns and considerable challenges ahead even as the proverbial light at the end of the tunnel when it comes to the pandemic draws closer.

Ted Shawn Theatre

At right, the Ted Shawn Theatre, which will undergo an $8 million renovation this year. At left, the Doris Duke Theatre, which was gutted by fire in November. Input is being sought on a replacement, and an architect is likely to be chosen later this year.

“Because our performances are going to be shorter, we won’t have the earned-income potential to bridge the gap between expenses and revenues,” she explained. “So we really need a subsidy, and we really need our community’s support to invest in putting artists back to work — who must get back to work if our field is going to survive this — and bring audiences back together.”

Overall, though, there is considerable optimism moving forward, and Tatge said that, for her, it’s fueled by the tremendous response she’s seen from the community, a broad term she uses to describe constituencies ranging from performers to patrons who take in their work.

“What has been impressive to me is the range of people who have contributed to Jacob’s Pillow so far, from artists themselves, who don’t have much but want to share something with Jacob’s Pillow, to alumni, to our board members and our members,” she said. “Jacob’s Pillow members are a devoted bunch, and they have stepped up, and we’re going to need that to continue until we get to 2022.”

“Our first priority is to bring people back together safely, so we have rigorous protocols that are in place — for audiences, performers, and staff.”

Optimism also abounds concerning the 2021 season of performances, which, as Tatge noted, will take place outdoors — at the Inside/Out stage and other settings around the sprawling campus.

“Our first priority is to bring people back together safely, so we have rigorous protocols that are in place — for audiences, performers, and staff,” she explained, adding that these protocols are being developed in conjunction with — and will be shared by — other performing-arts institutions in the Berkshires, such as Barrington Stage, Tanglewood, and other venues.

This collaboration is in many ways unprecedented, but also quite necessary, she went on, if the the tourism-dependent Berkshires region is to battle back from an incredibly difficult 2020.

The schedule calls for all activities — performances, workshops, and pre-performance talks — to take place outdoors or under a tent, said Tatge, adding that, in addition to the Inside/Out stage, the Pillow boasts a number of other ‘natural stages’ around the campus that will enable visiting companies to stretch their collective imaginations.

“There are so many parts of our campus that we’re going to be inviting audiences to discover,” she told BusinessWest. “And artists are crafting works particularly for our site, and that’s exciting.”

These performances will also be filmed, as most have been over the years, and presented virtually — an opportunity, as she noted earlier, to greatly expand audiences.

While the shows will go on in 2021, the Pillow is also looking to make huge strides with efforts to modernize and renovate the Shawn, opened during the 1940s, and replace the Duke.

The former, an $8 million project, has been in the works for several years, she said, adding that the pandemic has only reinforced the need for air-conditioning and improved ventilation. And this simple reality helped convince the board of directors that, despite the difficult and uncertain times, the Pillow needs to push ahead with a capital campaign conceived to raise the remaining $2 million needed for the project.

Pam Tatge says the ‘Pillow’ has put a horrendous 2020 behind it, but stern challenges remain for this Berkshires institution.

“We quickly realized that the Ted Shawn Theatre will not be viable as a theater in a post-COVID world without a ventilation system and air conditioning,” Tatge said. “It’s not a viable space at present, and we made the decision to take the Shawn offline this summer so we could move ahead with the renovation, which actually began in January, with pre-planning.”

Ultimately, the plan is to have the renovated theater ready for that 90th-anniversary year in 2022.

As for the 30-year-old Duke, that research study she mentioned has been completed, with the next steps in the process being to research architects and ultimately select one, determine the full scope of the project, and pinpoint just how much money will have to be raised beyond what is covered by insurance.

 

The Next Act

Moving forward, Tatge is focused on 2021, obviously, and bouncing back in a big way from a dismal 2020.

But she’s also focused on the future — not just the 90th-anniversary celebrations that will dominate 2022, but the years and decades to come.

The Pillow is a National Historic Landmark and a tradition in Western Mass., and the ultimate mission for staff and board members is to make sure it can serve future generations.

The pandemic severely tested the mettle of this institution, in every conceivable manner. But it has been made stronger by that test and, hopefully, even more resilient.

In short, the Pillow is ready to take big steps forward in 2021 — on stage and in every way.

 

George O’Brien can be reached at [email protected]

Construction

Firm Foundation

Mark Sullivan

Mark Sullivan says public work — his firm’s main niche — slowed down in 2020, but activity looks strong for the coming year.

Mark Sullivan wasn’t unlike countless other business owners, watching the COVID-19 story develop last February and March and wondering how his construction firm, D.A. Sullivan & Sons Inc., would fare.

While no one knew early on what the pandemic’s impact would be, the general consensus was “this isn’t going to go well at all,” he said. But the company, like all others, managed to keep moving forward, with office staff working from home and Zoom meetings a new fact of life.

“Ultimately, we were able to keep people working in whatever format worked best for the individual, and we’re thankful we didn’t have any layoffs in the field,” he went on. “We were able to employ everyone through 2020.”

What makes that notable is that this fourth-generation family business, which opened its doors in Northampton in 1897 and has been headquartered in that city ever since, relies heavily on public work, including some of the highest-profile municipal and collegiate projects in the region at any given time.

“Now it’s to the point where projects we built 30 or 40 years ago are being renovated or being torn down and replaced. It’s all cyclical.”

“We’ve always had a heavy mix of public work — probably half to 60% of what we do has been public work,” said Sullivan, who is the firm’s fifth president, while his brother, Dennis, is chief executive operator. “We certainly have private clients we do a lot of work for, and we look for that private work, but public work over the years has been the most consistent.”

When Gov. Charlie Baker shut down large swaths of the economy just over a year ago, “we were certainly fortunate we were deemed critical, or essential, and we were able to keep some projects going,” Sullivan recalled. “When COVID hit, we did lose some work; some projects were paused and some outright canceled as people tried to figure out what the pandemic was and what it meant in the near-term future.”

Some of the projects the firm completed in 2020 included a fitness center transformation at Massachusetts College of Liberal Arts in North Adams, a new administration building at Harriman & West Airport in that city, a renovation of the Pioneer Valley Transit Authority para-transit maintenance and storage facilities in Springfield, and the renovation of a mill building in Easthampton into apartments and office spaces.

“We rely on public work, and the state froze most public work after the first quarter. UMass did, too,” Sullivan said. “We had a backlog going into the year, and we finished up that work, but it was difficult getting new work toward the end of the year because everything had been frozen.”

renovation on Ferry Street in Easthampton

This mill renovation on Ferry Street in Easthampton features a mix of office space and apartments.

However, after the firm’s work volume in 2020 totaled about 20% from the year before, things are looking up. “What we’re seeing now is that, as the vaccine rolls out and people see the light at the end of the tunnel, those projects paused last year are coming back online.”

Considering that, he said, and the fact that new municipal projects are starting to emerge from the drawing board, “it looks to be a busy year.”

 

Plenty to Build On

Indeed, the projects currently underway — the firm typically manages 10 to 15 each year — speak to the breadth of the opportunities available in the municipal, academic, and other realms. They include:

• General-contracting services for the construction of the Newman Catholic Center at UMass Amherst, the UMass Fine Arts Center bridge renovation, a renovation and expansion of the Worcester Public Library, and the Chicopee City Hall renovation;

• Construction-management services for a renovation of Mount Holyoke College’s Gamble Auditorium and the construction of 38 cottage-style homes at Lathrop Community; and

• Owner’s project-management services for the renovation of the Westhampton Public Safety Complex and a renovation of the historic Grafton Public Library.

“It’s cyclical,” Sullivan said of public work. “You might be doing elementary schools for a decade, then find yourself doing middle schools after that. Now it’s to the point where projects we built 30 or 40 years ago are being renovated or being torn down and replaced. It’s all cyclical. We do a lot of work for the Five Colleges, UMass especially. It’s always varied, and it’s always interesting.”

The mill renovation in Easthampton was a fun challenge because of the condition of the building when the project began, he noted, while the Worcester library project is fun in other ways.

“Our partners got a kick out of the high-end millwork installation,” he said, noting details in the children’s room like a rocket ship and an eight-foot-tall book. “Most projects are budget-driven from a carpentry standpoint and may not get a millwork package that’s particularly interesting, so to speak. But every now and then, we get a library project or private-client work — we do a lot of private work for prep schools in the area — and those are projects carpenters can really sink their teeth into; they’re a lot of fun.”

Sullivan noted that construction management is becoming more the norm in the firm’s projects than straight general contracting. What hasn’t changed, however, is a reliance on cultivating relationships with municipalities, colleges, and other types of clients over time.

“It can be difficult to be a contractor of our size in the area we’re in and sustain longevity,” he said. “Every project is different, every client has a different process, and the relationships are unique, too; we value those relationships and rely on those relationships to keep work coming.”

That stability was in direct contrast to the upheaval of COVID-19, and how that affected the way workers were able to do their jobs.

“Initially, everyone was trying to figure it out,” he said. “There was no guidebook to follow; it was being established as we went along. That was true for everyone in our industry and in other industries deemed essential, and we were able to keep some projects moving forward in the field.

“Certainly, productivity took a hit, when we were sanitizing projects twice a day, taking temperatures, and keeping logs,” he went on, noting that, when a delivery person was found to have COVID, a whole job site shut down for a few days.

“In the big picture, we got through the whole year without too many issues,” he added. “It’s literally been a year since this thing hit; everyone has the protocols down pat.”

 

Getting to Work

Now that things seem to be looking up — both in the public-sector construction world and in general, with vaccines generating positive news on the COVID front — Sullivan is ready to tackle what he sees as pent-up demand.

“The need for work didn’t go away,” he told BusinessWest. “I think there’s a lot of liquidity in the market; last year, people held on to figure out a way through the pandemic, and now that they see an end in sight, things are starting to loosen up, and we’re very busy on the building side of things.”

As his family’s business has been for more than 120 years.

“We’ve been around a long time in Western Mass. We work roughly from Pittsfield to Worcester — that’s our zone — and there aren’t many mid-size contractors of our size left in Western Mass.,” he said, noting that the firm generates about $40 million in sales each year. “There are a few bigger firms and several smaller firms out there, but we’re happy with the size we are; it’s a good size. And we’re thankful just to be able to be working every day and be around as long as we have.”

 

Joseph Bednar can be reached at [email protected]

Modern Office

Flexible Thinking, Nimble Action

By Susan Robertson

To survive the pandemic, companies were forced to adapt very quickly to radically new circumstances. Even large organizations — where it’s typically difficult to shift directions quickly — managed to accomplish it. Leaders discovered that, when required, their organization could act much more quickly and nimbly than they normally do.

So, the obvious questions are: what was different? And how can you ‘hardwire’ this flexibility into your organization so it continues to be stronger in the future?

 

What Was Different?

All humans have a set of cognitive biases, which are mental shortcuts used for problem solving and decision making.

To be clear, cognitive biases are not individual or personal biases. They are a neuroscience phenomenon that all humans share. It’s also important to understand that they operate subconsciously; they affect your thinking in ways that you don’t realize.

You have two different thinking systems, commonly known as system 1 and system 2, sometimes referred to as thinking fast and thinking slow.

System 1 is the intuitive, quick, and easy thinking that we do most of the time. In fact, it accounts for about 98% of our thinking. It doesn’t require a lot of mental effort; we do it easily, quickly, and without having to think about the fact that we’re thinking.

System 2 thinking is deeper thinking, the kind that’s required for complex problem solving and decision making. This deeper thinking requires more effort and energy; it literally uses more calories. Since it’s less energy-efficient, our brain automatically and subconsciously defaults to the easier system-1 thinking whenever it can to save effort.

Cognitive biases result when our brain tries to stay in system-1 thinking, when perhaps it should be in system 2. The outcome is often sub-optimal solutions and/or poor decision making. But we don’t realize we have sub-optimized because all of this has happened subconsciously.

In typical circumstances, several of these cognitive biases conspire to make us perceive that continuing as we are — with only slower, incremental changes — seems like the best decision. It feels familiar, it feels lower risk … it just feels smarter. Choosing to do nothing different is, very often, simply the default. It frequently doesn’t even feel like we made a decision; instead, it feels like we were really smart for not making a potentially risky decision.

But during the pandemic, changing nothing, or changing very slowly, were simply not options. This particular situation was so unique that our brains didn’t have the choice to stay in short-cut system-1 thinking. System-2 thinking was required. Since we consciously realized we must change — quickly — our brains literally started working harder, in system 2, and the normal cognitive biases weren’t a factor.

 

How Can We Be More Nimble in the Future?

The key to maintaining flexible thinking and nimble behavior is to not allow our brains to fall into the trap of cognitive biases. Obviously, since these are intuitive and subconscious responses, this is not an easy task. But there are proven ways in which we can better manage our brains. Here are a few ways to start.

• Knock Out the Negativity Bias. This is the phenomenon in which negative experiences have a greater impact on your thoughts, feelings, and behaviors than positive experiences. So you are much more highly motivated to avoid the negative than you are to seek out positive. The way this manifests in your daily work is that you are much more prone to reject new ideas than to accept them, because rejecting ideas feels like you’re avoiding a potential negative.

Respond to “yes, but…” with “what if…?” This requires a dedicated and conscious mental effort, by everyone on the team, to monitor their own and the team’s response to new ideas. Every time “yes, but…” is uttered, the response needs to be, “what if we could solve for that?” This reframing of the problem into a question will trigger our brains to look for solutions, instead of instantly rejecting the idea.

• Short-circuit the Status-quo Bias. The status-quo bias is a subconscious preference for the current state of affairs. We use ‘current’ as a mental reference point, and any change from that is perceived as a loss. As a result, we frequently overestimate the risk of a change, and dramatically underestimate the risk of business as usual.

When weighing a choice of possible actions, be sure to overtly list “do nothing” as one of the choices, so you are forced to acknowledge it is a choice. Also include “risk” as one of the evaluation criteria, and force the team to list all the possible risks. Then comes the difficult part: remind the team that their subconscious brain is making them perceive the risks of doing nothing to be lower than the reality, so they should multiply the possibility of each of those risks.

• Curtail the Curse of Knowledge. In any subject where we have some expertise, we also have many subconscious assumptions about that subject. Under normal circumstances, this ‘curse of knowledge’ (these latent assumptions) limits our thinking and suppresses our ability to come up with radically new ideas.

Rely on advisors who don’t have the same curse of knowledge. In other words, seek out advice from people outside of your industry. When evaluating ideas or actions, these outsiders won’t have the same blinders that you have, so they will likely have a more clear-eyed view of the benefits and risks.

The bad news is that cognitive biases are always going to be a factor in our problem solving and decision making; they’re hardwired into us. The good news is that, with some dedicated and continuous mental effort, we can mitigate them and become nimbler in the face of change.

 

Susan Robertson empowers individuals, teams, and organizations to more nimbly adapt to change, by transforming thinking from “why we can’t” to “how might we?” She is a creative thinking expert with more than 20 years of experience coaching Fortune 500 companies. As an instructor on applied creativity at Harvard, she brings a scientific foundation to enhancing human creativity; www.susanrobertson.com

Community Spotlight

East Longmeadow Focuses on Improvements

By Mark Morris

From left, Michael Meunier, owner Kendall Knapik, and Orpheus Barrows from Pioneer Valley Arms.

From left, Michael Meunier, owner Kendall Knapik, and Orpheus Barrows from Pioneer Valley Arms.


When Mary McNally reflects on 2020, it’s with no small amount of gratitude for how well her town has weathered the pandemic up to this point.

“To state the obvious,” she said, “it’s been one heck of a year.”

As East Longmeadow’s town manager, she credits all the municipal staff, in particular the Health Department, for its efforts to advise and inform the public on COVID-19 matters, as well as the town’s emergency manager, Fire Chief Paul Morrissette.

“The pandemic gave people the chance to see how dedicated and committed municipal public workers are to the mission that is their vocation,” McNally said. “Their willingness to do what has to be done and go wherever they are needed is something people are aware of and appreciate. I certainly do.”

Though Town Hall has been closed since March 16 of last year, staffers have been able to meet the community’s demand for services through online meetings, e-mails, and phone calls.

“We had staff, including department heads, who met people in the parking lot of Town Hall if they needed access to a particular department for a document or other item,” she said. “It was like they were carhops at the old A&W.” Without committing to any specific timeline, she is hopeful Town Hall will reopen to the public in the next 90 to 120 days.

Though she has been the full-time town manager for only 16 months, McNally has been working on a master plan for East Longmeadow to better prioritize important projects. The town recently received a grant from the Pioneer Valley Planning Commission to hire a consultant to develop the plan. McNally said a recent Zoom session to plot out the vision of the master plan drew great participation from residents. Part of the grant requires the master plan to be completed by June, and she is confident about meeting that deadline.

“To state the obvious, it’s been one heck of a year.”

Back in December, the town council changed a zoning bylaw that has a direct impact on the site of the former Package Machinery. Once zoned only as industrial, the change allows for mixed use, which would allow residential as well as commercial buildings to locate there. McNally said the new zoning bylaw applies townwide.

“Previously, mixed-use zoning didn’t exist in East Longmeadow,” McNally said. “Because this zoning change applies to more than just the Package Machinery site, it opens the door for developments all over town.”

At this time, there are no formal proposals to develop the Package Machinery site, but past discussions have suggested construction of single-family homes, condominiums, apartments, and light-use business entities, she noted. “The idea would be to have a new walkable neighborhood near the bike trail and the center of town.”

 

Business Perspectives

While several businesses in East Longmeadow suffered from the pandemic, others experienced more demand for what they sell. Bobbi Hill is the fourth generation to work for W.B. Hill, a custom builder of oil trucks that has been incorporated since 1910 and located in East Longmeadow since 1965.

Hill’s title is manager, which she defines as running sales, marketing, parts, and human resources. The company primarily builds and maintains tank trucks, the kind that carry home heating oil and trailer tanks (known as ‘trailers’ or ‘tankers’) that connect to a truck cab, most often associated with hauling gasoline. Despite the world burning less petroleum during the pandemic, Hill said she saw only minor impact in a couple areas of business.

“The pandemic had a little impact on service work for tankers that needed repair,” she noted, quickly adding that COVID has not affected sales of new tank trucks, which have a backlog of orders. “If a customer walked in today to order a tank truck, I probably wouldn’t be able to deliver it until September.”

In the only consumer-facing part of the business, W.B. Hill is an official vehicle-inspection station. At the beginning of the pandemic, it shut down the consumer-vehicle business but continued with tanker inspections. “Pandemic or not, tankers need to be inspected,” she said. “They go through a lot of rigorous testing every year and cannot travel with an expired sticker.”

Though business is brisk right now and there is still plenty of demand to transport heating oil and gasoline, Hill has begun looking to the future.

“With electricity being pushed all over the country, I’m looking for us to become more of a parts business,” she said. By purchasing a building next door from Northeast Wholesale Lumber, she conceded that her “big dreams” of increasing the parts business is not happening right away because of high startup costs. Until then, Northeast continues to lease half the building.

“We are experiencing a bit of a boom in housing due in large part to the low interest rates.”

“We sell parts now, but I’d like to do more online and on a much larger scale,” she said. “There really isn’t anyone in New England who sells parts for these vehicles.”

Though a relatively new business in East Longmeadow, Pioneer Valley Arms (PVA) is another business that remained active during the pandemic. Owner Kendall Knapik, who opened the shop two years ago, had to shut down in the early days of the pandemic. A lawsuit by other gun stores claiming infringement of Second Amendment rights forced Gov. Charlie Baker to deem gun stores an essential business. When she reopened, Knapik’s already-successful shop saw a jump in sales.

“After the pandemic hit, our customer volume tripled,” she said. “We’ve increased our clientele tremendously, and we’re teaching many more safety classes.”

The combination of COVID-19, protests that took place in different parts of the country, and the presidential election all played a role in driving sales, she added. “Uncertainty and election years tend to drive sales more than a typical year.”

Knapik talked about a new wave of people coming in to protect themselves, their homes, and their loved ones. After 10 years in an industry she described as most often serving middle-aged male clients, Knapik opened her business to counter what she called the “usual gun-shop attitude.”

“It’s an attitude where shop owners and employees tend to be closed off to new clientele such as females,” she explained. “I wanted to have a shop where women and men would feel welcome and not afraid to come in.”

E. Longmeadow at a Glance

Year Incorporated: 1894
Population: 15,720
Area: 13.0 square miles
County: Hampden
Residential Tax Rate: $21.06
Commercial Tax Rate: $21.06
Median Household Income: $62,680
Median Family Income: $70,571
Type of Government: Town Council, Town Manager
Largest Employers: Lenox; Cartamundi; CareOne at Redstone; East Longmeadow Skilled Nursing and Rehabilitation
* Latest information available

Her strategy seems to be working, as female customers to the store have increased 30%. “I’ve done more background checks on gun sales for women in the past few weeks than ever before.”

Knapik made it clear that proper training and gun safety are the top priorities for PVA. She and her staff now hold safety classes every night of the week and, since the pandemic, have increased the number of classes during the day on Sunday.

“Our store draws many who are first-time buyers, so we get a lot of new people who just want to come in to learn about getting their gun license and what’s involved,” she said. “It’s something we definitely encourage.”

A potential gun owner must take a safety course in order to apply for a license-to-carry permit in Massachusetts.

“Some people are ready to pursue the process right away, while others need to mentally prepare themselves for it,” Knapik explained. “We’re just happy to be there to help them, whether they decide to pursue a license or not.”

 

Community Focus

Knapik credits her involvement in the East of the River Five Town Chamber of Commerce for helping to establish her business in town, and called joining the chamber “the best marketing decision we made.”

“Customers have really responded to the small shop and family-owned feel of PVA,” she said, adding that she and her staff are on a first-name basis with many of their customers.

While Knapik praised East Longmeadow as a welcoming place to do business, increasing numbers of people are finding it a good place to call home as well. McNally said 28 new houses and condominiums were completed in 2020, and an additional 19 homes and condos are currently under construction.

“We are experiencing a bit of a boom in housing due in large part to the low interest rates,” she said. Three developments — Bella Vista, Hidden Pond, and Fairway Lanes — have added 45 new building lots to the town.

Looking ahead, East Longmeadow continues to work with the Massachusetts School Building Assoc. to study whether the town needs to replace the 60-year-old high school with a new building or if the existing facility can be renovated to suit educational needs for the future. McNally sees the potential for a new high school as a key to keeping the community vital.

“If people have confidence in the educational system, it inspires them to be happy citizens who want to contribute to the betterment of the town.”

McNally concluded that, while many of the projects in town have not been completed, all are progressing. “We have several big projects that all require lots of time, attention, and planning. I’m pleased because we have a dedicated staff working on them full-time.”

Clearly, despite enduring “one heck of a year” marked by a worldwide pandemic, East Longmeadow is staying on track with important projects that promise to add economic vibrancy and quality of life.

Construction

Starts and Stops

Total construction starts fell 2% nationally in February to a seasonally adjusted annual rate of $797.3 billion, according to the latest report from Dodge Data & Analytics. Non-building construction starts posted a solid gain after rebounding from a weak January; however, residential and non-residential building starts declined, leading to a pullback in overall activity.

“With spring just around the corner, hope is building for a strong economic recovery fueled by the growing number of vaccinated Americans,” said Richard Branch, chief economist for Dodge Data & Analytics. “But the construction sector will be hard-pressed to take advantage of this resurgence as rapidly escalating materials prices and a supply overhang across many building sectors weighs on starts through the first half of the year.”

Non-building construction starts gained a robust 20% in February to a seasonally adjusted annual rate of $200.3 billion. The miscellaneous non-building sector (largely pipelines and site work) surged 76%, while environmental public works increased 26%, and highway and bridge starts moved 11% higher. By contrast, utility and gas plant starts lost 17% in February.

For the 12 months ending February 2021, total non-building starts were 13% lower than the 12 months ending February 2020. Highway and bridge starts were 4% higher on a 12-month rolling-sum basis, while environmental public works were up 1%. Miscellaneous non-building fell 26%, and utility and gas plant starts were down 37% for the 12 months ending February 2021.

The largest non-building projects to break ground in February were the $2.1 billion Line 3 Replacement Program, a 337-mile pipeline in Minnesota; the $1.2 billion Red River Water Supply Project in North Dakota, and the $950 million New England Clean Energy Connect Power Line in Maine.

Non-residential building starts fell 7% in February to a seasonally adjusted annual rate of $208.1 billion. Institutional starts dropped 8% during the month despite a strong pickup in healthcare. Warehouse starts fell back during the month following a robust January, offsetting gains in office and hotel starts, and dragging down the overall commercial sector by 8%.

For the 12 months ending February 2021, non-residential building starts dropped 28% compared to the 12 months ending February 2020. Commercial starts declined 30%, institutional starts were down 19%, and manufacturing starts slid 58% in the 12 months ending February 2021.

The largest non-residential building projects to break ground in February were Ohio State University’s $1.2 billion Wexner Inpatient Hospital Tower in Columbus; ApiJect Systems’ $785 million Gigafactory in Durham, N.C.; and Sterling EdgeCore’s $450 million data center in Sterling, Va.

Residential building starts slipped 7% in February to a seasonally adjusted annual rate of $388.9 billion. Both single-family and multi-family starts fell during the month, with each losing 7%.

For the 12 months ending February 2021, total residential starts were 4% higher than the 12 months ending February 2020. Single-family starts gained 12%, while multi-family starts were down 15% on a 12-month sum basis.

The largest multi-family structures to break ground in February were Bronx Point’s $349 million mixed-use development in the Bronx, N.Y.; the $215 million Broadway Block mixed-use building in Long Beach, Calif.; and the $200 million GoBroome mixed-use building in Manhattan, N.Y.

Regionally, February’s starts fell lower in the South Central and West regions but moved higher in the Midwest, Northeast, and South Atlantic Regions.

Earlier this month, Dodge Data & Analytics released its Dodge Momentum Index, which rose 7.1% in February. The Momentum Index is a monthly measure of the first (or initial) report for non-residential building projects in planning, which have been shown to lead construction spending for non-residential buildings by a full year. The institutional component of the Momentum Index jumped 26.3% during the month, while the commercial component was essentially flat.

February’s Momentum Index marked the highest levels in nearly three years as a result of a surge in large projects that entered planning. It remains to be seen if this level of activity, especially in the institutional sector, is sustainable given the tenuous economic recovery and rising material prices. Institutional planning projects in February were concentrated in large hospitals and labs, while commercial planning projects primarily included data centers, warehouses, and office projects. Compared to a year ago, the overall Momentum Index was up 9.2%; the commercial component was 15.2% higher, while the institutional component was down 3.3%.

Banking and Financial Services Special Coverage

Creating a Powerhouse

M&T Bank Corp. is no stranger to acquisitions, having broadly expanded its geographic footprint through a series of mergers over the past two decades.

But every acquisition is undertaken with purpose, Chairman and CEO René Jones said, and that includes the recent announcement that M&T will purchase Bridgeport, Conn.-based People’s United Financial Inc. in a $7.6 billion, all-stock transaction.

“The combination of M&T and People’s United will benefit both firms, providing additional growth opportunities beyond what either firm could achieve independently,” Jones said during a recent conference call with investors, adding that the culture of M&T will “resonate” with People’s United customers.

The transaction has already resonated through the region’s banking industry, as it will create a ‘super-regional’ banking franchise (as industry analysts are calling it), with approximately $200 billion in assets and a network of 1,135 branches and more than 2,000 ATMs spanning 12 states from Maine to Virginia and the District of Columbia.

The combined franchise will operate across some of the most populated and attractive banking markets in the U.S., M&T officials note. As part of the transaction, People’s United’s current headquarters in Bridgeport will become the New England regional headquarters for M&T.

Jack Barnes

Jack Barnes

“The merger extends our reach by providing customers access to a larger banking network and an expanded array of services.”

“In People’s United, we have found a partner with an equally long history of serving and supporting customers, businesses, and communities,” said Jones, who will continue to lead the expanded company in his current roles. “Combining our common legacies and our complementary footprints will strengthen our ability to serve our communities and customers, and provide solutions that make a difference in people’s lives. I am incredibly excited about this opportunity and look forward to welcoming new customers and team members to our M&T family.”

In the conference call, Jones recognized the value of People’s United’s footprint and resources.

“In addition to new geography, we expanded the talent and capabilities in our organization as well as the product sets vailable to our combined customers,” he noted, adding that the acquisition will make M&T the 11th-largest commercial-bank holding company in the U.S. by both assets and market capitalization.

In addition, “the combined geographic footprint is concentrated, offering a distribution system across the Northeast and mid-Atlantic states that represents over 20% of the U.S. population and over 25% of GDP, and has attractive levels of household income.”

Indeed, the median household income in People’s United’s footprint is almost $87,000, well above the national median, according to the Wall Street Journal. M&T will also add People’s United’s national equipment-finance business and its mortgage warehouse lending business.

“The density allows us to leverage local market knowledge, our recently bolstered technology infrastructure, and our nationally recognized brand,” Jones added, noting that the two companies have a complementary top-tier deposit share in core markets with a top-three share in most of their respective top-10 markets.

People’s United Bank’s headquarters in Bridgeport, Conn

People’s United Bank’s headquarters in Bridgeport, Conn. will become M&T’s New England regional headquarters.

“And People’s United’s outside proportion of core operating accounts makes it among the most attractive franchises in New England,” he added. “In our view, this is the most important characteristic of a stable, well-run franchise.”

 

Cultural Considerations

Jack Barnes, chairman and CEO of People’s United, noted that the cultures of the two banks are a good fit.

“M&T is a like-minded partner that shares our culture of supporting communities by focusing on building meaningful relationships and providing personalized products, services, and local market expertise to customers, while building on our legacy of excellence in service,” he said. “The merger extends our reach by providing customers access to a larger banking network and an expanded array of services. I am confident our shared community-banking philosophies will provide significant long-term value for our shareholders, employees, and loyal customers.”

M&T leaders note that both companies have been long been recognized for their community commitments and support of civic organizations. Over the past decade, M&T, through The M&T Charitable Foundation, has donated $263.7 million to more than 2,800 nonprofit organizations across eight states and the District of Columbia. M&T Bank has been awarded the highest possible Community Reinvestment Act rating on every examination since 1982 from the Federal Reserve Bank of New York.

Meanwhile, People’s United Community Foundation and People’s United Community Foundation of Eastern Massachusetts have granted $40 million to nonprofits aligned with the foundations’ collective mission since their inception in 2007. Through the foundations, M&T will use $90 million to support charitable activities in the communities currently served by People’s United.

In the Greater Springfield area, People’s United Bank traces its roots to the Bank of Western Massachusetts, which opened in 1987 and grew it into a regional commercial-lending power, one that was acquired by Chittenden Bank in 1995 and then again by People’s United in 2008.

People’s United, with a much longer history (it was founded in 1842), boasts more than 6,000 employees these days, offering commercial and retail banking, as well as weath-management services, through a network of more than 400 retail locations in Connecticut, New York, Massachusetts, Vermont, New Hampshire, and Maine. The company also provides specialized commercial services to customers nationwide. As of Dec. 31, 2020, the institution had total assets of more than $63 billion, loans of $44 billion, and deposits of $52 billion.

René Jones

René Jones

“The density allows us to leverage local market knowledge, our recently bolstered technology infrastructure, and our nationally recognized brand.”

M&T, headquartered in Buffalo, N.Y., operates banking offices in New York, Maryland, New Jersey, Pennsylvania, Delaware, Connecticut, Virginia, West Virginia, and the District of Columbia. It ranks among the largest regional lenders in the Northeast, with $142.6 billion in assets at the end of 2020. Commercial real-estate loans comprise almost 40% of its portfolio, and despite the pandemic’s impact on that sector, loan performance at the bank has been better than expected over the past year.

Under the terms of the agreement, People’s United shareholders will receive 0.118 of a share of M&T common stock for each People’s United share they own. Following completion of the transaction, former People’s United shareholders will collectively own approximately 28% of the combined company.

The merger has been unanimously approved by the boards of directors of each company and is expected to close in the fourth quarter of 2021, subject to customary closing conditions, including receipt of regulatory approvals and approval by the shareholders of each company.

 

Open the Floodgates

The acqusition is just the latest in a series of regional mergers seeking scale in order to better compete with the largest U.S. banks as low interest rates cut into lending profits, Forbes reported.

Last year, for instance, Huntington Bancshares Inc. agreed to merge with TCF Financial Corp., First Citizens Bancshares Inc. announced plans to acquire CIT Group Inc., and PNC Financial Services Group Inc. struck a deal to buy the U.S. arm of Spain’s BBVA. The year before, BB&T and SunTrust merged to become Truist Financial Corp. in the largest bank deal since the financial crisis of 2008 ushered in stricter regulations.

Ultra-low interest rates and meager loan growth have made it difficult for banks to profit from lending, the Wall Street Journal notes. The effect is most pronounced on regional banks, which rely more on lending profits than their national counterparts. Net interest margin, or the difference between what a bank pays its depositors and what it earns from lending, hit a record low for commercial banks in the fourth quarter of 2020.

Tom Michaud, CEO of Keefe, Bruyette & Woods, recently told Barron’s that, if regional banks want to be “relevant and significant,” they need to compete against the ‘Big Four’ of JPMorgan Chase, Citigroup, Wells Fargo, and Bank of America.

Robert Kafafian of the Kafafian Group, a consulting firm in Bethlehem, Pa., told American Banker he expects a surge in bank mergers in 2021, partly due to needed investments in new technology. “Customers have shown they can adapt to changing technology. Adoption may have advanced three to five years faster than what it might have been otherwise without the pandemic. Tech capability is all the more important now.”

Jones agrees, but stressed that many different considerations went into the decision to purchase People’s United and create a new, super-regional bank.

“Not only are our geographics complementary,” he said, “so too are the talent, product sets, and credit cultures, creating a solid platform we can build upon.”

 

Joseph Bednar can be reached at [email protected]

Law Special Coverage

A Challenging Docket

Sudha Setty says the field of law continues to evolve

Sudha Setty says the field of law continues to evolve and create new opportunities, even during the pandemic.

It’s been a challenging year for businesses of all kinds, and the profession of law is no exception.

But in many ways, the pandemic set the critical role of lawyers in even sharper relief, says Sudha Setty, dean of the   (WNEU) School of Law.

“I hear, anecdotally, from our alumni that they’re busy; they have a lot of work going on. Frankly, the legal work coming out of the pandemic is substantial,” she told BusinessWest, and it extends far beyond business disruptions.

“The pandemic has hit very unevenly in a lot of communities, including Western Massachusetts, and you have issues of trying to get unemployment benefits or ensuring against foreclosure of homes or eviction,” she noted. “A lot of legal needs have come out of all that. Those needs existed previously, of course, but the pandemic has exacerbated them. So the need for lawyers to help in those capacities has increased exponentially in the past year.”

Or take the growing (literally and figuratively) field of cannabis; a course on “Cannabis and the Law” is hugely popular, Setty said, because students see legal opportunities in an industry that still has plenty of room to expand.

“I hear, anecdotally, from our alumni that they’re busy; they have a lot of work going on. Frankly, the legal work coming out of the pandemic is substantial.”

“It’s a new field, and it’s not going away. It’s a way to think about new opportunities as a lawyer, but you’re also learning nuts and bolts you can apply to other fields as well, like regulatory law and how to navigate state bureaucracy and a lot of other pieces that will be helpful even if your practice isn’t in cannabis law in the long run.”

In short, the world will always need lawyers, and after a very uneven past two decades when it comes to the job market and law-school enrollment, colleges across the U.S. have reported an uptick in applications over the past few years, one that hasn’t been slowed by the pandemic.

WNEU welcomed an incoming class of 130 last fall, well over the 88 who started classes in the fall of 2018, Setty’s first year as dean. While the fall 2021 numbers won’t be finalized until the summer, she hears from Admissions that applications are still strong.

“Nationwide, I know most law-school applications are up significantly,” she added. “In this region, it’s up about 20%, and we’re about the same. So I feel cautiously optimistic.”

Programs she has shepherded have only made WNEU a more attractive destination — for example, the Center for Social Justice, launched in the spring of 2019, has offered a robust series of community conversations, pro bono opportunities, and other initiatives aimed at giving students real-world experience in making a difference, even while in school.

“Students have always been interested in that mission, but now we have this focal point and can shepherd students toward job opportunities, toward scholarships, toward career paths, thinking about what they need to be a social-justice lawyer,” she said, noting, as one example, the Center’s Consumer Debt Initiative, which helps area individuals who are unrepresented in debt collection, sometimes over a few hundred dollars, sometimes a few thousand.

“We’ve heard a lot of discussions over the last few years about income inequality and economic justice, and I think we’re in a really good place in meeting the interests students have when they come into the law school.”

“They can make a difference in someone’s life. It’s a way for students, faculty, and lawyers from the greater community to address this economic-justice issue. We’ve heard a lot of discussions over the last few years about income inequality and economic justice, and I think we’re in a really good place in meeting the interests students have when they come into the law school.”

Add it up, and the WNEU School of Law hasn’t slowed down its pursuit of building a program that will remain relevant in the ever-changing field of law, well after life — and the educational experience — return to something resembling normal.

 

Back to School

Like every college and university, WNEU had to scramble last spring to get students learning remotely, and faculty and staff spent the summer raising their online competencies to make sure courses would be even more effective in the fall.

“Some of them were already ahead of the curve,” Setty said. “For some of us, including me, it was a lot of learning, a lot of training, a lot of mock classrooms we did with each other to build up our ability. This place is about good teaching, and that was the really important thing to drive home — that, by the time we got back in August, everyone had to continue this excellence in teaching as part of the ethos of the law school — in a hybrid format, if they had to.”

The 2020-21 year has, indeed, taken a hybrid form, with students alternating between learning remotely and in classrooms at the Blake Law Center, due to social distancing and capacity limits. “The largest classrooms normally hold more than 100, and now they’re at 40-something. So the students are rotating through,” she added. “Some students, for health reasons, can’t come at all, so they’re fully remote. That’s the way we’ve been operating.”

The law school has long been known for its use of clinics — in areas such as criminal defense, criminal prosecution, elder law, and family-law mediation — in which students blend classroom instruction with work on real cases, under the guidance of local attorneys. The vast majority of students get involved in clinics and externships, understanding the value of developing not only real-world legal knowledge, but the soft skills that will make them more employable.

Those clinics are still operating, Setty said, but they now feature a strong remote component as well.

“Lawyering these days is largely remote,” she noted. “Client counseling is remote. Witness interviews are remote. We have remote hearings in front of judges. So there’s a separate and related set of competencies that our students are learning, which deal with remote client presentation. It’s very different than what they’ve had to do before, and it has its challenges.”

However, she continued, “the flip side is that this is going to be a part of lawyering going forward. Everything’s not going back to fully in person after the pandemic fades. There are going to be some elements of remote trial work and remote client counseling, so I feel like our students are on the cutting edge of learning this stuff, so when they’re out looking for jobs, they can say, ‘not only do I have this skill set, I also have remote competencies in client representation; I’ve been a remote mediator, I’ve represented people in a criminal proceeding remotely.’ These are remarkable experiences they’re having — they’re very different, but absolutely what we need to do.”

Those graduates are entering a job market that has proven resilient during the pandemic, Setty said, noting that the contraction of law-school enrollment nationally a decade ago has gradually increased demand for talent.

“A lot of law schools were fully online for the full year, but we made a commitment and said, ‘we want to see our students in person and make this work.”

“The employment piece for the folks graduating during the pandemic, I think there’s still uncertainty around that,” she said. “But for the most part, our graduates have kept their jobs.”

The school has added some faculty members in the past two years, most recently Jennifer Taub, who specializes in white-collar crime, criminal procedures, and other business-law subjects, and authored the book Big Dirty Money: the Shocking Injustice and Unseen Cost of White Collar Crime.

“We’re on a positive swing,” Setty said. “The energy of our students, our faculty, and our staff has been terrific. Working through a pandemic requires a lot in terms of navigating the uncertainty and the need to adapt, but also all the hours it takes for faculty and staff to dig in and collectively make this work so we can have in-person education here.”

 

Community Focus

Setty took the reins as dean of the School of Law in 2018 after 12 years as a professor at WNEU. She first joined the faculty in 2006 as a professor of Law and associate dean for Faculty Development and Intellectual Life, and has produced notable scholarship in the areas of comparative law, rule of law, and national security.

Through her career, she has maintained that law schools are in a unique position to impact the future of a just society, and she has always seen WNEU as a place that launches the careers of thoughtful lawyers who work for the betterment of both their clients and society as a whole. The Center for Social Justice has been an important part of that philosophy over the past two years.

“I really wanted to establish this center and get it off the ground, and it has been terrific,” she said, crediting grants from MassMutual, individual law firms, and other entities to help fund its programming. “Not only is it a way to help our students and meet the social-justice mission of the law school, but it does such good work in the community. It’s great for attracting new students, but it’s also great for the work it does.”

Areas of focus have included economic justice, racial justice, and a recent effort, funded by a WNEU alum, to create an LGBTQ speaker series and support summer work in that realm for two students each year.

“It draws people in with a lot of interests,” she said of the center. “People come to law school wanting to make the world a better place, and they’re wondering how to do that — this speaks to them in a way that’s really profound.”

In fact, the law school as a whole has taken a hard look at its own efforts toward racial justice and diversity, equity, and inclusion issues, Setty said, from the coursework to how it connects with the outside community on issues like police practices.

“We have made an effort to think more about this and integrate it into our curriculum and how we engage in the larger community, but I want to do it in a sustained fashion so it’s not like, ‘oh, that was the focus for 2020; we don’t have to think about it anymore.’ The idea is to integrate it into who we are as a law school and focus on it going forward as well. It shouldn’t be a flavor-of-the-month issue, and then we move on.”

Setty is, however, more than ready to move past the pandemic and welcome students back on campus full-time, but she’s proud of what has been accomplished during the past unprecedented year.

“A lot of law schools were fully online for the full year, but we made a commitment and said, ‘we want to see our students in person and make this work,’” she told BusinessWest. “And we’ve been relatively successful. I continue to be really grateful to be the dean — particularly at a time when it’s required so much collective effort to make this happen.”

 

Joseph Bednar can be reached at [email protected]

Employment Special Coverage

Remote Possibilities

Most of Big Y’s 11,000 employees — those who stock shelves, prepare food, work the cashier lines, and do any number of other tasks — must do their jobs on site, in a specific location. But at Big Y’s 300-employee-strong customer-support center in Springfield, which supports those frontline workers, about 70% of them have worked remotely since the start of the pandemic.

“This past year, we learned that remote work can work, and it allows for a lot of flexibility for individuals,” said Michael Galat, vice president of Employee Services at the supermarket chain. “That being said, we’re a company where we stress collaboration and teamwork, and that has definitely been a challenge at times. Meetings using technology are different than having in-person meetings. It definitely can work, but there are pros and cons to it.”

The company’s pandemic response team was quick to set up safety protocols last spring to protect the thousands of customer-facing, frontline employees, but it also set many employees up with the necessary technology to work from home, put together a best-practices guide for working remotely, and has carefully followed the public-health data to determine when to bring them back.

“As time has gone on, they’ve seen the productivity; they see that the work is getting done, customers are being served, and people are happy. Now they’re saying, ‘maybe we don’t need to have everyone in.”

One important finding? Productivity never flagged — which tracks with accounts from many other area employers over the past 12 months. Thus, many employers feel no rush to bring everyone back before the pandemic is in the rear view — and that poses a question no one expected last March: does every employee really have to come back? And what if they don’t want to?

Meredith Wise

Meredith Wise says employers run the gamut when it comes to bringing back remote workers; some are anxious to do so, while others may see value in changing their model altogether.

Most employers last March thought shutdowns would last a couple months. But a year later, millions of workers are still working from home — and the result has been a national experiment with remote work that has borne some surprising data.

“It’s striking — we’re seeing a little bit of everything,” said Meredith Wise, president of the Employers Assoc. of the NorthEast. “We have a number of companies — like manufacturers — that never shut down and had employees come in the whole time. And we have companies starting to have employees coming back on a sporadic basis — maybe not five days a week, but two or three days a week. Then others have said, ‘we aren’t even thinking about having employees back until later in the year.’”

One reason for that hesitancy is the fact that workers have not only adapted to remote work, but have, in most cases, been as productive as they were in the office. So employers are taking their time bringing them back, looking to state guidance and public-health metrics to guide decisions.

“As time has gone on, they’ve seen the productivity; they see that the work is getting done, customers are being served, and people are happy,” Wise said. “Now they’re saying, ‘maybe we don’t need to have everyone in.’”

UMassFive College Federal Credit Union is one example of that phenomenon.

“We moved about 60% of our workforce home last spring, and it continues to be that way,” said Craig Boivin, vice president of Marketing. “We’re developing plans and processes for what this will look like in the post-pandemic world, but we’re not looking to bring people back until the state says it’s safe for large groups to gather indoors.”

During the exodus from office to home last March, he recalled, “I won’t say it was chaotic, but we had to make a lot of quick decisions at the senior level to make sure everyone had the equipment and support they needed at home,” in addition to developing guidelines to ensure accountability and making sure everyone understood new (to them, anyway) communication tools like Zoom and Slack.

“We found there are some real positives with productivity and being able to shut off some of the distractions,” he went on.

Employees — especially those who have grown to appreciate working from home, and even prefer it — are thinking similar thoughts, and that may pose a problem of pushback at some companies when they try to bring their teams back in. For now, in most cases, there’s no rush, but those days won’t last forever.

 

National Conversation

The same story is playing out nationally, with some companies planning to remain 100% remote post-pandemic, while others — including big names like Microsoft — taking a hybrid approach, giving workers more flexibility about where they work. Other companies are clamoring to bring everyone back.

“I see a hybrid approach in the future, finding balance, again, between meeting the needs of the business and allowing people flexibility to take care of their home life.”

“It’s no longer, ‘do you offer remote work?’ but, ‘do you offer it with enough organizational support so I can be as successful as the people who work in the office?’” Andrew Hewitt, senior analyst at market research firm Forrester, told CNN recently. He expects about 60% of companies will offer a hybrid work model, while 30% of companies will be back in the office, and 10% will be fully remote.

Since last summer, Big Y’s support-center workers have been required to be on site at least one day a week, and the company continues to discuss internally what the full transition back will look like.

“Productivity has not been an issue,” Galat said. “But, with our company, the culture is a huge component of it. Collaborating and having discussions on Zoom … you can do that, but it’s not the same.”

By essentially being forced into a mode of flexibility since last March, he believes companies — including Big Y — have learned some important lessons going forward. “I see a hybrid approach in the future, finding balance, again, between meeting the needs of the business and allowing people flexibility to take care of their home life. It’s a constant discussion we’re having with the executive team about what’s working, what’s not working, and what this will look like in the future.”

The fact that the support center is not just an 8-to-5 operation, but requires coverage on nights and weekends, allows for some flexibility of schedules for workers juggling their kids’ remote learning or taking care of parents, he added. “We continue to take care of business, while allowing people the flexibility to take care of home needs as well.”

Another of the region’s largest employers, MassMutual, continues to keep a large swath of workers off campus, and is in the process of evaluating their return to the office, said Chelsea Haraty, communications consultant in Media Relations for the company.

Craig Boivin

Craig Boivin

“At a high level, we expect to have MassMutual employees return to our corporate offices in a slow, phased manner later this year,” she told BusinessWest. “We will continue to monitor and reassess that plan, factoring in a number of considerations — including guidance from medical experts and government officials, a sustained reduction in cases, broader availability of testing and vaccines, as well as our employees’ circumstances and comfort in returning.”

What employers are starting to understand, Wise said, is that employees are also weighing the pros and cons of coming back, and while some are eager, others would rather stay home, and may make that fact known.

“Employers have employees all over the spectrum — some want to get back into the office and don’t feel part of the team when they’re not. Others are saying, ‘I’m not sure I want to come back; I’m not sure about the cleaning protocols and sanitation protocols. Are people wearing masks? I’m not sure I’m comfortable in the office.’”

She noted that some companies are fine pushing those decisions into the future. “They’re saying, ‘things are going pretty smoothly; we don’t have quite as much water-cooler talk, not as much gossip going on, and people are really productive when they’re remote. We don’t have to have people come back to the office and incur the expense of coffee and bathroom supplies. Maybe we can cut some of our expenses.’”

Including some major expenses — most notably the office space itself. “Some of these companies have leases coming up in the next year, so they’re asking, ‘can I reduce my footprint? Do we need as much space as we have?’”

 

Back and Forth

On the other hand, Wise said, questions about workplace culture are very real. “Some companies are looking at their culture, their camaraderie, their teamwork, just the ability to walk down the hall and talk to somebody, and they want to get all their employees back in the office as soon as they can.”

She noted the importance of age-old rituals of the workplace, walking in the door at the start of the day and asking co-workers about their weekend, or their family, or whatever might be going on, whether it’s related to their jobs or not.

“How do you incorporate new personnel into the culture outside of the physical environment? That’s a big challenge.”

“When people are removed from an environment that really is a team, where you’ve gotten to know each other’s family situations and personal life, you really do lose that with a remote connection,” she said. “When people come into an office meeting, they sit down and chit-chat with the person next to them a little. It’s hard to recreate that on a Zoom meeting; you lose some of that personal connection.”

Boivin agreed. “The productivity piece seems to be working out pretty solidly now,” he told BusinessWest. “At the same time, the collaborative, in-person aspect is missed.”

One big topic of conversation is new-employee onboarding, he said, noting that orientation is conducted in person, and video communications are a regular reality, but he wonders if that’s enough to keep them engaged.

Mike Galat

Mike Galat

“I have a new graphic designer in the Marketing department who started at the end of August. She’s been [physically] at UMassFive for just a day or two. How do you incorporate new personnel into the culture outside of the physical environment? That’s a big challenge.”

Also challenging is the way boundaries between work and personal life have blurred, whether it’s juggling job responsibilities with helping kids with remote schoolwork, or simply working too many hours.

“Productivity is up,” Wise said, “but some of it is putting in longer hours — rolling out of bed, having breakfast, and getting right to work instead of commuting, and then at 5, instead of getting in the car and driving home to fix dinner, they keep working. Something we’ve heard is that people need to build in some transition time so they don’t start working at 7 and quit at 6.”

Whatever the reason, many employees will be more than happy to return to the pre-pandemic work world.

“Now that we’re going on a year, a lot of people are saying, ‘I thought I wanted this, but I really want to be back in the office — maybe not five days a week for 52 weeks a year, but maybe in the office three days and at home two days,” she added. “A lot of employees are saying, ‘this isn’t what I thought it was going to be — I need to be back around people; I need to have boundaries by being back in the office.’”

Each industry is different, too, Wise added. For example, companies where creativity is crucial, like marketing firms, probably find it easier to brainstorm when people are together in one physical space, able to immediately bounce ideas off one another.

“I don’t think it’s a one-size-fits-all answer that’s going to fit every organization,” she said. “My guess would be a lot of manufacturers, since they have individuals on the floor who have to be at work, are going to be less likely to have their office staff remain totally remote because that creates an us-and-them mentality. But some other organizations will allow many people to stay totally remote, or there may be that hybrid of people working in the office and then from home.”

Galat agreed, adding that that he’s heard of some companies staying fully remote, but most seem to be moving toward a hybrid approach — which speaks to one way COVID-19 may have permanently altered the American workplace.

“We’ve learned a lot through the year,” he said. “We miss that component of teamwork and collaboration; not having that makes it more challenging. But I think the hybrid approach might be the approach we look at going forward. We’ll evaluate and fine-tune it as we go.”

 

Joseph Bednar can be reached at [email protected]

 

Special Coverage Women in Businesss

Learning to Take Charge

By Mark Morris

Only one-third of all businesses in Western Mass. are owned by women, according to a recent survey. In the healthcare sector, one of the largest employers in the region, leadership positions are held by women 41% of the time — with outliers like one hospital where it’s only 16%.

These findings are from a 2019 study commissioned by the Women’s Fund of Western Massachusetts titled “Status of Women and Girls in Western Massachusetts.”

To address disparities like the ones in the survey, the Women’s Fund and Holyoke Community College (HCC) have teamed up on an eight-week training program this spring for women who want to enhance their leadership skills.

Titled “Women Leaning into Leadership: Empowering Your Voice,” the course begins March 25 and runs through May 13.

According to Michele Cabral, executive director of Professional Education and Corporate Learning at HCC, the idea for the course grew out of the Women’s Leadership Luncheon Series, hosted by the college.

Until COVID-19 forced it into a virtual meeting, the college hosted the luncheon every month for the past five years. With attendance limited to 28 attendees, four women leaders would each select a topic relevant to women and leadership, then break out the attendees into four groups to discuss their particular subject. The next month, the groups would rotate so they could discuss a different topic with a different leader. Areas of discussion have included dealing with different leadership styles, the role of communication, and conflict management when you’re the only woman in the room.

When COVID hit, Cabral said they pivoted to a remote video lunch and changed the format to having one person lead the discussion and opening it to anyone who wants to join via video. A recent conversation covered how to deal with changes brought on by the pandemic. Because some women wanted to discuss some of the topics in more depth, Cabral said, developing a course was a logical next step.

Michele Cabral

Michele Cabral

“These women want to get to know themselves better, to identify what skills they need to focus on and promote their strengths. They were looking for a more structured program to help guide them through that process.”

“These women want to get to know themselves better, to identify what skills they need to focus on and promote their strengths,” she explained. “They were looking for a more structured program to help guide them through that process.”

A few years back, Monica Borgatti attended the Women’s Leadership Luncheons at HCC. As chief operating officer for the Women’s Fund of Western Massachusetts, she especially liked the cohort-style of learning (a collaborative approach in which individuals advance together in an education program) that took place at the events.

“The cohort model works well in this type of learning situation because people start to feel comfortable with each other, and they are more willing to be vulnerable as they share and learn together,” she said.

The luncheon reminded her of a program the Women’s Fund used to run known as the Leadership Institute for Political and Public Impact (LIPPI). While it had some success, Borgatti and her colleagues thought the program suffered from trying to be all things to all women and fell short in that effort. After compiling feedback from women who had gone through LIPPI, the Women’s Fund put the program on hold.

“LIPPI grads gave the program its highest marks in the cohort learning approach,” she recalled. The graduates also cited networking opportunities and making connections as solid benefits from the program.

After wrapping up LIPPI, Borgatti explained, the Women’s Fund’s emphasis shifted from creating and running programs to identifying leadership programs it could adapt for this area, as well as support for existing programs.

“When I learned HCC was developing a more in-depth leadership program, I thought it was worth exploring to see if there might be a partnership opportunity for the Women’s Fund,” she said.

 

Engaged in Equity

The course is targeted to women in mid-career, especially those who are emerging as leaders in their careers and the community. As part of its partnership, the Women’s Fund is offering sponsorships of up to $650 to defray the $799 tuition cost.

“The Women’s Fund is contributing in such a meaningful way. With their sponsorships, HCC is able to bring this program to people who would not have access otherwise,” Cabral said, adding that many employers do not reimburse the cost of training, so these sponsorships make the course more accessible for women who struggle to pay for self-development.

“HCC provides the education, the Women’s Fund provides the sponsorship, and together, we bring our common mission out to the community,” she noted.

Borgatti said taking part in the course was an easy call because it allows her organization to reach women who are seeking personal and professional development. “We want to see more women in leadership positions across our region, so we’re proud to partner with HCC to help more women become effective leaders.”

While the goals of the Women’s Fund address gender equity and gender justice, Borgatti also made it clear that her organization also strives to improve racial equity and racial justice.

“We know that women are not in leadership roles as much as men, and there are even fewer women of color in leadership positions,” she said, noting that the HCC course is one way to support the current and future leaders of color in the community.

“HCC provides the education, the Women’s Fund provides the sponsorship, and together, we bring our common mission out to the community.”

Borgatti added that her organization became involved to make sure affordability would not prevent anyone from taking the course. “We want to encourage more women of color in programs like this, and we want to make sure it’s financially accessible for all women.”

Cabral noted several highlights of the course, such as assessing communication styles and techniques, as well as working with each woman to develop a professional roadmap to help her reach her potential. Each program participant will also receive 30 minutes of private, one-on-one coaching from Annie Shibata, owner of Growth Mindset Leadership and Communication Coaching in Cincinnati, who will coach each student via video link.

“Incorporating one-on-one coaching elevates the course to a higher level of really personalizing the experience for each individual,” Cabral said.

One of the main reasons the Women’s Fund got involved was to encourage more representation of women in leadership. Borgatti hopes women who take the course emerge more confident in their skills and abilities to step into all sorts of leadership roles.

“We want to see more women CEOs, more women chiefs of police, more women judges,” she said. “Unless we support women being able to access these opportunities, we’re not going to see real change.”

At the end of the day, Cabral said, she and Borgatti share a common mission: to elevate the skills of women who are willing to put in the work. “We want to make sure those skills are here in Western Mass., and they stay in Western Mass.”

Community Spotlight

Community Spotlight

Tyler Saremi

Tyler Saremi sees potential in West Springfield’s downtown, and is taking steps to inject some economic vibrancy.

When Tyler Saremi looks at what is considered downtown West Springfield — the Elm Street/Park Street area — he doesn’t see Northampton or West Hartford.

But he can easily imagine a day when that section of this city that still calls itself a town can attain something approaching a level of vibrancy and an eclectic mix of businesses, especially those in the hospitality sector, that define those communities.

And he’s doing his best to bring that day closer. Indeed, the multi-faceted business run by his family that he serves as vice president, Saremi LLP, acquired 95 Elm St. — known to most as the United Bank building because it was the main tenant for many years — with the goal of … well, turning back the clock in many respects.

The century-old building has, over the decades, been home to cafés, restaurants, a grocery store, banks, and other types of retail, said Saremi, adding that it has always been a destination, and the broad goal with this project is to make it one again. Thus, it has been rebranded as Town Common.

Already, Tandem Bagel, the Hadley-based company with locations there and also in Easthampton and Northampton, will soon occupy space where bank-teller windows have stood on the first floor; the target date for opening is July. Meanwhile, at the other end of the first floor, Saremi pointed to the place where intends to put a restaurant. He said two other leases have been signed, and several more are pending.

“People are just really excited to be part of bringing downtown West Springfield back,” he said. “Our main intention is a café and a restaurant on the first floor; whether we have to open a restaurant ourselves or partner with someone, we don’t care. That’s part of our commitment to West Springfield — it needs a café, and it needs a restaurant, and that’s what we’re going to do.”

“It’s going to be a tough year, but there are reasons for optimism — we see things opening back up.”

The redevelopment of 95 Elm St. is just one of the intriguing stories unfolding in West Springfield, a community that is, like many others, trying to rebound from a pandemic that has taken a huge toll on hospitality-related businesses. And West Side, as it’s called, has many of them, said Mayor Will Reichelt, who counted 20 hotels and motels and a number of restaurants in his community.

But the biggest business in that sector, obviously, is the Big E, which is responsible for filling many those hotels, motels, and restaurants, not just during the 17 days of the annual fair, but almost year-round, as that venue hosts a number of shows centered on everything from horses to toy railroads; dogs to guns and knives.

The Big E has been mostly empty and silent since the pandemic arrived a year ago, and while the outlook for 2021 is more promising, there remains a huge number of unknows, especially with regard to the fair, a situation that Big E President and CEO Gene Cassidy summed up this way:

“It’s like you’re navigating your way down a dark alleyway; you don’t know what’s in front of you — if there’s suddenly going to be a crack in the pavement or if you’re going to walk into a dumpster,” he said, using that phrase to indicate how difficult it is to plan when the rules keep changing, often without much, if any, notice. “Our goal, simply, is to plan to produce a product that people are going to enjoy.”

Cassidy is quite confident there will be a Big E this September — he just doesn’t how many people will be allowed to attend. He doesn’t think it will be full capacity, as in 100,000 people on a weekend day, as in fairs past. Instead, he’s expecting some percentage of that number, which won’t be ideal, but certainly better than last year.

And while most of his energy and attention is still focused on this year’s fair, he said he’s spending a good amount of time lobbying officials to understand the importance of fairs and live events in general, and to help ensure the long-term survival of such institutions, something he believes is now imperiled.

Overall, though, he’s optimistic about the rest of 2021.

Gene Cassidy says a sparsely attended Big E is better than none at all

Gene Cassidy says a sparsely attended Big E is better than none at all, and he’s moving forward with planning after having to cancel the 2020 fair.

“It’s going to be a tough year, but there are reasons for optimism — we see things opening back up,” he said, noting that various expert projections of herd immunity by fall or even sooner are encouraging, even as innumerable challenges and question marks loom.

For this, the latest installment in its Community Spotlight series, BusinessWest takes a hard look at West Side and its efforts to become even more of a destination, even as its business community continues to battle COVID-19 and all the challenges it has brought.

 

Road to Progress

Reichelt, now wrapping up his second term in office, with plans to seek a third, said he can’t find too many silver linings from the pandemic and all the havoc it caused in 2020.

But he can find at least one — acceleration of the process to replace the Morgan-Sullivan Bridge, which connects his city with Agawam. The bridge project, which commenced two years ago, has to pause during the 17-day run of the Big E, he explained, adding that work actually comes to a halt for three weeks or more because of logistical concerns.

Obviously, that didn’t happen in 2020, he went on, adding that a project that was due to be completed this summer will now be done by spring.

“The work is way ahead of schedule,” he said. “Without the Big E, they probably gained a month of working time, and that will certainly help out on the back end.”

The broad mission moving forward is to get more people to travel over that bridge and other thoroughfares into West Side, said Reichelt, adding that the city has always considered itself at the crossroads of this region — I-91 and the turnpike connect there, and Route 5 runs through it as well. This location has long been a huge asset, one that paved the way, if you will, for major retailers and car dealers alike to populate Riverdale Street and Memorial Avenue. It has also brought visitors to the community not only for the Big E and shows on its grounds, but for myriad other tourism- and business-related functions, from leaf peeping to the semiannual EASTEC trade show.

The ongoing goal is to continually take advantage of this asset, build on the foundation that’s been laid, and try to spread the vibrancy to other areas of the city.

Which brings us back to Elm Street, Town Common, and the huge ‘Under New Management’ banner now adorning it.

As he gave BusinessWest a tour, Saremi pointed out the spot where Tandem Bagel would go, then did the same with the restaurant. Venturing to the second floor, much of which is now occupied by Saremi LLP, he showed where a number of smaller spaces, individual offices, and even co-working space might be carved out.

“We want to make it more walkable, more friendly, and more inviting so we can complement the business investment that’s happening there.”

Later, he pointed out one of the huge windows to the traffic — specifically, the juncture of Route 20 and Elm Street.

“This intersection has so much traffic … we need to get people to stop here in downtown West Side, get out, walk around, go to some shops, get something to eat — that’s how I see it,” he noted, adding that there are already some attractions there, including the Celery Stalk restaurant, a legendary luncheon stop; as well as bNapoli restaurant and the Majestic Theater. The broad goal is to build on that critical mass, he said, noting that clusters of eateries and entertainment venues have been the formula for success in Northampton, West Hartford, and other communities.

Reichelt concurred, and told BusinessWest the city is always striving to build on its already-impressive portfolio of retail- and hospitality-related businesses — and also fill in some spots that are less vibrant than others.

Mayor Will Reichelt

Mayor Will Reichelt says initiatives like a new economic recovery director and a series of infrastructure plans will help keep West Springfield on the right track.

As an example, he pointed to Riverdale Street, which actually has two distinct sections, if you will. There’s the one south of I-91, which is thriving and always has, said the mayor, who worked at the Donut Dip on that throughfare in his youth and thus speaks from experience. Then there’s the stretch north of the highway, which, while still vibrant by most measures, has some vacancies and, in general, is underperforming.

Reichelt said the city will look to help address this situation, and other business and economic-development issues in the city, through the hiring, at least on a temporary basis, of what’s being called an ‘economic recovery director.’

“The goal with this new position is to build better business relationships in the community, help with business retention, and focus on some of the underutilized areas, like the north-of-91 section of Riverdale,” he explained.

Already, there are signs of progress, he said, noting the reopened White Hut, the expansion of Calabrese Market on Park Street, and the sale of the former Hofbrahaus property to the owner of the Hangar Pub and Grill and growing ‘Wings Over’ stable of restaurants, among other positive developments.

“The common citizen wants their life to return to normal,” he said. “So I think people will come out … they will come back to fair.”

Meanwhile, a number of infrastructure plans now in place are designed to improve traffic flow and, ultimately, promote more vibrancy in the city. First up is Park Street, he said, adding that it is being repaved and steps are being taken to taken to make the commons more accessible and safer to use. Those plans include what the mayor called a mile-long loop or walking and biking trail around the green space.

Elm Street will follow, he went on, adding that this will be a multi-faceted initiative designed to beautify the area, add more parking, redesign the intersection of Elm Street and Route 20, and allow people to make more and better use of the green space there.

“We want to make it more walkable, more friendly, and more inviting so we can complement the business investment that’s happening there,” he told BusinessWest, adding that this project is in the design phase and should commence in 2022. Likewise, a huge, $25 million project to improve traffic flow on Memorial Avenue will take place that same year.

 

Fair Assessment

Sitting in the large conference room in the Big E’s administration building, Cassidy reflected on what has been an ultra-challenging 12 months for this regional institution — and what lies ahead, to the extent that he could, obviously.

He said every aspect of this enterprise — from the annual fall fair to the year-round shows that draw visitors from across the Northeast, to the restaurant on the grounds, Storrowton Tavern — have been deeply impacted by the pandemic.

And the hurt is still being felt. The shows slated for weekends in January and February were all canceled, he said, with some, including the huge Western Mass. Home & Garden Show, moved back on the calendar, in this case to August.

The Big E has received some support — nearly $1 million in the first round of PPP, with an application in for the second round of funding. There have been some cutbacks — the workforce has been trimmed from 30 full-time employees to 25 — and those who are left have found themselves with … let’s call them broadened job descriptions.

“Those of us who are still here have had to do jobs we’ve never had to before,” he noted, adding that such tasks include everything from directing traffic for the few events that have been staged to making sure the buildings on the grounds are secure. “Everyone has had to pitch in.”

West Springfield at a glance

Year Incorporated: 1774
Population: 28,529
Area: 17.5 square miles
County: Hampden
Residential Tax Rate: $16.90
Commercial Tax Rate: $32.49
Median Household Income: $40,266
Median Family Income: $50,282
Type of Government: Mayor, City Council
Largest Employers: Eversource Energy, Harris Corp., Home Depot, Interim Health Care, Mercy Home Care
* Latest information available

As for the last three quarters of 2021, Cassidy said there are certainly some signs of optimism with his industry. For example, the Canadian government recently gave the green light for the popular Calgary Stampede to take place in June. Meanwhile, the Pasco County Fair in Florida was recently staged, albeit with a number of restrictions and safety precautions in place.

Cassidy took it in while on a trip to Tampa for ‘Florida Week’ and a number of trade association meetings that were staged in-person, which is significant in and of itself, he noted, adding that the main topic of conversation, obviously, was how to stage events safely.

“Interestingly, at the Pasco County Fair, we were there on a Tuesday night, it was chilly, but the fair manager indicated that attendance actually exceeded what it was last year, and he attributed that to the fact that people want to get out,” he recalled. “They want to resume ‘normal,’ and that’s in a state where businesses have been open and Main Street is open.”

But while he can look ahead and try to plan, there are too many question marks to do the latter with any amount of efficacy. These question marks surround everything from what the attendance restrictions will be to whether — and under what conditions — the state buildings can open, to whether individuals and families will be willing to come back out and be part of a mass gathering on the midway or one of the concert venues.

The major consideration is what will be permitted for attendance, said Cassidy, adding that it’s a simple but troubling fact that the costs of operating the fair will be roughly the same whether it’s at full capacity, 50%, or some other number. But the bottom line is that a smaller fair, attendance-wise, is certainly preferable to no fair at all.

“It costs the same to produce the fair for 1.6 million people as it does to produce the fair for one,” he said. “Our staff is preparing a conventional Big E and will try to deliver the product we’re known for.”

Cassidy believes that, as he saw in Florida, there will a significant amount of pent-up demand and that people will want to return to the fairgrounds.

“The common citizen wants their life to return to normal,” he said. “So I think people will come out … they will come back to fair.”

Reichelt agreed, and said the return of the fair this fall, even a smaller fair, will help the region’s economy and, specifically, many of those hospitality-related businesses that have been deeply impacted by the pandemic.

“Having it happen will be good, not only for the Big E, but for the region to bring back that sense of normalcy,” he noted. “And it will be helpful for businesses in the area as they start to recover from all this.”

 

George O’Brien can be reached at [email protected]

Banking and Financial Services

Taking the Long View

By Mark Morris

Matt Landon and Jeff Liguori saw an opportunity for Napatree Capital to better serve Western Mass. out of its new location in Longmeadow.

In a co-working office space at the historic Brewer-Young mansion, Jeff Liguori and Matt Landon help people build their financial futures.

Liguori, founder and chief investment officer of Napatree Capital in Providence, R.I., relocated to Western Mass. in 2015 and began to sense increasing demand for his firm’s services in this area. In January, he hired longtime acquaintance and Western Mass. native Landon as a partner in the firm. Together, they discussed opening a local office, and on Feb. 1, Napatree Capital opened its five-person firm in the restored mansion in Longmeadow’s center.

While Napatree could have served clients here from Providence, Liguori and Landon both thought it was important to have a physical presence in Western Mass.

“It was serendipity that there was one opening left in the Brewer-Young mansion,” Landon said. “We felt this iconic and different building fit with our image, so we jumped on the opportunity to locate there.”

Liguori, who grew up in Westerly, R.I., named his firm after Napatree Point in Watch Hill.

“Our investment committee is skilled at finding temporarily undervalued, underloved, and underappreciated companies that are selling at a discount. But we feel they’ll get the recognition they deserve in the near- or medium-term horizon.”

“It’s a beautiful stretch of beach where I’ve spent many summers,” he said. “As the southwesternmost point of Rhode Island, it separates Block Island Sound from Long Island Sound, so it really splits Rhode Island from New York.”

Because he liked the symbolism of its location and the relative obscurity of the name, he sought copyrights for several variations of the Napatree name in anticipation of one day starting his own firm. “Very few people have heard of it; even many Rhode Islanders don’t know Napatree Point.”

Liguori explained that his firm specializes in two areas: working with private investors looking to reach long-term financial goals, and managing endowments for nonprofits, which he called a growing area of business.

The firm’s business philosophy starts with ‘value investments,’ which Liguori says has to do with how a stock measures up against its industry or sector. The firm has had success taking a contrarian approach by investing in companies that are currently under the radar and might be underpriced by the market.

“Our investment committee is skilled at finding temporarily undervalued, underloved, and underappreciated companies that are selling at a discount,” Landon explained. “But we feel they’ll get the recognition they deserve in the near- or medium-term horizon.”

Landon also made it clear that Napatree takes the long view toward investing. “We’re not traders; we are long-term owners of companies.”

All advisors at Napatree are fiduciaries, meaning they can only recommend investments that are in the client’s best interest. By contrast, financial advisors who are not fiduciaries are held to a much more lenient ‘suitability’ standard. For example, two index funds based on stocks listed in the Standard and Poor’s 500 may seem similar on the surface. If one fund charges high fees and the other low fees, they are technically both suitable investments. A fiduciary, however, is required to recommend the fund with the lower fee because it is better for the client. Landon pointed out that he enjoys sticking with a fiduciary approach.

“It makes doing business very simple when you operate from a fiduciary standard,” he explained. “If you do what’s in the client’s best interest all the time, it’s an easy path to follow, and everyone wins.”

 

Upward Projections

Liguori pointed out that growth in his business comes in two ways: investment performance and taking on new clients. When the world came to a halt last March, however, meeting with potential new clients became extremely difficult. As advisors and investors, Liguori and his colleagues listened to the concerns of panicked clients, while at the same time they continued to research and act on investment strategies.

“We are also business owners worried about our business,” Liguori said. “We saw assets evaporate, so that meant our fees went down 30%.” Digging in and working harder was a key to getting through the trying times, he added. “As the founder of the firm, and on a personal level, I couldn’t be more grateful for where we are now after what we went through last March.”

Landon added that the pandemic strengthened client relationships as communication became more important and frequent, especially for clients whose industries were hit hard by coronavirus. While there are clear challenges and roadblocks ahead, the market horizon looks further out and toward more recovery.

“We try to reinforce to our clients that better earnings and brighter days are ahead, along with being empathetic to where they are right now,” Landon said.

After a slowdown at the beginning of COVID, Napatree saw a big uptick in the fourth quarter of last year. Liguori said that set the table for projected 20% growth in 2021.

“The last 12 months have been similar to a full market cycle, something that usually takes place over a five-year time period,” he said. “Clients who were full-on panicked in the beginning and were able to stay invested are now reaping the rewards of their patience.”

He admitted that even clients who have stayed invested are still anxious about the future. Most concerns are ones that existed long before COVID-19. In addition to parents who worry about saving enough for their children’s college education, the number-one concern Landon hears involves retirement.

“About 80% to 90% of the people we talk to have not been trained in investing; they would rather be gardening or hiking. So, if we can help put them at ease and feel good about the path they are on, it’s enormously rewarding.”

“People often ask if they will have enough to retire comfortably and live with dignity,” he said, noting that, because people are living longer, financial planning for retirement now involves making sure people have money for up to three decades after they retire.

Recent findings prove the point. Data from the CDC shows the average life expectancy for everyone born in the U.S. to be 78.9 years, but when calculating life expectancy after reaching age 65, it’s a different story. According to 2018 findings from the Society of Actuaries, there’s a 50% chance that a 65-year-old male lives to age 87, and that a 65-year-old female lives to age 89. For couples at age 65, there is a 50% chance at least one of them will live to age 93, and a 25% chance one will live to 98.

Disruptive events, like pandemics, can create the kind of fear and anxiety in people that lead to bad decision making in their efforts to reach long-term savings goals such as college and retirement.

Liguori said behavioral investing, whether it’s driven by fear or greed, usually leads to dangerous outcomes. His firm looks to avoid the herd mentality that can happen during volatile markets and instead focus on the client’s long-term objectives. He noted the GameStop stock bubble as an example that may look good in the near term, but the usual outcome for a small investor in events like this is disaster. Napatree’s philosophy, Landon added, is the exact opposite of chasing bubbles.

“We want to buy compelling long-term businesses that are selling at a discount right now because we’ve researched the likelihood they will be going up, not down,” he explained, adding that, when Napatree recommends a company to a client, the firm also own it.

“When we believe in an investment, it’s where we are putting our own money as well,” he said. “We think it’s important to show that we invest in the same companies as our clients.”

Another part of Napatree’s business involves helping small and medium-sized companies manage their employee 401(k) programs. Landon said the firm works with a couple dozen businesses to make sure programs are designed well and priced fairly, and that employees feel confident about participating in the plan.

“About 80% to 90% of the people we talk to have not been trained in investing; they would rather be gardening or hiking,” he added. “So, if we can help put them at ease and feel good about the path they are on, it’s enormously rewarding.”

 

Bottom Line

Landon said he and his colleagues love to meet with people to dissect their financial situations, and if it leads to someone being a client, that’s even better.

“We’re excited to be here in Western Mass. to expand the Napatree footprint,” he told BusinessWest. “We look forward to helping a lot of people and doing good things in the community.”

Banking and Financial Services

Tax-loss Harvesting

By Gabe Jacobson

Tax-loss harvesting is the selling of stocks, ETFs, mutual funds, and other securities at a loss with the goal of reducing taxes on other short- and long-term capital gains.

Does It Apply to Me?

Minimizing taxes is an important goal for investors, and tax-loss harvesting is a useful strategy for reducing your total tax bill. If you sell stocks, exchange-traded funds (ETFs), or mutual funds for a gain this year in a taxable, non-retirement, investment account, you may want to utilize tax loss harvesting to reduce potential taxes on any capital gains generated by those sales.

Tax-loss harvesting applies to investments of all sizes, so whether you have $5,000 or $5 million in your portfolio, you can still benefit from tax-loss harvesting.

Full-service financial advisors usually perform tax-loss harvesting as a part of their service and will coordinate with your tax advisor, but robo-advisors are beginning to offer this service for additional fees. These fees may not make sense given your situation, so consult your tax advisor if you are uncertain. Even in a rising stock market, some individual stocks or sectors may decline in price, giving an opportunity for tax-loss harvesting, which can be done at the end of the year but may be more effective during periods of volatility throughout the year.

You may want to consult your tax advisor about tax-loss harvesting if you have a self-service brokerage account. Pay special attention to tax-loss harvesting if you bought and sold securities within the same year because your capital-gains tax will be much higher than if you held the investments for over one year.

How Does It Work?

Tax-loss harvesting is also known as tax-loss selling because it involves selling securities at a loss, generating capital losses. This seems counter-intuitive. After all, most people buy securities hoping that the price per share will increase over time, allowing them to earn capital gains when they sell. These capital gains, like all other sources of income, come with a tax bill attached.

“Tax-loss harvesting works because capital losses are subtracted from capital gains when you file your tax return, so you pay taxes only on the gains in excess of losses.”

Tax-loss harvesting works because capital losses are subtracted from capital gains when you file your tax return, so you pay taxes only on the gains in excess of losses. However, capital gains and losses are grouped into two buckets based on how long the investments were held for.

Capital gains on securities sold more than one year after the purchase date are considered long-term and are taxed at lower rates. In 2020, the long-term capital gains rates range from 0% to 20%, depending on income levels; most people will fall in the 15% range.

However, if securities are sold within a year of the purchase date, the gains are considered short-term and are taxed at the same rate as wages or business income, which in 2020 range from 10% to 37%. These two buckets cannot be mixed, so you cannot reduce your short-term capital gains by long-term capital losses or vice versa.

Sure, it’s nice to mitigate your tax liability, but wouldn’t you lose more money selling your investments for a loss than you save in taxes? Why not just wait for those prices to bounce back and sell for a gain, assuming you expect the investment’s price to eventually recover? The price may recover down the line, but the tax bill associated with any capital gains generated this year cannot be avoided unless a loss is generated in the same year.

The solution is purchasing a similar asset shortly after selling for a loss. This way, you ‘harvest’ the capital loss for tax purposes while making little actual change to your investment portfolio. The IRS instructs that you must wait at least 30 days before purchasing another asset that is “substantially identical” to the asset sold for a loss, but there are enough similar assets available to allow immediate reinvestment in most situations.

An Example to Clarify

Here is a hypothetical example using common investments: the S&P 500 large-company index and Russell 2000 small-company index tracking ETFs (the prices are fictionalized for ease of understanding, but the ETFs are real and can be purchased through most brokerages).

In this example, in your brokerage account, you purchased 10 shares of iShares Core S&P 500 ETF (IVV) on Jan. 1, 2021 for $100 per share, for a $1,000 total investment. On the same date, you also purchased 10 shares of the iShares Russell 2000 ETF (IWM) for $200 per share, or a $2,000 investment. By Nov. 1, 2021 the price of IVV (the large-company index) has doubled to $200 per share, and you decide to sell five of your 10 shares, generating $1,000 in short-term capital gains.

However, you do not want to pay income taxes on an additional $1,000 on top of your regular wages. You notice that the small company index IWM’s price has dropped to $100 per share, so you lost $1,000 on that investment. You do not want to sell at a loss, but then you realize that, if you sell all 10 shares of IWM, you can generate a short-term capital loss of $1,000 which will completely mitigate the short-term gains from your sale of five shares of IVV when you file your income tax return.

You sell all 10 shares of IMW, but you still want to invest in small-company stocks. You immediately purchase $1,000 worth of shares in iShares MSCI small-cap index fund SMLF with the cash received from the sale of IWM. This fund gives you similar exposure to the Russell 2000 small-company index fund (IWM) you just sold without tracking the same index, meaning the IRS will not consider the two funds “substantially identical,” so you can purchase it before the 30 days are up. At this point, you have effectively received $1,000 in capital gains without generating any taxable gains, and you have maintained your portfolio allocations.

Note that, if you had purchased IVV more than a year before you sold it on Nov. 1, 2021, the gain would be classified as long-term, so the short-term loss generated on the sale of IMW would not offset this gain. Speak to your tax advisor regarding capital-loss carry-forwards, as capital losses not used to offset gains in one year can be applied to future tax years.

 

Gabe Jacobson is an associate at the Holyoke-based accounting firm Meyers Brothers Kalicka, P.C.; (413) 536-8510.

Law

MREs and HCAs

By Mary-Lou Rup

Under Massachusetts’ recreational-marijuana statute, those seeking to operate a marijuana retail establishment (MRE) must obtain a license to operate from the Cannabis Control Commission (CCC). Municipalities exercise local control over MRE applicants through ordinances or bylaws setting ‘reasonable’ controls on the time, place, and manner of operations and limiting the number of MREs within their borders.

During the first step of the licensing process, MRE applicants must obtain approval from the municipality, and the municipality and applicant execute a host-community agreement (HCA), which sets forth the conditions under which the MRE can operate. During the second step, the CCC determines to which approved applicants it will issue licenses, which in part requires a one-page certification that the applicant and municipality have executed an HCA.

Municipalities may require that MREs pay a ‘community impact fee,’ statutorily capped at 3% of the MRE’s gross sales for five years, to cover a variety of actual costs to the municipality reasonably related to the MRE’s operations.

“An appeal now pending in the Supreme Judicial Court (SJC) may resolve issues related to the degree to which municipalities exercise control over which applicants move on to the second step.”

In HCAs, many municipalities require additional payments by the MREs, often based on an additional percentage of gross sales and/or charitable donations to entities selected by the municipality. These additional costs have, for the most part, gone unchallenged by MRE applicants anxious to obtain the HCA necessary in order to be licensed to operate.

An appeal now pending in the Supreme Judicial Court (SJC) may resolve issues related to the degree to which municipalities exercise control over which applicants move on to the second step. The case involves Mederi Inc., which sought to operate one of five MREs permitted by the city of Salem. Mederi received the necessary special permit and alleges it met all other requirements of the city’s application process. A city committee reviewed the applications before entering HCAs with four applicants; Mederi was not among them and sued. Dismissal of that suit lead to Mederi’s appeal.

Two arguments made by Mederi are of interest. Mederi challenges the city’s authority to select with which qualified applicants it would enter HCAs, effectively controlling those which the CCC could then consider for licensing. Mederi also argues that the city exceeded its lawful authority by, among other actions, imposing as a condition of its HCA fees in excess of the 3% community-impact fee. Specifically, the city required five annual payments of 1% of gross sales to a ‘traffic-enhancement fund’ and at least $25,000 in charitable contributions to local causes.

Mederi posits that allowing municipalities to utilize these ‘pay-to-play’ provisions and to pre-select which qualified applicants it will allow to advance to the CCC adversely impacts the statute’s provisions giving priority to economic-empowerment applicants — provisions intended to assist areas of disproportionate impact disadvantaged by high rates of criminal activity involving marijuana.

In opposition, the city argues that it could properly decide with which applicants to enter into HCAs. It asserts that the local-control step of the MRE-licensing process allows municipalities to weigh competing proposals and exercise discretion in choosing the most suitable applicants. The city argues that its selected applicants were the “strongest possible operators” based on experience in the marijuana industry and intent to operate in the “least impactful locations” in Salem.

The CCC filed an amicus brief in the case. Pointing to competing legislative mandates, it asserted that, while the statute does not authorize it to regulate or participate in the initial local-control portion of the licensing process, the statute also requires that it give MRE licensing priority to existent medical-marijuana treatment centers and economic-empowerment applicants.

It noted that municipalities’ exclusive control of the HCA process seemed to advantage more experienced and better-resourced applicants, leaving economic-empowerment applicants at a competitive disadvantage, and, in effect, controlled those whose license applications the CCC is able to consider. The CCC has recommended amendments to the statute, addressing, among other matters, this issue and the additional fees imposed in HCAs. Its recommendations are presently under consideration in the legislature.

Stay tuned. The SJC heard arguments on Feb. 3 and, under its usual 130-day timeline, may be expected to issue its decision by early summer.

 

Mary-Lou Rup served as associate justice of the Massachusetts Superior Court until her retirement in 2018, when she joined the litigation group of Bulkley Richardson as senior counsel.

Law

Knick-knack Knockouts

By Valerie Vignaux, Esq.

The most prolonged and venomous arguments I’ve witnessed in my estate-administration practice have not been over money. In my experience, the highest level of emotional warfare is reserved for tangible, personal property, or the ‘stuff’ that mom and dad, or grandma and grandpa, leave behind in the house.

The $7 porcelain ballerina that sat on the mantel for 50 years, the carbon-steel chef’s knife in the kitchen, costume jewelry, a crocheted Kleenex holder, photo albums, even the washing machine, if you can believe it — these are the objects that can send otherwise well-behaved, loving, and gentle family members to opposite corners of the boxing ring to steel themselves for a fight. And fight they do.

“Not me, and not my family,” we all say. But it can happen to the best of us, and the conflict has the potential to do serious damage to a family already grieving the loss of a loved one. Adult siblings revert to traits and behaviors not exhibited since ages 6 to 12. Beloved in-laws who were once an integral part of the family are now interlopers who deserve nothing. And only after mom is gone do we learn that she seems to have promised her cuckoo clock to all four of her children. (Pro tip: none of you should take the cuckoo clock. Your own families will thank you for letting that one go.)

How do we prevent such consternation at a time when we should be coming together in our shared sadness? A list. A simple, old-fashioned list. I call such a list a will memorandum, and Massachusetts General Laws recognizes such a “separate writing identifying [the] devise of certain types of tangible property.”

One of the most appealing aspects of the will memorandum is that this list can be updated, changed, thrown out, and begun anew at any time, without having to change the will itself. In fact, a properly written and executed last will and testament document typically provides that the author (the testator or testatrix) may leave such a memo, listing specific items for specific people.

“The most prolonged and venomous arguments I’ve witnessed in my estate-administration practice have not been over money.”

For any object of significant monetary value — jewelry, works of art, vehicles, and rare books are all such examples — I recommend providing for distribution directly in the will or trust document, as opposed to a separate memorandum. Similarly, a will memorandum is not an appropriate place to include gifts of money or real estate. But for all those personal belongings that have more emotional than dollar value, such a list is perfect.

Some of my clients have also placed notes on the backs or bottoms of objects around the house, stating who is to receive it upon the client’s death. This works, but I prefer a list that is dated and signed and kept with the client’s copy of his or her will. It is helpful, too, if I, as the client’s estate-planning attorney, have a copy in my file.

How does one start writing a will memorandum? Ask your family members what they want. Understandably, many people are not eager to have these conversations, but it is a gift to those you leave behind to prepare for your passing, and a gift to prevent discord in the family.

Want to achieve the next level of preparedness? Start giving possessions away before you die. If you know that your niece would enjoy your bamboo fishing pole, give it to her now so you can see her smile, hear her thank you, and forestall any arguments about it later. Further, giving away some of your possessions now will reduce the burden on those you leave behind to clean out your residence.

Take a look around your home. Is there decluttering that could be done now? (For almost all of us, the answer is assuredly yes). Start making a list of items that you can part with now, and ask your family and friends if they’re interested in any of them. By starting the process during your life, you are lessening the burden you might otherwise leave your loved ones.

‘But I’m only 40 (or 50 or 60),” you say. You’re not too young to start. Do yourself and your family members a favor and start making that list. Every one of us has at least a few things that would be meaningful to another. If you don’t have children, consider your siblings, nieces, nephews, and friends.

One last thing: although it can feel like tempting fate, please be assured that making a will memorandum (or having a will prepared, for that matter) will not cause your death. It will not court the agents of your demise. It will be an exercise of control over the uncontrollable. It will actually make you feel better, not worse. And it will make things markedly easier for those loved ones you leave behind.

 

Valerie Vignaux is an attorney with Bacon Wilson, P.C., and a member of the firm’s estate-planning and elder-law team. She assists clients with all manner of estate planning and administration, including probate, and provides representation for guardianship and conservatorship matters. She received the Partner in Care Award from Linda Manor in 2017 and served on the board of directors for Highland Valley Elder Services; (413) 584-1287; [email protected]

Law

Non-competition Agreements

By Timothy M. Netkovick, Esq.

Everyone is aware of the honeymoon phase of the employment relationship — that time period when the employee begins work and both parties are filled with high expectations for the relationship.

Possibly, prior to beginning the relationship, an employer has the employee sign a non-competition agreement as a sort of prenuptial agreement, hoping to never have to use it. However, fast-forward a few years, the employment relationship goes sour, and the employee leaves the company. Not only does the employee leave the company, but they also begin soliciting clients, or maybe even fellow employees, to join them at their new place of employment.

As employers are aware, Massachusetts enacted the Noncompetition Agreement Act in 2018. Prior to the act, there was little restriction on the contents of a non-competition agreement other than what terms would be enforced by a court in the event of a dispute. That changed with the provisions of the act. Now, in the scenario above, if the employer sought to enforce the non-competition agreement, it would need to pay the former employee not to work during the competition period.

This is because the act mandates that, to be enforceable, a non-competition agreement must contain a ‘garden-leave clause,’ defined as 50% of the employee’s highest annualized salary within the two years preceding termination.

“While the Noncompetition Agreement Act requires employers to pay former employees not to work, there may be other options available to employers.”

Employers therefore must answer the question: what do I really want with a non-competition agreement? Is it to stop the former employee from working? Or is the goal to maintain the status of my business? If the goal is to maintain the status of the business, employers may be able to utilize non-solicitation and non-disclosure agreements, which can protect the former employer’s interests while also allowing the former employee to work.

Both such agreements are excluded from the definition of ‘non-competition agreement’ by the act, meaning they do not need to include garden-leave clauses.

A non-solicitation agreement does not prohibit a former employee from working for a competitor when the employment relationship ends. Instead, it serves to prohibit the former employee from soliciting clients and other employees of the former employer to join them at their new place of employment. A non-solicitation agreement can therefore be an effective tool in preserving the current status of the business by prohibiting a former employee from taking clients and other employees with them to their new place of employment.

A non-disclosure agreement also does not prohibit a former employee from working for a competitor when the employment relationship ends. Nor does it prohibit the former employee from soliciting clients and other employees from joining them at their new place of employment. Instead, it serves to prohibit the former employee from disclosing any confidential information from the former employer. The confidential information protected could be a trade secret or other highly sensitive material.

In short, while the Noncompetition Agreement Act requires employers to pay former employees not to work, there may be other options available to employers. It is therefore wise to consult with employment counsel to review your potential options to protect your business interests after the employment relationship has ended. u

 

Timothy M. Netkovick, Esq. is a litigation attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council; (413) 586-2288; [email protected]

Employment

Putting Experience to Work

Colleen Holmes says client employment, inclusion, and empowerment have been challenged by the pandemic.

Colleen Holmes says client employment, inclusion, and empowerment have been challenged by the pandemic.

Colleen Holmes calls it a ‘full-circle moment.’

That’s how she chose to describe her decision to assume the role of president and CEO of Viability, the Springfield-based nonprofit with a broad mission that boils to providing services — and creating opportunities — for those with disabilities. Those opportunities come in a number of forms, and we’ll get to that shortly.

But first, that ‘full circle’ reference. Holmes used it to note that she spent a full decade at one of the legacy agencies, in this case Human Resources Unlimited (HRU), that became Viability in 2107 (Community Enterprises was the other) before moving on to a new role leading as president and CEO of the 18 Degrees agency.

So she’s back where she was. Well, sort of, but not really. Viability is a much bigger agency than HRU was — it boasts $36 million in annual revenues, 420 employees, and 37 sites in four states — and so much has changed in the interim, much it before COVID-19. And the pandemic has simply added another layer — or several layers, when you get right down to it — of challenge and intrigue.

“Coronavirus has in no way taken away from the need for the services we provide. And in many ways, it has made it even more important to provide those services; that has been job one for me, and for all of us here.”

“Coronavirus has in no way taken away from the need for the services we provide,” Holmes explained. “And in many ways, it has made it even more important to provide those services; that has been job one for me, and for all of us here.”

In that respect, much hasn’t changed, and she has, indeed, come full circle, especially when it comes to agency’s mission, which boils down to enriching the lives of the people served by the agency and continuously reinforcing the belief that every individual, no matter their ability, can be a valuable contributor to the community — and the workforce.

It carries out this mission through a number of programs and services, including:

• Clubhouses, which provide members with a supportive environment to increase their vocational, educational, and social skills;

• Partnering with more than 600 employers to provide members with a variety of supported employment opportunities;

• Community living programs that provide that provide care management, direct care, and referral services to individuals with disabilities, enabling them to live in the community with dignity;

• Day supports and various recreational programs that provide individuals with a broad range of community activities; and

• Transitional services that provide members with upfront job-readiness skills, placement assistance, and ongoing supports.

The common denominator in each of these areas, said Holmes, is dedicated staff that not only make the programs happen, but make the individual goal set by and for each member attainable.

“This work doesn’t happen without our staff — and I don’t mean that simply from the standpoint of hands being on deck,” she said. “A lot of the way in which progress is made with individuals is through trusted relationships that are built that give people a safe space to try things, to grow, to progress, to fail and come back and try again another day. Those trusted relationships are pivotal, and our staff’s ability to offer that is everything.”

But COVID has certainly impacted many of these initiatives, said Holmes, adding that the agency has collectively overcome a number of challenges to keep employment, inclusion, access, and empowerment for people with disabilities in the forefront, despite the pandemic. Moving forward, lessons learned from the pandemic will be applied to the future of these programs and services and how they are provided.

“What worries me is that some of these people are losing ground that they worked so hard to gain — people who were working, people who were gaining life skills, people who were gaining in their levels of independence, people who were ready for their next step in employment. There are a number of folks who have lost ground.”

And there will be some important ground to be made up, she said, adding that, in some cases, COVID stunted the progress being made by some members who were forced inside and into a form of isolation that is not part of this agency’s MO.

“What worries me is that some of these people are losing ground that they worked so hard to gain — people who were working, people who were gaining life skills, people who were gaining in their levels of independence, people who were ready for their next step in employment,” she noted. “There are a number of folks who have lost ground.”

Overall, however, many members, and the agency as a whole, have been able to carry on and move forward through this pandemic, she went on, adding that many members work in essential positions, and they take pride in being essential.

For this issue and its focus on employment, BusinessWest talked at length with Holmes about her new assignment, but especially about how the pandemic has only magnified the need for the various services this agency provides, and how Viability has gone about responding to this changed landscape.

 

Work in Progress

Holmes said she certainly wasn’t looking for a new challenge when Don Kozera, the long-time CEO of HRU, her former boss (she served the agency as special projects coordinator), and, most recently, the interim president and CEO of Viability following the unexpected passing of Dick Venn (who stepped into that role after having the same titles at Community Enterprises), asked to talk with her about possibly becoming a candidate for this role.

Suffice it to say he did a good sales job, although it wasn’t necessarily a quick or easy sell.

“He said he thought I would be a good fit for this position and asked if I might consider it,” Holmes recalled. “And I said, ‘I don’t know … I’ll go talk to people; I’m always happy to do that.’”

She did talk to people, and came away intrigued by the possibilities.

“What I saw in this was an opportunity to sort of test my skills and challenge myself in a larger organization; this one is probably two and half times the size of the organization I was leading,” she explained. “Also, and this is probably most compelling, coming to Viability was an opportunity to advance work that matters to me in a different and larger arena.

“Our focus is on employment, training, empowerment, and inclusion with people who have disabilities and other challenges and disadvantages,” she went on, “and that speaks very much to me, in the combination of capacity building and social-justice change.”

Fast-forwarding a little, she did enter what became a nationwide search for a permanent president and CEO, and prevailed through a series of interviews conducted virtually, which she described as a new and different experience — at least as the interviewee.

She arrived in November to a full plate of challenges, including continuation of the daunting process of combining HRU and Community Enterprises into the larger entity that exists today, work that was in some ways slowed, and complicated, by both the passing of Venn and then the arrival of COVID.

“As I came on board, the organization that I am coming to know was ready to be on the other side of that transition,” she told BusinessWest. “And it would have been on the other side sooner had it not been interrupted by the grief and loss of Dick Venn, and had it not been for a pandemic.”

Elaborating, she said that what has been delayed has been the process of “breaking down the silos” within the organization. “You have a much larger organization in every way you can name — there’s more staff, many more programs and services, and in more geographic areas — and one that was continuing to grow, not just as a result of the merger but because it’s part of the mission, vision, and value of the organization. It’s about silos, systems work, and some of the basic functional things, like IT.”

A big part of the process of leading the organization to that proverbial ‘other side’ is to do a lot of “listening, watching, and learning,” she noted.

“You don’t walk into an organization like this one and think you know what you need to know,” she explained. “And I can say I’ve walked into an organization of people who are very welcoming, very helpful, who have lots to share, and who are deeply committed to the mission. Our people show up because they believe in the work that they’re doing and the people they’re working with.”

 

The Job at Hand

Supporting and nurturing this staff is just one of the many priorities for Holmes moving forward — and is, in itself, a challenge.

“One of my larger concerns, and it’s one that’s certainly shared, is the fact that human-service salaries are woefully inadequate to the jobs people do,” she explained. “Joining in advocacy efforts at the state level for eliminating the disparity in pay between community-based providers and state employees who do substantially the same work is important. But it’s also important for us as an organization to prioritize our staff to the extent that the limitations of our largely state-funded dollars allow us to do. Continuing services and supporting our staff are real priorities.”

Another priority, of course, will be transitioning, if that’s the right word, to a post-COVID world. Many staff members have been working remotely, she noted, and there are questions moving forward about how and where work will be carried out and even how much office space the agency may actually need in the short and long term.

And there are many factors to consider in making those decisions, she said.

“It comes down to how we most effectively support the services and the staff members that are delivering the services,” she explained. “There might be a natural tendency to say, ‘OK, there are certain positions that can be carried out remotely, so let’s just put all of them out and save that space.’ But it’s more complicated than that; human-services work is very collaborative. It’s teamwork, but more deeply than that, there is an environment of support that’s hard to come by when you’re not in contact with people, when people don’t see you walk through the hall and see you being a little more tired, a little more stressed than normal. In the kind of work we do, we need to pay attention to that.”

Meanwhile, there are those lessons learned and the new ways of doing things that came about out of necessity — and ingenuity.

“There was a brief period when staff needed to switch to providing services remotely, and … by golly, they did it,” Holmes told BusinessWest. “You get creative, and I’m sure we all have; you learn how to do some things differently, and you discover that the paradigm of how services are provided is turned on its head.

“That’s a new skill set we’ll carry forward, but it by no means replaces in-person services,” she went on, adding that, moving forward, the agency will look toward using the new skills and new technology, including virtual reality, to carry out its mission.

She noted that Viability is using virtual reality to acclimate and train clients and members for job placements. “We started during the pandemic, and we’re very much in the testing and piloting stage,” she explained, adding that early results are very positive. “If you have folks who have autism or others who for various reasons are highly sensitive to changes in environment or to noises, or just to new experiences … to be able to take a work environment and load it into a virtual-reality system so that people can safely explore and navigate that workspace without actually being there is very advantageous. It can lead to much smoother transitions.”

As for the employment programs, the ones that put thousands of individuals in jobs across this region and beyond, COVID prompted some businesses to close and many others to slow down, said Holmes, adding that obvious question marks remain about when and to what extent business, and jobs, will pick up again.

“It is a concern as to how long the economic rebound takes, and if there continues to be a shortage of positions,” she said. “As is so often the case, people who are marginalized are pushed out first, so that is a concern. But there are a number of employers we partner with who, through experience, will tell you the value of working with us, and that, when it comes to our members, their attendance is superior, and the quality of their work is at least on par.”

 

Past Is Prologue

Holmes has talked with many such employers over the years, so she understands those sentiments. She has, as she said at the top, come full circle when it comes to her career in human services.

But in most all respects, she is not coming back to where she was years ago. The landscape has changed in myriad ways and, thanks to COVID, it continues to change, each month and almost each week.

This is a different test, a sterner test, one she fully embraces. As she said, she’s excited about the opportunities — for herself, but especially for those benefiting from Viability’s programs and services.

 

George O’Brien can be reached at [email protected]

Employment

Don We Not Our BLM Apparel

By Tim Murphy

Americans across the country have been actively engaging in the Black Lives Matter (BLM) social-justice movement, which advocates against incidents of racially motivated violence police. Often, BLM supporters will demonstrate their commitment to the movement not only by protesting, but also by wearing apparel, such as T-shirts and face coverings, with BLM messaging.

But what happens when supporters wear this clothing to work? Can employers enforce a dress code requiring employees to refrain from wearing politically motivated clothing? Yes, a recent Massachusetts federal court determined. Even so, is it worth the negative publicity and PR fallout? You be the judge.

The case involved the well-known Whole Foods grocery store, and a group of nearly 30 Whole Foods’ employees who claimed to be negatively impacted by the store’s “neutral” dress-code policy, which prohibited employees from wearing clothing with visible slogans, messages, logos, and/or advertising that are not Whole Foods-related.

“Can employers enforce a dress code requiring employees to refrain from wearing politically motivated clothing? Yes.”

Beginning around June 2020, in the wake of George Floyd’s killing and subsequent nationwide protests, Whole Foods employees began wearing masks and other attire with BLM messaging to work. Some employees were disciplined for violating the dress-neutral dress-code policy, while others were sent home without pay and directed to change clothing. Several employees quit, and others kept wearing BLM clothing to protest the store’s actions.

Then, a group of 27 employees filed a lawsuit against Whole Foods, accusing the store of racial discrimination. They claimed Whole Foods was selectively enforcing its dress code banning “visible slogans, messages, logos, and/or advertising” against black employees.

Last month, a federal District Court judge dismissed the race-discrimination claims. The court was not convinced that Whole Foods was enforcing the policy based on race-related reasons. Instead, it was enforcing a neutral dress-code policy with no consideration to race. The court noted that, “at worst, they were selectively enforcing a dress code to suppress certain speech in the workplace.” The judge went on to state that, “however unappealing that might be, it is not conduct made unlawful” by anti-discrimination laws.

On its face, this decision makes sense. Generally speaking, an employer can lawfully implement and enforce a dress code, as long as it is applied equally to all employees. This is particularly important when violations of the dress code negatively affect productivity or lead to employee disputes. As far as political speech is concerned, the First Amendment provides no protection for employees unless they work for the government, because the First Amendment applies only to governmental restrictions on speech.

Additionally, in Massachusetts, there are no state laws or protections for speech in a private workplace. It also appears there was no evidence in this case supporting the argument that Whole Foods was selectively enforcing the dress-code policy against black employees.

Given the current political climate, employers may be left wondering whether Whole Foods and other retail employers are making the right move by enforcing dress-code policies in a way that restricts political and socially progressive speech. Certainly, there are arguments to be made that these policies are geared toward improving customer relations and eliminating politically charged disputes between workers and customers. Last summer, much news was made about a customer in Target berating an employee wearing BLM attire with questions about whether “all lives matter.”

The same can be said for employee relations. It is not hard to envision heated disputes around the water cooler over clothing that bears political or social-justice messages.

That said, this case has generated a lot of publicity for Whole Foods. And they are not alone. Starbucks had a similar dress-code policy that prohibited employees from wearing BLM attire and other clothing bearing political and social messaging. After protests and public outcry, Starbucks reversed its position and began allowing employee to wear T-shirts or pins supporting the Black Lives Matter movement.

Businesses need to pay careful attention to this issue. While the adoption of strict, ‘neutral’ dress codes appears legal, there could be unintended consequences, including irreversible harm to employee morale and negative public-relations nightmares.

 

Tim Murphy is an attorney with the Springfield-based firm Skoler Abbott & Presser, specializing in labor relations, union campaigns, collective bargaining and arbitration, employment litigation, and employment counseling; (413) 737-4753.

Women in Businesss

Progress Report

By Janine Fondon

On March 8 (International Women’s Day), the 2021 On the Move Forum to Advance Women, presented by Bay Path University, Springfield Museums, and a host of local organizations, virtually hosted some 200 women of all backgrounds from Western Mass. and beyond. Through conversations and speakers, women voiced their hopes and elevated their concerns to support the future success of women in leadership at all levels.

Speakers noted there is much work to be done to change the trajectory of women in companies and organizations, given that women still operate in a world where they are paid less than men. Also, women have limited leadership opportunities in the C-suite and have experienced workplace challenges in the face of the COVID-19 crisis. Also, black women and Latinas still make less than anyone in the workforce, and their opportunities for promotions are certainly limited. Where do we go from here?

The forum theme, “Women in Leadership: This Is What Change Looks Like — Past, Present, and Future,” offered attendees an inter-generational, cross-cultural, gender-inclusive, and history-infused conversation focused on advancing women, led by moderator Nikai Fondon.

The event presented voices and content that showed what change could look like — young, diverse, professional women on the move to create a new world; experienced leaders of all backgrounds who share their expertise; and college-aged women exploring new skills. Now in its fifth year, the event has engaged more than 1,000 women in community conversations and presentations on women’s history, empowerment, and advancement.

“The numbers also show us that change needs to happen to build more inclusive workplaces at all levels and in all industries. We must keep watch that our colleges and universities understand the magnitude of not only recruitment and retention, but belonging and mentoring.”

This year’s event aligned with the priority theme of the 65th session of the United Nations Commission on the Status of Women, “Women in Leadership: Achieving an Equal Future in a COVID-19 World.” According to Catalyst, “in 2020, women of color represented only 18% of entry-level positions, and few advanced to leadership positions. While white women held almost one-third (32.8%) of total management positions in the U.S. in 2020, Asian women (2.2%), black women (4.1%), and Hispanic women (4.5%) held a much smaller share.”

During the forum, the speakers and participants during the conversations voiced the sentiments expressed in these statistics. Most women still face obstacles in moving up the ladder at work. These statistics remind us that young women professionals who are rising to new opportunities in industry may have to pick up the path of experienced women today who still fight these trends after more than 20 years.

The numbers also show us that change needs to happen to build more inclusive workplaces at all levels and in all industries. We must keep watch that our colleges and universities understand the magnitude of not only recruitment and retention, but belonging and mentoring.

Also, as black women, Latinas, and women of color climb the ladder of success, they find that every step along the way may not come with the support they need or expect. A study conducted by Lean In and SurveyMonkey finds that, although more than 80% of white employees view themselves as allies to women of color at work, just 45% of black women and 55% of Latinas say they have strong allies in the workplace. There is more work to be done to build relationships that drive trust and transformation in the workplace, and more conversations need to confirm informal and formal sources of support.

 

Diversity, Equity, and Inclusion

To help make a change in the workplace, educational institutions, companies, and organizations continue to underscore the importance of diversity, equity, and inclusion. While these efforts allow for some change, we need strategic approaches to systemic racism and inequities that address issues for companies and individuals. Many young professionals, consumers, and communities are at the forefront of social justice, so shifts in social responsibility, outreach, and accountability could drive change on many levels.

Bay Path President Sandra Doran noted in her speech that she has been committed to the advancement of women and the power of education. “I embrace these beliefs because I come from a family of educators and strong women. I have witnessed first-hand the power of higher education for women. My grandmother attended Barnard, a women’s college, and my mother returned to school to earn her degree at a women’s college as an adult learner. With such personal role models, I felt called to be the president of Bay Path.”

However, noting the effects of COVID-19, she noted that, “by now, we all know the burden of the pandemic fell harder on women than on men. Women make up the majority of front-line workers in deeply affected industries like retail, food service, hospitality, and healthcare, and also picked up a disproportionate share of the additional loads of schoolwork, housework, and elderly care. Black women have faced the highest rate of unemployment among women at 8.9%, followed by Latinx women at 8.5%. This pandemic has uncovered the fragility of our systems, from healthcare to daycare to education, and it is our calling, women — and men of substance — to create change. And the pipeline of women in leadership positions has shrunk.”

“As we move past International Women’s Day and Women’s History Month, there must be even more commitment to revisiting practices in workplaces, classrooms, boardrooms, meeting places, and Zoom rooms to deliver equity, belonging, and dismantling ‘isms.’”

Doran also referenced an IBM study that “noted how women on corporate boards and in C-suites around the world have made no progress since 2019, when IBM did its first study on the subject.”

Another report, the 2020 Women in the Workplace study, conducted in partnership with Lean In and McKinsey, tracked the progress of women in corporate America. The data set reflects contributions from 317 companies that participated in the study and more than 40,000 people. According to the report, “the boundaries between work and home have blurred, and women, in particular, have been negatively impacted.”

In the study, women of color were noted as particularly impacted by COVID. “Women — especially women of color — are more likely to have been laid off or furloughed during the COVID-19 crisis, stalling their careers and jeopardizing their financial security. Meanwhile, black women already faced more barriers to advancement than most other employees. This is an emergency for corporate America. Companies risk losing women in leadership — and future women leaders — and unwinding years of painstaking progress toward gender diversity.”

 

Adverse Impact on Black Women and Latinas

While many black women and Latinas have made strides and found success in corporations and organizations, far too many remain underutilized, left behind, not included, and overlooked for opportunities. The numbers document their trajectory in a world where, in most cases, they are paid less than everyone else. Also, according to a report by CNBC, “employment for black women is 9.7% lower than it was in February 2020. Employment for white men, white women, and black men is down 5%, 5.4%, and 5.9%, respectively.”

A report by Lean In also confirms the experiences of black women in the workplace, noting that black women are significantly underrepresented in leadership roles, much less likely to be promoted to manager (and their representation dwindles from there), more likely to see their successes discounted, and less likely to get the support and access they need to advance. In addition, black women face more day-to-day discrimination at work. They want to lead — and they are motivated to improve their workplaces — but often find themselves unfairly penalized for being ambitious.

These findings should cause us all to pause and revisit our workplace policies, practices, and procedures. While not every black woman may have these experiences, other personal scenarios that they face result in negative trends. Most of all, these findings should prompt us to think about how everyone is treated in the workplace and how we treat each other. Most of all, we should consider how we can understand what others feel and find ways to communicate. If we were all treating each other as ourselves, we would not have these trends.

 

LGBTQIA+ Equality

While many communities and individuals experience an uncertain landscape in the workplace, we must continue to stay vigilant about trends that impact inclusion. For LGBTQIA+ (lesbian, gay, bisexual, pansexual, transgender, genderqueer, queer, intersex, agender, asexual, and other queer-identifying) communities, the journey to equality continues to “ebb and flow,” as Kathleen Martin of Springfield College and her wife, Andrea Hickson Martin of Bay Path University, noted:

“There is no doubt that there have been tremendous strides over the past decade for LGBTQIA+ equality. In 2012, the Obama administration supported marriage equality. In 2015, in the Supreme Court of the United States case Obergefell v. Hodges, marriage equality was made federal law, paving the way for our marriage in 2017. In 2019, Congress approved a comprehensive LGBTQIA+ civil-rights bill, providing non-discrimination protections for the LGBTQIA+ community in employment, housing, public spaces, education, jury service, credit, and federal funding. During the Trump administration, however, LGBTQIA+ rights were rolled back through a ban on transgender military service, the appointment of anti-LGBTQIA+ judges at various levels of the judicial system, the rolling back of the Obama-era Civil Rights Act protecting transgender and non-binary workers from employment discrimination, and the rescinding of Title IX rules requiring schools, including colleges and universities, to address sexual harassment, including sexual violence.

“As with everything in life, there is a constant ebb and flow,” Martin and Hickson continued. “On the first day of the Biden-Harris administration, President Biden signed an executive order preventing and combating discrimination on the basis of gender identity or sexual orientation, reinstating the LGBTQIA+ protections the Trump administration removed. More recently, the administration has directed the Department of Education to ‘review all of its existing regulations, orders, guidance, and policies to ensure consistency with the Biden-Harris administration’s policy that students be guaranteed education free from sexual violence.’ This includes an evaluation of the Title IX burden of proof issued under the previous administration.”

As stated, the ebb and flow of policy continue to take us away from setting a more consistent, inclusive world and workplace where all people can succeed.

As we move past International Women’s Day and Women’s History Month, there must be even more commitment to revisiting practices in workplaces, classrooms, boardrooms, meeting places, and Zoom rooms to deliver equity, belonging, and dismantling ‘isms.’ Also, we must begin to employ new ways for engaging, recognizing, and retaining black women, Latinas, and women of color who are still hidden in plain view.

 

Janine Fondon is a writer, speaker, assistant professor, and chair of Undergraduate Communications at Bay Path University. She is a frequent contributor to publications and media outlets on the topics of social justice, women’s history, and diversity, equity, and inclusion. She recently curated and produced an exhibit and series of public events at Springfield Museums, called “Voices of Resilience: The Intersection of Women on the Move.” She was named a 2020 Difference Maker by BusinessWest, a 2020 Pynchon Award winner, and one of the top African-American female professors in 2018 by the African American Female Professors Assoc.

Women in Businesss

Pink Slip

By Joanne Hilferty, Dan Kenary, and Brooke Thomson

In 2020, the same year a record number of women were elected to Congress and the first woman was elected vice president, COVID-19 had a devastating and potentially permanent impact on women in the workforce.

The percentage of women participating in the U.S. labor market in October 2020 was the lowest since 1988, and of the 9.8 million jobs that have not yet returned, 55% belong to women. In one year, COVID-19 wiped out a generation of progress and put the precariousness of being a woman in the modern American workplace into stark perspective.

Before the pandemic, women in Massachusetts were participating in the workforce at increasing rates, surpassing the national rate by 2019. COVID-19 brought them back to where they were at the end of the Great Recession in 2009.

More than 40% of female employees in Massachusetts work in education, healthcare, and social assistance, sectors that have been particularly hard hit by the economic downturn. Add the lack of quality childcare options brought about by the closure of schools and early-education programs, and you have a perfect storm forcing women to face gut-wrenching choices.

“In one year, COVID-19 wiped out a generation of progress and put the precariousness of being a woman in the modern American workplace into stark perspective.”

According to the U.S. Bureau of Labor Statistics, in September 2020, when schools typically reopen, a staggering 69% of women said the pandemic was keeping them from returning to work for reasons other than downsizing or business closure. In a survey conducted by the Associated Industries of Massachusetts (AIM) last fall, 67% of employers listed lack of childcare as a primary concern for their workforces.

Fortunately, organizations in Massachusetts are taking a leadership role in addressing the ongoing challenges facing women in the workforce. The Boston Women’s Workforce Council, the Commonwealth Institute, and the newly formed Massachusetts Business Coalition for Early Childhood Education are focused on advancing important changes, such as pay and representation equity. Even before the pandemic, women on average made about 81 cents for every dollar earned by their male counterparts.

Women and men should have the same options to pursue a career and raise a family, but the pandemic has laid bare the reality that women are expected to take greater responsibility for their families without sufficient support.

Ensuring that jobs traditionally filled by women have more extensive protections and finding a path toward more balanced representation of women in industries like information technology, transportation, and construction — fields where female representation is still limited — are also critical steps to achieve greater balance in the long term. However, immediate action is needed to ensure progress made by women does not erode further.

That is why AIM is calling on employers to make a commitment now to review their practices and policies and make immediate, substantive adjustments to mitigate the impact of COVID-19 on women and other caregivers in the workforce. Specific recommendations include:

• Committing to providing pay increases and advancement steps to women caregivers on schedule rather than penalizing those who have been on leave or working limited hours;

• Extending the time workers can be on leave to coincide with the duration of the pandemic;

• Giving hiring preference to former workers, if their experience and skills allow, who were required to leave the workplace due to family demands;

• Extending the time that returning workers can bridge tenure for benefits and other considerations to coincide with the full duration of the pandemic;

• Listening to individual employees about their specific needs and expectations and not making assumptions about what each woman or caregiver can or cannot do; and

• Instituting practices that reduce conflict with remote schooling, such as not holding meetings before 9 a.m. or at lunch, when children need assistance.

These steps alone will not fully offset the impact of the pandemic on women; they will, however, demonstrate the business community’s commitment to supporting the Commonwealth’s skilled female labor force. Massachusetts cannot afford to go back to business as usual as the light begins to shine at the end of the COVID-19 tunnel, especially when it comes to how businesses and public policy treat working women.

The pandemic has presented an unprecedented responsibility for the Commonwealth and the nation to see decreasing numbers of female workforce participation for what they are — gaps in the system allowing available and accessible talent to fall straight through. Failure to act on them now will have long-term, devastating impacts on the Massachusetts economy.

Joanne Hilferty is board chair at Associated Industries of Massachusetts (AIM) and president and CEO of Morgan Memorial Goodwill Industries. Dan Kenary is immediate past chair of the AIM board and CEO and co-founder of Mass Bay Brewing Co. Brooke Thomson is executive vice president of Government Affairs at AIM. This article first appeared as an op-ed in the Boston Globe.

 

Home Improvement Special Coverage

Backyard Experience

 

By Mark Morris

On a Thursday in February while snow fell on the region, Bob Schwein was answering a steady stream of phone calls at Drewnowski Pools.

Sure, some calls were from people who use their spas year-round, but many more inquiries were to schedule swimming-pool openings.

“Swimming-pool owners know that if they want to schedule a pool opening for Memorial Day, when thousands of other people want to open their pools, they need to schedule now,” said Schwein, sales manager for Drewnowski.

Early spring is typically when he receives calls to replace vinyl pool liners and to repair or renovate pools made from gunite, a concrete product used for many inground pools. “Repairs to gunite pools can take weeks, and people don’t want to interrupt the middle of their swimming season, so we usually schedule these early in the year.”

With his business growing over the last five years, Schwein said backyard pools are not what they used to be, particularly inground pools (see photo above).

“It used to be a rectangle with a three-foot concrete walk around the pool and a fence surrounding it by itself in the yard,” he noted. “Now, the pool is part of an entire backyard experience.”

That trend — toward creating an experience right outside the back door — is one that many different types of outdoor-improvement contractors can attest to, particularly during the era of COVID-19. BusinessWest spoke with several who said people are spending more money on their homes simply because they are spending more time at home.

The oft-heard story is that people were encouraged to only go out when necessary, and those who were fortunate enough to work from home during this time have been able to save some money, while also becoming more acutely aware of repairs and renovations they may have been putting off. As a result, many contractors reported their most successful year of business in 2020.

As many of the pandemic restrictions continue, people are not sure how long they will continue to work and attend school from home. It reminds Brian Rudd, owner of Vista Home Improvement, of the uncertainty that emerged during a different historic time.

“After 9/11, we saw people start to nest, and they began to see their home as their kingdom,” he said. “Since the pandemic, the desire to nest at home has happened to an even larger degree.”

“Right now, people are addressing the aesthetics of their houses because they are home more and able to address these things now.”

And they’ve been increasingly looking outside the home, not just inside. After a record year in 2020, Rudd reported that even more customers want new siding and new windows. “Right now, people are addressing the aesthetics of their houses because they are home more and able to address these things now.”

It’s not unusual for customers to call Dave Graziano, landscape project manager for Graziano Gardens, to replace old, overgrown plantings with new ones. Last year was different because, along with replacing old plantings, customers wanted to make other improvements to their property.

“Whether it was adding a big patio or simply hanging flower baskets, people wanted to create more outdoor living space, no matter how large or small their yard might be,” he said.

Brian Campedelli, president of Pioneer Landscaping, said his business doubled in 2020 because people decided to invest in their homes rather than vacations. “The money they would have spent on vacation instead went into their backyards, where we helped them create an outdoor entertainment area.”

Both Graziano and Campedelli noted that firepits have become one of the most popular additions to the backyard.

“While we build a lot of circular firepits, people are getting creative and asking us for square or triangular pits to match the seating they have around it,” Campedelli said.

A worker with Pioneer Landscaping places patio stones.

A worker with Pioneer Landscaping places patio stones.

Once considered only for warmer climates, outdoor kitchens are also a growing part of his business, with many designs incorporating a pizza oven.

“In the past, people would not build outdoor kitchens because of the short season to use them, but I don’t hear that as much anymore,” he said. “I think people are just going for it.”

 

Dive Right In

‘Going for it’ is an increasingly common mindset when it comes to buying an inground pool as well, Schwein noted.

While Drewnowski sells inground and above-ground pools, installation is handled by its parent company, Juliano Pools of Vernon, Conn. As busy as Juliano was last year, many who wanted pools couldn’t get them, due to higher demand than normal combined with shortages of materials and labor. Schwein said 2021 is off to a good start because those who couldn’t purchase last year can do so this year.

“We have a spillover of people from last year and new people who have decided to buy a pool this year, so I’m positive that combination will mean another banner year,” he told BusinessWest.

For years, many believed that houses with inground pools would be tough to sell. The red-hot real-estate market since last spring seems to have made that concern a moot point. Many first-time homebuyers are also first-time pool owners who are calling Schwein for advice on how to maintain their inground asset.

“From what I’ve seen, people are not afraid to buy a house with an existing pool. In fact, to many, it’s a selling point,” he said. While a typical home inspection does not cover the condition of a swimming pool, Drewnowski has pool inspectors available to help prospective buyers understand what they are getting.

With less inventory in the housing market, Rudd observed that many people choose to upgrade the house they have. By the same token, when people do purchase a home, they often come to see him, armed with plans.

“From what I’ve seen, people are not afraid to buy a house with an existing pool. In fact, to many, it’s a selling point.”

“When people move, they improve. And when they don’t move, they improve,” he said with a laugh.

Sprucing up a house isn’t complete until landscaping provides the final touch. In addition to landscaping services, Graziano Gardens has a retail store for those who want to tackle backyard projects themselves. Graziano saw new faces in the garden center last year, resulting in what he termed a “mini-explosion.”

“We sold out of trowels, shovels, gloves, watering cans, things we’ve never sold out of before,” he said. Also hard to come by were grown items such as hanging baskets, vegetable plants, and even evergreen hedges. “It seems like people just wanted to fill in that spot.”

Brian Campedelli says customers are looking for more creativity in firepit design.

Brian Campedelli says customers are looking for more creativity in firepit design.

Dry, warm temperatures early last spring, combined with parents and kids cooped up in their homes, might have led to a shortage in pool heaters. Schwein said he took many calls from exasperated parents who bought a heater and opened their pool earlier than usual to get their kids outside and squeeze a few more months out of the swimming season. That logic was fine until manufacturers ran into COVID issues and Schwein could no longer get them.

“The demand was high, and the supply was low,” he said. “Heaters are something that would normally take six days to get, but last year we ran into three-month delays.”

The pandemic also forced several contractors to find new ways to do business. A summer ritual for many involves periodic trips to the local swimming-pool retailer with samples of pool water to make sure the chemical balance keeps the water clean and safe. When COVID first hit, Schwein said, customers were no longer allowed into his store. “We had to change our business model.”

Specifically, customers left water samples outside the door where employees would test the sample and call the customer with a list of what chemicals were needed. After completing the transaction over the phone, an employee would deliver the chemicals to the customer’s house. Schwein admits it put a strain on his staff and customers, but everyone adjusted well.

“Our customers were able to get what they needed, but the way we had to do everything was different.”

When the pandemic first hit, Rudd and his staff were forced to become familiar with 10 years of new technology in less than three months. Beyond Zoom meetings, Vista consultants used satellite technology to measure houses for roofs and siding when they could not visit a client in person. While skeptical in the beginning, he now calls the technology “amazing.”

Dave Graziano says his garden center sold out of many popular plants last year.

Dave Graziano says his garden center sold out of many popular plants last year.

“I’m from the days of using a tape measure and a pencil, so at first I took comparison measurements to make sure the satellites were accurate,” he said. “It’s scary how accurate they are.”

Rudd enjoys using computer-design tools to give homeowners a good idea of how their space will look with improvements.

“We take a picture of the house, upload it into one of our applications, and change the house right in front of them,” he explained. “It leads to great interaction with the client and lets them have control of their purchase, with us there to guide them.”

Campedelli said it’s difficult for clients to envision a dramatic renovation of their backyard, so computer design goes a long way toward sealing the deal.

“Once they see the design, they want to move forward,” he noted, adding that, once the job is done, he enjoys how thrilled customers are with the result. “It changes their lives in a positive way.”

 

Getting Ahead

With spring around the corner, contractors are preparing for another busy year. Schwein pointed out that his phone is ringing now because customers have learned from the pandemic.

“Last year, people were patient and understood slowdowns due to COVID issues, so they are calling now because they don’t want to hear the COVID excuse this year,” he said.

After a busy 2020 as both a contractor and a retailer, Graziano’s main takeaway from last year was that people want to make their properties into their own oasis.

“Whether they do it themselves or they hire a landscape professional, I think that trend will continue through this year,” he said.

In the meantime, he’s got what he called a “good problem” — figuring out how many more shovels and watering cans to order for 2021.

Special Coverage Technology

A Critical Gap

 

Margaret Tantillo clearly remembers — honestly, who doesn’t? — the day Gov. Charlie Baker started shutting down the economy a year ago this month.

As the executive director of Dress for Success Western Massachusetts, an organization dedicated to the economic empowerment of women, she started calling participants in the days that followed, asking what issues they were having. One that kept coming up was access to the internet.

“If people are not connected, they’re going to be left behind in terms of being able to participate in the workforce,” Tantillo said.

So, identifying digital equity as connectivity, access to equipment, and the knowledge and ability to use software, Dress for Success enlisted a group of volunteers to form a digital task force, providing one-on-one coaching for about 40 women and providing more than 250 hours on the phone coaching.

“For the most part, we’re helping people operate on Zoom so they can participate in training and apply for jobs and interview virtually,” she said — just one way internet connectivity is a lifeline for people in these times.

Or, conversely, how lack of it can have a crushing impact.

It’s an issue that has received more attention during the pandemic, as tens of millions of Americans have struggled with remote learning, telehealth, and the ability to work from home because they lack access to fast, reliable internet service.

This ‘digital divide,’ as its commonly known, is not a new phenomenon, but the way COVID-19 has laid bare the problem is forcing lawmakers and others to see it in a new light.

“There are still communities in Western Mass. that don’t have high-speed internet access, or internet at all,” said state Sen. Eric Lesser, who has long championed this cause. “Frankly, in the year 2021, that’s a national embarrassment.”

State leaders haven’t ignored the issue, including tens of millions of dollars for infrastructure in bond authorizations over multiple budgets and economic-development bills, Lesser said, and Gov. Baker has set a goal to reach every community.

State Sen. Eric Lesser

State Sen. Eric Lesser calls the lack of connectivity in some Bay State towns “a national embarrassment.”

“But, frankly, the fact that we have communities that don’t have broadband internet access raises very profound questions about how a high-tech state like Massachusetts, in this day and age, can allow that to happen.”

As president and CEO of the Western Massachusetts Economic Development Council, Rick Sullivan said the EDC has long taken the position — even before COVID-19 made it a more pressing issue — that the state needs to bring internet connectivity into every city and town. He noted that Gov. Deval Patrick’s administration started building the backbone, and the Baker administration has been diligent in making sure communities get financing to execute plans to bring broadband to their residents.

“For a lot of the smaller communities, that is probably the single biggest opportunity they have for economic development in the region,” Sullivan said. “People can choose to work from home, but they need to have the access that helps people choose to live in those communities, and it makes it easier to sell your properties, and that increases values in small towns.”

But even large cities have a digital divide, he added, which has been exposed to a greater extent by COVID-19.

Tantillo noted that, according to Census data from last year, 31% of households in Springfield have no internet access, and 37% don’t even have a computer. That means no remote work, no remote education, no telehealth, no … well, the list goes on.

These digital-divide issue arose during a public hearing last week in Springfield on the relicensing of Comcast. “Parts of Springfield need better connection,” Sullivan said. “The mayor was clear in his opening statements that this was an issue they would be taking a look at. But in every city and town, there are some connectivity issues that clearly need to be addressed.”

Learning Lessons

Yves Salomon-Fernández, president of Greenfield Community College (GCC), understood the need for connectivity before students began attending classes remotely last spring, but that move more clearly exposed the scope of the issue.

“The digital divide is real, especially in certain areas of Franklin County and in the hilltowns. Even in the city of Greenfield, there are places with spotty internet access, and with all of us being on Zoom right now, it slows down the connectivity we have for our faculty, staff, and students,” she added, noting that GCC had to purchase technology for many of them to teach and learn remotely.

“We also have students who are housing-insecure and may not have access to the internet. We gave them a hotspot if they have no cellphone service, and we have accommodated them on campus in various ways.”

She noted that even parts of the GCC campus contain dead zones where cellphones won’t work; the college has a phone tree set up for emergency alerts because cellular connectivity isn’t a given everywhere.

“If the college, a critical institution and a community asset, has these issues,” she said, “imagine what it’s like for small businesses and individuals.”

The flawed vaccine rollout in Massachusetts (see story on page 40) has laid bare another impact of the digital divide: access to vaccination appointments. Even if the state’s website wasn’t confusing or prone to crashing early on, Lesser said, it still wasn’t acceptable to make it the only option to sign up, which is why he and other legislators have pushed for a phone option, which was implented last month.

“You were pretty much shutting out a whole community of people, especially the 75-and-older category, when you set up a system that’s website-only,” he noted.

But vaccine distribution will be completed over the coming months; what won’t change are the other reasons people need to access the internet from home. Solving the issue won’t be easy with the patchwork of different levels of responsibility — towns, the state, FCC regulators on the federal level — when it comes to regulating contracts and service arrangements.

That’s why Lesser is high on municipal broadband, offered by a city to its residents like a public utility — an initiative that Chicopee and Westfield have undertaken, to name two local projects. “It really is like the water or electricity of the 21st century, that’s delivered by the city as well.”

More such municipal projects will also increase competition, he said, which could force other providers to lower their prices and boost speed.

Even people who have internet access through large companies often deal with higher costs than they can easily afford, Lesser said. “The costs are astronomical in the U.S. — people pay much more per month than in Europe or Asia.”

Therefore, “the state needs to look at ways to open the market more and create more competition,” he added, and that could simply entail putting more pressure on big internet companies.

“The problem is, internet service is left to the private sector when it’s a public good,” he said. “It doesn’t make economic sense for big companies to invest in infrastructure to get the internet turned on in small communities. The state may have to mandate they have to make those investments if they want to provide service for bigger locations.”

An Issue of Equity

Tantillo agrees with Lesser that society should be looking at connectivity as a utility and a basic, affordable service, but goes a step further.

Margaret Tantillo says the digital divide, if not rectified, could leave generations behind when it comes to economic opportunity.

Margaret Tantillo says the digital divide, if not rectified, could leave generations behind when it comes to economic opportunity.

“From an equity perspective, this disproportionately impacts women and people of color, so it’s also a social-justice issue,” she said. “But a crisis like this is also a big opportunity to be transformative. Springfield is considered the city of innovation. With a bold solution and reallocating resources, who knows what this community can transform into, if everyone has the opportunity to participate equally in online banking, telehealth, access to jobs, even to engage civically?”

Salomon-Fernández agreed. “In this day and age, it’s also an equity issue when you have people disconnected from the rest of the world. In the United States of America, and in one of the most technologically advanced states in the country, that’s a concern.”

And a particularly acute one, she added, in Franklin County, which contains some of the more rural and economically marginalized towns in the state. The impact isn’t just a problem in the present — it can have long-term effects.

“The world is increasingly globalized, and not being connected has negative repercussions on communities,” she added. “We are creating an underclass of people not able to take full advantage of economic possibilities through digitalization and connectivity. That has real effects, not just on teaching and learning, but also on the vibrancy of our whole region.”

The Federal Communications Commission’s latest broadband deployment report concluded that the “digital divide is rapidly closing.” But some voices in that agency are more hesitant.

“If this crisis has revealed anything, it is the hard truth that the digital divide is very real and very big,” FCC Commissioner Jessica Rosenworcel said in a statement released along with the report last month. “It confounds logic that today the FCC decides to release a report that says that broadband is being deployed to all Americans in a reasonable and timely fashion.”

The most recent available data from Pew Research, published in 2019, found that around 27% of Americans don’t have home broadband. That percentage is higher for Americans whose annual income is less than $30,000 (44%), black and Hispanic Americans (34% and 39%, respectively), rural Americans (37%), and those with a high-school education or less (44%).

Pew also reported, from a survey conducted last April, that 22% of parents — 40% in low-income families — whose children were learning remotely say they have to use public wi-fi because they lack a reliable internet connection at home.

Sullivan noted that some companies, like Comcast, and municipal utilities in cities like Holyoke and Westfield have made connectivity available to school children during the pandemic, which has been important.

“But going forward, it needs to be universal, and everyone needs to be able to have access,” he said. “It’s so important for education and for economic-development opportunities in every city and town. If we had that, combined with our quality of life and the cost of living we have here in Western Mass., we could be a place where people choose to live and work from home.”

Opening Eyes

Proponents of improved internet access in Massachusetts say COVID-19 certainly made the digital divide more evident, but it certainly didn’t cause it.

“I think it exacerbated that problem,” Tantillo said. “The digital divide has now become a chasm. And if we don’t solve it, generations will be left behind. I think people are more aware of that, so people are more invested in solving it.”

That awareness is critical, she said, in generating the kind of momentum that will move decision makers.

“It’s the plumbing of the 21st century, and the pandemic showed this,” Lesser said. “Vital services like education and, increasingly, healthcare, with the rise of telehealth, are critical services delivered to people through the internet. We’ve operated through a prism of treating this like DirecTV or cable television, like entertainment, an extra in your house. And that’s just not the case anymore.”

For many Americans, Tantillo added, connectivity is something to be taken for granted, but more people are realizing that’s just not the case.

“If I’m sitting there with my laptop, I’m not thinking about the 50,000 residents in Springfield without connectivity — I’m thinking about my own needs. But this is being exposed on a broader level.”

She understands — and has expressed — the negative impact of not being connected, but prefers to couch the issue in a more hopeful, visionary way.

“We know what the ramifications are if we don’t fix the problem of the digital divide,” Tantillo said. “But here’s the amazing thing: we don’t know all the opportunities and how we can transform communities when we fix this and provide digital equity for everyone.”

Salomon-Fernández certainly hopes that happens.

“I think the pandemic has laid bare a lot of the fissures, the inaccessibility and inequity in our democracy, and also the ability of different folks in different regions to reach the same levels of economic prosperity,” she said. “While many people may not have been concerned about them pre-pandemic, it’s obvious now that the cracks are wide open. Hopefully it’s an opportunity for us.”

Joseph Bednar can be reached at [email protected]

Manufacturing Special Coverage

Machine Learning

Mary Bidwell says hands-on training will always be critical, but the pandemic taught ACC about what can be accomplished remotely as well.

 

As pivots go, this one was pretty smooth, Mary Bidwell says.

But that’s fitting for an academic program built on precision.

It was almost a year ago — March 13, to be exact — when Asnuntuck Community College (ACC) sent everyone home, including students in its Advanced Manufacturing Technology program, which Bidwell serves as interim dean.

“We finished online through April and the end of May, and by the beginning of June, we were able to open back up,” she said, adding that students were able to finish their hands-on training in fields like welding and mechatronics on campus through the summer. “We were one of the first departments back on the ground.”

In the meantime, the program reinvented itself in some ways, turning to online content in ways professors and administrators hadn’t considered before, not only in classwork for the student body, but in community-focused courses for area workers seeking to boost their skills.

“We’ve pivoted well and created online content, we created hybrid models, we got students back in, and we’ve got good safety protocols in play — and we’re looking forward to getting even more students on the ground,” she told BusinessWest. “And now we have this whole portfolio of online opportunities we didn’t have before, and we’ve diversified what we can offer the community, which is great.”

Innovation and adaptation are not foreign concepts in the field of advanced manufacturing, or at ACC, which has become a robust collegiate pipeline into the manufacturing workforce.

The Advanced Manufacturing Technology Center at ACC has been around for almost a quarter-century, but it received a major overhaul four years ago with the opening of a 27,000-square-foot addition, more than doubling its space to about 50,000 square feet. It includes an 11,000-square-foot machining lab with 90 computerized numeric control (CNC) and manual machines, an additive-manufacturing lab equipped for both plastic and metal 3D printing, a metrology lab featuring computerized measuring machines, state-of-the-art computer labs — and a whole lot more.

But the center’s most impressive offering may be its partnerships with area manufacturers, who have guided ACC in crafting its certificate program as a way to get skilled workers in their doors quickly — typically at salaries starting around $50,000 or higher.

The program has created work opportunities for both young people and career changers, and addressed what has been a persistent lack of qualified employees these companies need to grow. Normally, advanced manufacturers are looking for people with three to five years of experience. But ACC students are interning during their second semester and being hired for jobs immediately after, at good salaries. The reason is that the curriculum is customized according to industry needs.

Companies can then build on that training, hiring certificate holders, further training them up, and often providing additional education opportunities along with that full-time paycheck.

“People are always thinking about four-year degrees, but if your pathway is through community college, your debt can be so much less,” Bidwell said. “That’s such an opportunity: to start a career and have someone else pay for it.”

Even though the pandemic has temporarily slowed demand for workers at some companies, Bidwell and her team — and the industry in general — believe that’s not likely to continue, especially with an aging workforce in many corners.

“You still hear about the silver tsunami,” she said. “We need to have people ready when they’re needed.”

 

Working Through It

The pandemic has slowed the pace of business in industries like aerospace and at regional anchor companies like Sikorsky Aircraft, mainly due to supply-chain issues dating back to last spring, but students in all three of ACC’s advanced-manufacturing areas — welding, machining, and robotics/mechatronics — are finding jobs, Bidwell said.

“It seems like the staffing agencies have been a source lately that, at times in the past, we didn’t use as much because of our direct contacts,” she said. “But students are getting placed; they’re still going into companies we’ve always worked with.”

Enrollment in the program is about 60% what it usually is, she added. “We did lose students because people just don’t want to go online at all — they want to get back on the ground. Hopefully we’ll see that return for the fall and definitely next spring as vaccines roll out further.”

The numbers aren’t really a problem, though, because of capacity and social-distancing rules on campus. Students have engaged in a hybrid model this year, with some remote instruction and the necessary hands-on training on campus. As expanded vaccination hopefully leads to herd immunity, Bidwell is confident that those limits can be lifted next year, but the college will plan for all contingencies, including more hybrid learning.

The Advanced Manufacturing Technology Center at ACC has 50,000 square feet of space devoted to robotics and mechatronics, machining, and welding.

The Advanced Manufacturing Technology Center at ACC has 50,000 square feet of space devoted to robotics and mechatronics, machining, and welding.

“We’ve proven we can do it, and people have been successful,” she said, adding that the marketing message has been, “people wear their mask and social distance, and you don’t have to stop your education. We’re here for you, and jobs are waiting. As we head into summer and fall, people who want to go to school and get that education, they can.”

While student ages can range from 18 to 65, the average age at the Advanced Manufacturing Technology Center during the Great Recession, when many more people were looking to switch careers, was around 45. Today, it’s under 30, but no matter the age, the idea is to equip students with a strong foundation from which they can grow into any number of careers.

That foundation begins with a hands-on approach to learning the machinery and techniques, from 3D printers, lathes, and surface grinders to welding and robotics labs — a healthy mix of manual and CNC machines.

Mary Bidwell with one of the center’s 3-D printers.

Mary Bidwell with one of the center’s 3-D printers.

Even in a healthy economy, the program still attracts a good number of mid-life career changers who see opportunities they don’t have in their current jobs. Meanwhile, high-school students can take classes at ACC to gain manufacturing credits before they enroll, and a second-chance program gives incarcerated individuals hands-on experience to secure employment once they’re eligible for parole.

It all adds up to a manufacturing resource, and an economic driver, that has attracted plenty of public funding from the state and from private foundations, such as the Gene Haas Foundation, which aims to build skills in the machining industry, and recently awarded the program a $15,000 grant to use for student scholarships for tuition and books.

 

Mind the Gaps

The program has also attracted attention of other kinds. The center was recently featured in the new book Workforce Education: A New Roadmap, written by MIT Professors William Bonvillian and Sanjay Sarma. The book explores the gaps and problems in the U.S. workforce education system, while also spotlighting how programs, including ACC’s Advanced Manufacturing Technology program, help to mitigate deficiencies across the country to build a stronger workforce.

“We spent time visiting and learning about apprenticeship programs, about new employer training programs, and visiting lots of community colleges,” Bonvillian said. “We found that our community colleges are our critical, not-so-secret weapon in educating our workforce, so we spent time at many.”

While the two were researching programs, they learned from an MIT friend, who grew up in Enfield, about Asnuntuck’s program, and Bonvillian set up a visit to the college.

“I was very impressed by the programs they presented in advanced-manufacturing skills that reached not only community-college students, but students from area high schools and incumbent workers at area companies,” he said. “In the book, we called this the ‘trifecta’ — Asnuntuck was using its flexible programs, its year-round schedule, and its new advanced-manufacturing center with its up-to-date equipment to reach three groups: workers and high-school students, as well as more traditional community-college students.”

That outreach is a constant challenge, Bidwell said, noting that, while outdated perceptions about today’s manufacturing floors — which many older people believe are dirty and unsafe — are changing, they do persist, and work needs to be done to get young people interested.

“I think it’s better than it was, but we’re not there 100%,” she said of the perception problem, adding that many companies market themselves online with videos taken on their clean, high-tech floors. “We are getting a younger population than we did years ago, but we’re still going around the state, trying to educate as much as we can. Guidance counselors are a big piece in high school. We need guidance counselors talking up manufacturing, and they have to understand it themselves. We’ve definitely made strides in that.”

Educating parents about what these careers really entail is part of the process as well, she added.

ACC has had students on campus part-time in a hybrid model since the fall.

ACC has had students on campus part-time in a hybrid model since the fall.

“There’s a big push in high school now, but we want to get the middle schools, to get young people aware of manufacturing and create those career pathways. We’re looking at the inner cities, where there’s a lot of population, and the message is, ‘these are viable careers where you can sustain a family and have a good, livable wage.’”

Bonvillian believes Asnuntuck and similar programs can help satisfy the demand for educating a workforce that has been impacted this past year, and not just in manufacturing.

“The COVID crisis is hitting hard at some important sectors like retail and hospitality, and workers there may well need to find new work,” he said. “The U.S. needs to prioritize training more workers more quickly than the country’s current disconnected approach to workforce education allows.”

 

Opportunity Awaits

The connection that First Lady Jill Biden has to community colleges — and her advocacy for them — is important, too, in changing perceptions and helping people understand college and career opportunities they might not have considered, Bidwell said.

“We want more people to take advantage of all that community colleges have available. We see it in manufacturing, but also IT — there’s a big need for IT professionals, and for healthcare professionals.”

And she doesn’t expect any dip in opportunity for students — young or older — who want to explore the modern manufacturing world.

“There’s really a lot of energy in Connecticut, and in Western Mass., right over the border,” Bidwell said. “The plan is to get out of this [pandemic] and keep growing, and be ready for the demand when things turn around.”

 

Joseph Bednar can be reached at [email protected]

Business of Aging Special Coverage

Taking Shots

Rob Whitten, executive director of the Leavitt Family Jewish Home

Rob Whitten, executive director of the Leavitt Family Jewish Home, gets vaccinated in January. For the public, the process has been thornier.

February was the month all seniors in Massachusetts would finally be able to get the COVID-19 vaccine.

Instead, it was a month of frustration.

“It’s simply inexcusable, in a state with the healthcare infrastructure and high-tech reputation we have, that the vaccine rollout was allowed to fall behind every other state so quickly,” state Sen. Eric Lesser told BusinessWest, calling the state’s scheduling website “an obstacle course with all these links and hoops to go through, instead of making it simple, like Travelocity or KAYAK or Open Table.”

That’s when it wasn’t crashing altogether, like it did two weeks ago, when the state opened up vaccine appointments to all individuals 65 and over, as well as individuals age 16 and older with two or more co-morbidities, from a list that includes asthma, cancer, obesity, diabetes, and a host of other conditions.

Later in phase 2, access will roll out to workers in the fields of education, transit, grocery stores, utilities, agriculture, public works, and public health, as well as individuals with one co-morbidity. Phase 3, expected to begin in April, will include everyone else.

Lesser hopes the process — not just to schedule a vaccination, but to get one — improves well before then. One positive was the establishment of a 24/7 call center for the many people who lack internet access (see related story on page 30), something he and dozens of other state lawmakers demanded.

Before that, with online-only signup, “you were locking out whole categories of people,” he noted. As for the website, “it is improving, but it’s still far too confusing and far too hard for people.”

In an address to the public last Thursday, Gov. Charlie Baker acknowledged the frustration around scheduling appointments, but noted that most of it comes down to supply and demand.

“I know how frustrated people are with the pace of the vaccine rollout and how anxious they are to get themselves and their loved ones vaccinated,” he said, but noted that about 450,000 requests for first-dose vaccines arrive each week from hospitals, community health centers, and other entities, but the state receives only 130,000 first doses of vaccine weekly from the federal government.

“We’re putting every dose we get to work each week,” Baker said. “But we don’t receive anywhere near enough vaccine each week from the feds to provide our existing vaccinators with what they request, or to work through most of the currently eligible population that wants a vaccine now. We want people to get vaccinated. We want people to be safe.”

In a hearing with legislators that day, the governor noted that residents have been able to book more than 300,000 appointments through the system despite its flaws, and that Massachusetts is first state in the nation in first doses administered per capita among the 24 states with more than 5 million residents.

While she understands the supply-and-demand issues, Dr. Nahid Bhadelia says the state’s website troubles have still been “a bit of a disappointment.”

While she understands the supply-and-demand issues, Dr. Nahid Bhadelia says the state’s website troubles have still been “a bit of a disappointment.”

State Rep. William Driscoll, the House chairman of the Joint Committee on COVID-19 and Emergency Preparedness and Management, was having none of it. “I just really want to stress that I think you’re missing how broken the system is right now,” he told Baker, “and the approach is not working for the citizens of the Commonwealth. It needs to be addressed.”

Baker’s hopes for more vaccine entering the state may get a boost from Pfizer and Moderna both annoucing plans to double production in March from February’s levels, and by the Johnson & Johnson vaccine nearing emergency authorization.

“They have some very good efficacy data, and they said they’ll deliver another 20 million doses. That’s a one-dose vaccine, so that’s 20 million more people, hopefully, immunized by the end of March,” said Dr. Nahid Bhadelia, infectious-disease physician and medical director of the Special Pathogens Unit at Boston Medical Center, in a Facebook Live conversation with state Sen. Adam Hines, also on Thursday.

Bhadelia understands Baker’s frustration with supply … to a point. “Demand really outweighs supply, still. But last week’s challenges with the website were kind of drastic,” she said. “That was a bit of a disappointment.”

She and Hinds agreed that a waiting list for a vaccine is one thing, but a waiting room just to get on the site is understandably frustrating for people.

However, she also noted some positives, like a movement at the state level toward delivering more doses to pharmacies and local clinics, after perhaps over-emphasizing the mass-vaccination sites (of which Western Mass., to date, hosts only one).

“I’m glad the governor is going back to clinics. We have to get them where people can access them,” Bhadelia said, adding that distribution through doctors’ offices and pharmacies is a tougher organizational challenge, but worth the effort to help people go to providers they trust.

She didn’t deny the website problems, however. “If they try and can’t access it, one day they will give up.”

 

Confidence Boost

And if there’s one thing healthcare professionals don’t want, it’s for people to lose their enthusiasm for getting vaccinated. That’s why the state and various health organizations have rolled out public messaging around the benefits of the vaccine, especially targeting people who might be skeptical of its benefits.

“We recognize it’s a journey, and folks might not feel comfortable with it today, but maybe you’ll feel comfortable tomorrow,” said Lindsey Tucker, associate commissioner of the Massachusetts Department of Public Health (DPH). “We want to be sure that, when you’re eligible for the vaccine, you can access it when you’re ready for it.”

“Even though you’re vaccinated, you still need to wear a mask, stay six feet apart, avoid crowds, and wash your hands frequently.”

Tucker said those words during a webinar held last month by the Public Health Institute of Western Massachusetts, which also featured input from Dr. Sarah Haessler, lead epidemiologist and infectious-disease specialist at Baystate Health, who has emerged as a leading local voice in public information around COVID-19.

Haessler detailed the amount of data that emerged from clinical trials for the vaccines, and noted that the FDA will approve one only if the expected benefits outweigh potential risks.

“The FDA reviewed all the data — it’s pages and pages and pages of data — around every single thing they did in these clinical trials to be sure of the safety and efficacy of the vaccination,” she said, noting that multiple mechanisms are currently in place to track instances of side effects.

While significant side effects are rare — anaphylaxis is one, which is why individuals receiving the shots must remain at the vaccination site for 15 to 30 minutes — most people experience nothing more than arm soreness, fever, chills, tiredness, and headache; most symptoms fade after a day or two, although they last longer in rare cases. Many people feel no effects at all.

“It’s certainly a lot safer to get the vaccine knowing there are just minor side effects than to take your chances getting infected with COVID-19,” Haessler added. “The more people we vaccinate, the closer we get to herd immunity, and the closer we get to going back to life, where we can see our family and friends and return to pre-pandemic activity.”

Also in February, during the Massachusetts Medical Society’s monthly COVID-19 conference call with DPH physicians, State Epidemiologist Dr. Catherine Brown talked about the DPH’s public vaccine-confidence campaign.

“The campaign recognizes that there are particular populations, especially people of color and other minority populations, that may have understandable increased concern about receiving the vaccine,” Brown said, noting that Public Health Commissioner Dr. Monica Bharel considers health equity to be a primary priority. “Therefore, DPH is having additional, ongoing conversations about the best ways to try to improve vaccine confidence among some of these groups that are harder to reach.”

At the same time, Haessler was quick to note that the vaccine is not a license to stop doing the things that slow the viral spread. It takes about 10 days for someone to begin developing immunity after the first dose, and full protection doesn’t arrive until about 14 days after the second dose. But it’s still unknown how easily vaccinated individuals can spread the virus to others.

“The bottom line is, even though you’re vaccinated, you still need to wear a mask, stay six feet apart, avoid crowds, and wash your hands frequently,” she explained, noting that vaccination is the last layer of protection, but far from the only one.

It is, of course, a critical one, and that’s a message she continues to spread to those who might be anxious about making an appointment.

“Educate yourself about vaccine safety and talk to trusted sources — your own personal healthcare provider as well as people you know who have been vaccinated,” Haessler said. “Many, many healthcare workers in our community are vaccinated now because we went first.

“I think a lot of our healthcare workers were anxious at first, but as they saw their colleagues getting the vaccine and doing fine with it, they were excited, because now there’s a light at the end of the tunnel — there’s some hope that helped bolster confidence in it,” she went on. “The more we know about this, the more people will feel comfortable with it. Knowledge is power.”

 

Better Days?

Bhadelia, who is also an assistant professor at Boston University School of Medicine and has spoken on CNN and MSNBC about the pandemic, said she’s optimistic about the fact that COVID cases in Massachusetts have been trending down, while acknowledging that testing has also gone down in the Bay State during the vaccine rollout.

Still, she added, “there is a general consensus that it’s not only the testing that’s gone down; it seems there is truly a drop in cases.”

Concern lingers about the COVID-19 variants, which are currently circulating in Massachusetts, particularly the South African variant, which may affect the efficacy of vaccines. But she noted that, even against that variant, vaccination will reduce the risk of severe hospitalization and death.

Taking a federal perspective, Bhadelia also praised the Biden administration’s approach to the vaccine rollout, which she said is science-based and features regular briefings. “The science is always changing, so it’s really great to stay on top of it instead of just guessing at what’s behind the curtain.”

Most Americans, of course, just want to know what’s down the road. So does the governor.

“We want people to turn the corner on COVID, and I can’t tell you how much we would like to see that happen faster,” Baker said. “But to put to work all the folks who are available today to vaccinate our residents and dramatically increase the number of people able to get vaccinated each week here in the Commonwealth, we’re going to need to see a dramatic increase in federal supply coming to Massachusetts.”

 

Joseph Bednar can be reached at [email protected]

Business of Aging

Building Momentum

Pat and Craig Sweitzer

While their workload is like a typical year, Pat and Craig Sweitzer say, the way facilities are designed in the age of COVID-19 is not.

Ryan Pelletier says that, while it was “scary at times,” he believes life has returned to something approaching normal — although ‘normal’ is certainly a relative term — when it comes to construction within the broad and all-important healthcare sector in Western Mass.

And he should know. He’s project manager for Houle Construction in Ludlow, a family-run operation (his father, Tim, is president) that does the bulk of its work within the healthcare sector, including projects for most area hospitals and a number of private practices as well.

He told BusinessWest that things were busy just after COVID-19 arrived in the 413 almost exactly a year ago, as a number of hospitals and other providers needed some retrofitting of sorts and other types of work to do battle with the pandemic, but then, things got quiet in a hurry and stayed that way for a while, before starting to revert to something akin to pre-pandemic conditions.

“We were very busy for a few weeks, and then … it just died,” said Pelletier, referring to the early months of the pandemic, and noting that hospitals and private practices simply didn’t want more people on site than absolutely needed to be there. “But in the last several months, things have started to come back. There’s a comfort level now — the hospitals and private practices are getting back to business as usual, or as usual as they can.”

But that word ‘scary’ was used in reference to much more than the number of projects in the pipeline. Indeed, it also referred to everything from the daunting task of keeping employees — and everyone else on a job site — safe to the cost and availability of materials.

And he was not alone in that assessment, especially when it comes to the price hikes.

“We’ve seen steel and lumber costs rise exponentially — they’ve almost doubled within the past year.”

“We’ve seen steel and lumber costs rise exponentially — they’ve almost doubled within the past year,” said Dan Bradbury, director of Sales and Marketing for South Hadley-based Associated Builders, which works within a number of sectors, including healthcare. He noted that these rising costs could, and probably will, impact everything from decisions on whether projects move forward in the near term to what kind of construction takes place — new or renovation of existing space (more on all that later).

As for now and the immediate future, those we spoke with said that, after going mostly and then almost completely silent in the weeks after COVID hit, the phones are starting to ring again with greater regularity — in general, and within the healthcare sector in particular.

Pat and Craig Sweitzer, co-owners of Monson-based Swietzer Construction, which specializes in healthcare construction and especially dental offices, said they have a number of projects in progress and on the books, including three new dental offices, a medical building with a dental office as part of the lineup, two new medical spas (including one in East Longmeadow, adjacent to an Ascent Dental office they built), a cannabis dispensary, and work at Adaptas Solutions in Palmer, which is now making parts for COVID testing.

Ryan Pelletier stands in the atrium at Mercy Medical Center

Ryan Pelletier stands in the atrium at Mercy Medical Center, one of the many projects within the healthcare sector undertaken by the company in recent months.

Noting how he needs to be at a number of different sites on a weekly of not daily basis, Craig Sweitzer joked, “I need to buy an airplane.”

Those sentiments express just how much the market has rebounded — if that’s even the right word — and how the outlook has brightened since the darkest days of the pandemic.

Bradbury agreed. “Especially in this new year, 2021, there’s been a more positive outlook, and we’re starting to have the phone ring more and see more potential jobs in the pipeline for this year and for next,” he said, adding that this sentiment applies, again, to construction in general and healthcare construction more specifically.

But there are still many question marks about just what the future will bring, and for this issue, we talked with these experts about what can and likely will happen, both short- and long-term.

 

Concrete Examples

Rewinding the tape on the past 12 months of COVID, those we spoke with echoed the sentiments of business owners and managers in every sector when they said the changing landscape brought with it both challenges and opportunities, and certainly more of the former.

Indeed, some construction projects in the healthcare sector were put on the shelf because of the way the pandemic impacted the client in question financially. Meanwhile, and especially in the beginning, it brought about some new work, as Pelletier explained.

“When COVID first hit, the hospitals were scrambling to get prepared for potential overflow — spikes and surges — and they wanted us to help them with that, whether it was installing plexiglass shields or building out existing spaces in their facilities to house incoming patients,” he explained. “We had to work around the clock, and it was a little nerve-wracking at first because no one was quite sure what COVID was and how dangerous it was — and they were asking us to send our guys out there not knowing exactly what they were getting into, and the crews had mixed feelings.”

Again, opportunities and challenges.

The challenges came in waves and in different forms, from meeting the many new regulations and protocols regarding when and how work can be done to handling new and different employee needs — from more sick time, if needed, to PPE, to working in settings that were often the front lines of the COVID crisis.

The opportunities have come in various forms as well, and sometimes unexpectedly. That was certainly with the case with Adaptas Solutions.

“They’ve kept us quite busy through all this because they’ve been ramping up and needed construction facilities to accommodate the work they were doing,” said Pat Sweitzer, adding that the company has some projects ongoing there.

“When COVID first hit, the hospitals were scrambling to get prepared for potential overflow — spikes and surges — and they wanted us to help them with that.”

Meanwhile, the airplane the company doesn’t have yet would also be going to several other projects across the region, the sum of which adds up to what Pat described as a fairly typical year, volume-wise.

What isn’t as typical is the nature of the work being undertaken, said Craig, noting that COVID has changed the way facilities are designed and operated, with additional emphasis on HVAC and, more specifically, air movement and air quality.

“Dental offices are ground zero — these are individuals working in a patient’s mouth, which is the means for transmitting COVID,” he explained. “These doctors and their hygienists are at ground zero as far as risk is concerned, so we’ve paying a lot of attention to our design/build criteria.

“And the lion’s share of that goes back to HVAC, so we’ve redesigned our standard operatory,” he went on, adding that, with these redesigns, instead of air being drawn up from the patient’s mouth past the doctor, it is drawn down to the floor, into the ductwork and away from the doctor’s face.

The company is also installing UVC systems, which kill COVID; additional air changers; larger, tighter air filters; and, increasingly, washers and dryers so staff can wash their clothes during the day.

“We’ve really been refining how we lay these design/build projects out,” Pat said, noting that the modern dental office now resembles a hospital operating room in many respects.

Looking ahead, those we spoke with said COVID will likely continue to impact the healthcare construction scene, even if the pandemic eases, as most project that it will.

Indeed, there is general uncertainty about when or even if the rising prices on materials will start to ease, and this uncertainty could play a role in whether some projects move forward or not.

Berkshire Facial Surgery facility in East Longmeadow.

Among the many healthcare sector projects undertaken by Associated Builders in recent months was the construction of this Berkshire Facial Surgery facility in East Longmeadow.

Bradbury told BusinessWest there is inclination among some in healthcare (and in other sectors, obviously) to try to wait these increases out with the hope that prices will start coming down.

“But there is no guarantee that prices will come down,” he said. “One thing I always tell people is that, while they think they can wait out the increases in materials costs, there are never any guarantees that they will, so we encourage people to move forward with projects — if it fits their timeline and their budget, because there are no guarantees.”

Meanwhile, COVID will likely impact the healthcare construction market in another way, said those we spoke with, specifically the lasting impact it seems destined to have on the real-estate market. Even when COVID eases, they said, it seems almost certain that some companies will settle into smaller spaces as more people work at home, bringing more commercial real estate onto the market, which will, in turn, impact new construction.

“Renovating existing space is almost always less expensive than building new, especially when you consider those amazing price increases we’re seeing,” Bradbury said. “A lot of our business is new construction, and we’re contending with a lot of empty office space; long-term, there will be more available office space to lease on the market, which, across some industries, will tamp down new construction, but it will bring an opportunity for more build-out and renovation of existing space.”

 

Bottom Line

Looking back, and ahead, those we spoke with said a sense of normal — or a new normal (there’s that phrase again) — is returning to the healthcare construction scene.

But there are many question marks still looming over the scene and a number of variables that could impact how much work and what kinds of projects move into the pipeline.

There has been a great deal of pivoting over the past year — for the construction firms and their clients as well — and there is certainly more to come.

But for now, momentum is building in a number of ways.

Features

Work After the Pandemic

By John Graham

It’s been a year now since we came under the relentless domination of the coronavirus. After all this time, the picture isn’t pleasant. The end is uncertain, and the implications for the future are far from clear.

McKinsey reports that “75% of employees in the United States and close to a third in the Asia-Pacific region report symptoms of burnout. European nations are reporting increasing levels of pandemic fatigue in their populations. The number of those who rate their mental health as ‘very poor’ is more than three times higher than before the crisis, and mental-health issues are still likely to rise.” In spite of their severity, such figures should get our attention, but do they?

Perhaps the most dangerous part of the coronavirus is its divisiveness. More often than not, outside attacks — wars, famines, and natural disasters — bring us together to slay the dragon. But the pandemic has driven us further apart. Who would have thought life could take such a painful turn?

Overnight, workers were told to leave their jobs and work from home. Not only did they do it, they liked it. Now, many are ready to refuse to go back to claustrophobic cubicles or vacuous open spaces where they lacked privacy. To express their pleasure at working from home, they remodeled their bedrooms, kitchens, and basements; upgraded their internet connection; purchased all sorts of digital devices and office equipment; and didn’t miss a beat.

They’re choosy, too. “You want me in the office? I don’t think so.” Some moved to Boise or some other place in the middle of nowhere that welcomed them with open arms and lower living costs. They donned their sweats, popped open a laptop, jumped on virtual meetings, adjusted the lighting, turned on a monitor or two, and went to work in their new, $999 office chair, or decided to stay in bed and make it their office that day. To the utter surprise to everyone, productivity went up.

That’s just the first chapter. The McKinsey report also notes that “there is a veritable flood of new small businesses. In the third quarter of 2020 alone, there were more than 1.5 million new-business applications in the United States — almost double the figure for the same period in 2019.” That’s not all. The fourth quarter found Apple ripe for success with the highest revenue in its history — and the company wasn’t alone.

 

Four Lessons

All this adds up to an amazing, but totally counter-intuitive, story. But what does it mean to all of us who must live it? Literally, what in the world is going on? Even more to the point, what’s the message about the future — our future? Here are four thoughts about that.

“Overnight, workers were told to leave their jobs and work from home. Not only did they do it, they liked it. Now, many are ready to refuse to go back to claustrophobic cubicles or vacuous open spaces where they lacked privacy.”

The genie is out of the bottle. It’s finally happened. To put it another way, like no other phenomenon in modern history (perhaps in all of history), the pandemic released a level of momentum sufficient to turn the world and everything in it upside down in an instant. It may also be the catalyst that changes everything, from politics, government, and public policy to health and medicine, education, work-life balance, business, entertainment, culture, industry, and science. When Jeff Bezos, the CEO of Amazon, steps back, we can be sure profound change is in the air.

 

Far more people have seats at the table. We talked for so long, but nothing changed. Then, suddenly, we became keenly aware of those who had long been invisible to us. We raised our hands and called them ‘heroes’ but never raised their wages. Now, all of a sudden, we’ve finally figured out that when everyone has a seat, we have better healthcare, better jobs, stronger families, and happier communities. Could it possibly be that it took a painful pandemic to make more room at the table?

 

Everything is under a microscope. Again, counter-intuitive but nevertheless true: the number of applications for fall 2021 at the University of California are breaking all records. It’s happening at the same moment when millions of young Americans are questioning the value of a college education, particularly if it will take decades to free themselves from the sobering shackles of student debt. Those who went before them, the Millennials, are dogged in determining their own way in the world. Don’t be surprised. The lens of the microscope may never rest.

 

Don’t drink the Kool-Aid. There are dangers in the tension-filled, stressful times in which we find ourselves. Someone has aptly described it as “hitting the pandemic wall,” and it’s felt at home and at work. It’s when we reach out for relief so we can get our lives on a better path. Simple, quick, and easy answers are what sell in turbulent times: “buy this or do that, and your problems vanish, and your dreams come true.” We’re too resilient to do that to ourselves.

 

Bottom Line

Now, go back to where we started, the original question: “Who will have the upper hand after the pandemic: employers or employees?

All this leads to the final question. Through the pandemic frenzy, who will come out ahead, the workers or employers? The way it looks at the moment, it just may be the workers. But, as we all know, things can change. u

 

John Graham of GrahamComm is a marketing and sales strategy consultant and business writer. He is the creator of Magnet Marketing and publishes a free monthly e-bulletin, “No Nonsense Marketing & Sales Ideas”; [email protected]

 

Community Spotlight

Community Spotlight

 

Aaron Vega

Aaron Vega says Holyoke lost considerable momentum to the pandemic, but it has a solid foundation on which to mount its recovery.

When he made up his mind roughly a year ago not to seek re-election to the state House seat he had held for four terms, Aaron Vega had an informal list of things he would like to do next when it came to his career.

Working in Holyoke City Hall certainly wasn’t one of them. But … things changed, in many ways, and in a profound way.

For starters, the COVID-19 pandemic limited some of the other options he was thinking about professionally, especially those in higher education, economic development, and workforce development. More importantly, though, Marcos Marrero, the long-time director of Planning and Economic Development in Holyoke, decided that he, too, wanted a change. And as he went about looking for someone to fill his rather large shoes, he started talking to Vega, someone who obviously knew the city, was heavily invested in its future, and was looking for work.

“Working for the city wasn’t really on my shortlist — and not in a negative way,” said Vega, the former Holyoke city councilor who started his five-year appointment just a few weeks ago. “Marcos reached out to me and asked if I’d be interested in taking the position; it came out of the clear blue sky. I was honored that he saw me as someone who could take the reins and keep going.”

He takes the helm in economic development when Holyoke, like most communities, and especially the urban centers, are looking to regain momentum lost due to the pandemic.

And, in the case of the Paper City, it’s a large amount of momentum.

Indeed, over the past several years, Holyoke had made great strides in a number of areas — downtown revitalization, with its cultural economy, with entrepreneurship and new business development, and, most recently, with cultivation (pun intended) of a new and potential-laden industry sector: cannabis. Indeed, with Mayor Alex Morse — who will not be seeking re-election in November and has been offered the the job of town manager of Provincetown — putting out the red carpet for the cannabis sector and the city blessed with millions of square feet of vacant mill space that is in some ways ideal for cannabis growing and other aspects of this business, Holyoke has become a destination for companies looking for a home.

The pandemic has certainly slowed the pace of progress in most of these areas, though. It has certainly impacted the cultural economy, most notably with the news that Gateway City Arts, the multi-purpose arts venue, has closed, and its owners are looking for a buyer. But signs of lost momentum are everywhere. The Cubit Building, once a symbol of downtown revitalization, is still humming on its residential floors, but the Holyoke Community College MGM Culinary Arts Center has been all but shut down by the pandemic. Meanwhile, there are still a number of vacancies on High Street and other downtown throughfares. And the Holyoke St. Patrick’s Day Parade, a significant economic engine for Holyoke and the region as a whole, has been canceled for the second year in a row.

“A lot of the groundwork is sort of done, and in some ways, this office how has to be more proactive and outward-facing — how can we go out to private industry and market Holyoke better? We need to go door-knocking and tell people, ‘think about Holyoke as a place to set up shop.’”

“That’s been a huge financial hit to the restaurants and many other kinds of businesses,” Vega said of the parade. “The trickle-down impact is severe.”

Even the cannabis sector has been slowed a little by the pandemic, but in most all respects, it remains a powerful force in Holyoke, with more than 30 ventures currently at some stage of progression and perhaps 300 new jobs coming to the city with the slated opening in the next few months of Florida-based Truelieve’s facility on Canal Street.

The company, which has more than 2 million square feet of cultivation facilities and more than 70 dispensaries across several states, will operate a multi-faceted, vertically integrated operation that will include cultivation, production, and office operations in a 145,000-square-foot facility formerly occupied by Conklin Office.

“We understand scale, we understand supply chain, and we’re going to be bringing that experience to Massachusetts as we build out our cultivation here,” said Lynn Ricci, director of Investor Relations and Corporate Communications for the company, adding that the company expects to begin operations by the third quarter this year and employ between 250 and 300 people from the Holyoke area when fully operational.

For this, the latest in its Community Spotlight series, BusinessWest turns its lens on Holyoke, an historic city that has bounced back from its decline in the ’60s and ’70s, and must now, in some ways, bounce back again.

 

Growth Opportunities

Vega is certainly no stranger to the large office he now occupies on the third floor of the City Hall annex building.

When he was a state representative, he would meet with Marrero there every month so he could keep pace with what was happening in the city where he grew up, spent most of his childhood life, and still lives.

Gateway City Arts is just one of many Holyoke businesses

Gateway City Arts is just one of many Holyoke businesses in the arts and hospitality sectors to be devastated by the pandemic.

“We had a standing meeting with him in this office to keep up to date on all the projects that were going on, particularly around cannabis, because I was on the Committee on Cannabis Policy,” he explained. “So I was familiar with most of what was going on in this office, and I knew everyone in this office.”

Today, he’s having those same meetings with Patricia Duffy, his former legislative aide who successfully ran for his House seat last year.

“We just met a few days ago,” he said with a laugh. “We have a standing monthly meeting. It’s interesting being on the other side of the table — I spent the last eight years fighting for funding for all these programs, and now I’m actually utilizing them, and that’s kind of fun.”

Offering a similar update of sorts for BusinessWest, Vega focused on the momentum that has been lost in the city and the need to turn the clock back, in some respects, and put Holyoke back on the intriguing path it was on before March 2020.

“If you look at Gateway City Arts … the pandemic just took the wind out of them, it took the momentum away; it’s like someone slammed the door in their face.”

Before getting to that, though, he was asked to elaborate on the circumstances that brought him to his current post.

“I wanted to focus more,” he said simply when asked why he wanted to move from his House seat. “One of the great things about being a state rep is all the different topics and issues that come across your desk. But, that said, you don’t really get to focus on anything; the best description of my job as state rep was that I was in a permanent liberal-arts education — and there were certain topics that I just wasn’t passionate about.”

He is certainly passionate about Holyoke, and his goal now is built on what had been achieved in the years before the pandemic.

“What Alex and Marcos did was change the conversation about Holyoke, they changed the direction of a lot of the development, and they helped usher in a plan — the urban-renewal plan,” he explained. “A lot of the groundwork is sort of done, and in some ways, this office how has to be more proactive and outward-facing — how can we go out to private industry and market Holyoke better? We need to go door-knocking and tell people, ‘think about Holyoke as a place to set up shop.’”

The story the city can tell is a good one, although, as noted, it was better before the pandemic.

“Things were happening in this city; the momentum was happening,” Vega said. “It took a while to build that momentum, and hopefully we can get it back soon.”

The loss of Gateway City Arts, however, is a serious setback for the community.

“It was firing on all cylinders,” he said, referring to everything from its event venue to its popular restaurant. “And it’s ironic because we’re six or seven months away from having 200 to 400 more people working in downtown Holyoke in the cannabis industry — people who will be looking for a place to go eat or have a beer or listen to music after work. The irony is that we don’t have that right now.

“The biggest hit has been with momentum,” he went on. “Our restaurants took a hit, just like Northampton and Springfield; the housing developments, especially if they were dealing with state incentives, have been pushed out — everything’s taking longer now.”

Overall, Vega said, the pandemic has made it difficult for some small businesses to survive, and it’s made it more difficult for all of them to operate as they would like.

“If you look at Gateway City Arts … the pandemic just took the wind out of them, it took the momentum away; it’s like someone slammed the door in their face,” he said, adding quickly that there is interest in some of the components of that business, and, likewise, the phone is starting to ring, and more interest is being shown in Holyoke within the development community.

“There’s a couple of key projects where, if we can get them online, we can regain some of that momentum,” he told BusinessWest, noting that one such project is a large housing initiative downtown, a 92-unit project being undertaken by WinnDevelopment at the former Farr Alpaca mills that has been slowed by the always-complicated process of applying for and receiving historic tax credits.

Truelieve’s massive facility on Canal Street

Truelieve’s massive facility on Canal Street is ramping up for opening, and is projected to employ between 250 and 300 people when fully operational.

Meanwhile, some projects that were “percolating,” as Vega put it, before the pandemic and back-burnered to one extent or another are perhaps poised to be revisited and moved off the drawing board. These include some indoor agriculture that is not cannabis-related.

“The biggest price-point stuff that they’re talking about right now is lettuce and herbs,” he noted, “because there’s a quick-growing cycle; you can turn lettuce around in 30 days. So many restaurants want locally grown, hormone-free lettuce … there’s real potential there, and they can grow other vegetables, too. The price point is not as good as cannabis, but we’ve been talking about urban farming for a while, and we’re trying to create opportunities.”

 

On a Roll

Speaking of cannabis, while the pandemic has slowed some aspects of that sector, the industry is poised for additional growth, especially in the Paper City. The next important chapter looks to be written by Truelieve, which just received its occupancy permit. But there are many companies with plans in various stages of development.

Indeed, Vega said, there are two growing facilities now online and three dispensaries, but, overall, there are 40 host agreements and 40 provisional licenses at the state level.

As for Truelieve, its story touches on many of the opportunities and challenges that Holyoke and its old mills present, said Ricci, who started by noting that the company was mostly in Florida before last year, when it started expanding aggressively into other states, including a cultivation facility in Pennsylvania (added through acquisition) and dispensaries in Connecticut and other states.

“We really see 2021 as a big year for national expansion and being a true multi-state operator,” she explained, adding that, when looking for places in which to broaden the portfolio with new facilities, Truelieve focuses on cities and towns with large minority populations, communities that clearly need the jobs and everything else these ventures bring to the fore.

“Investing in a majority minority community was important to us,” she said. And upon concluding that the Bay State would be a good market to enter, Holyoke soon came onto its radar.

Holyoke at a glance

Year Incorporated: 1850
Population: 40,135
Area: 22.8 square miles
County: Hampden
Residential Tax Rate: $19.04
Commercial Tax Rate: $39.74
Median Household Income: $33,030
Family Household Income: $36,262
Type of government: Mayor, City Council
Largest Employers: Holyoke Medical Center; Holyoke Community College; ISO New England; Hazen Paper
* Latest information available

“We wanted to make sure, going in, that we were revitalizing and adding to the community and providing jobs; those kinds of things are important to us as a core value of the company,” she noted. “When we found this location in Holyoke, an area that had certainly seen better times, we thought, ‘we could invest here and provide the jobs.’”

As for the site in Holyoke, renovating the historic mill has been “a huge undertaking,” Ricci said, adding that the company entered into a sale/lease-back arrangement in order to secure the nearly $40 million required for this project (cannabis operations cannot obtain traditional bank financing, because the product is illegal on a federal level).

The actual buildout was an involved process that began more than a year ago and was slowed by state mandates that shut down many types of construction during the early months of the pandemic.

“The property is beautiful in its own way — there’s big, wide staircases and beautiful brickwork, but … it needed a lot of work,” she told BusinessWest. “It has been a challenge, and not just to set up different rooms, but to make sure everything was set up properly.”

Staffing is the next challenge to be overcome, Ricci said, adding that final inspections of the facility are expected sometime this quarter, with growing due to begin, as noted, in the second quarter.

Other facilities are in various stages of the pipeline, said Vega, who told BusinessWest that, while the city is welcoming all types of cannabis businesses, the larger cultivation facilities hold the most promise for jobs and overall impact on the city and the region, and he can envision the day when perhaps eight to 12 such ventures are operating in the city.

And, like his predecessor, he sees opportunities not merely for the growing and selling of cannabis, but also encouraging businesses that can provide needed products to those ventures.

“A lot of the products used by these businesses are made in Texas and Florida, the simple things like the planters — we should be making those here in Holyoke,” he noted. “I equate it to the ‘green’ industries. It’s great seeing solar fields — we have some in Holyoke — but we should be building solar panels in Western Mass., not just installing them.”

 

Bottom Line

Making progress in that area is just one of the ways Holyoke will be looking to regain the considerable amount of momentum it lost to the pandemic.

The city that had come so far in the past decade has the foundation that Vega mentioned in place. It has the building blocks, and it has a cannabis industry hungry for the open spaces, low energy prices, and other amenities that this city can provide.

The pandemic certainly slowed the pace of progress, but Vega and other officials are confident that the Paper City can soon regain its stride.

 

George O’Brien can be reached at [email protected]

Home Improvement

Fueling Interest

By Mark Morris

EcoBuilding Bargains

EcoBuilding Bargains, celebrating 20 years this year, has been a trendsetter in repurposing reclaimed and surplus building materials.

John Majercak likes to say the Center for EcoTechnology (CET) has been successful for 45 years because it’s willing to try out approaches to saving energy that in time become a normal way of doing business.

“We helped invent the energy audit in the 1970s, and now it’s a routine thing that lots of people have done, and it’s having a huge impact,” said Majercak, president of CET.

In 2021, the organization marks several noteworthy milestones. In addition to CET’s 45th birthday, Majercak celebrates 30 years with the organization, serving as president since 2010. In his time there, he has seen a growing mainstream awareness of the connection between the community, the economy, and the environment.

“It used to be that environmentalism was thought of as a fringe thing or a nice thing to have,” Majercak said. ”But the work we do in saving energy and reducing waste helps people live better lives, as well as addressing the urgent issue of climate change.”

CET also runs EcoBuilding Bargains, the largest reclaimed and surplus building-materials store in New England. Launched in 2001, the reuse store celebrates its 20th anniversary this year. When it opened, the store was one of only a few of its kind that existed. Today, thousands of stores sell reclaimed building materials.

From the beginning, people liked the idea of saving money and helping the environment by giving a second life to used cabinets, lighting, plumbing fixtures, and hundreds of other items. Through the years, awareness increased as EcoBuilding Bargains was featured on several home-improvement TV shows, most notably This Old House.

Located in Springfield, EcoBuilding Bargains sells products in all 50 states and several other countries thanks to the internet. Once reusing materials became fashionable, Majercak said, interest in the store exploded.

“When reusing materials became stylish, it allowed people to bring their own character to a piece,” he noted. “On top of personal creativity, it’s an inexpensive purchase that helps the environment, so it’s a home run.”

Majercak pointed out that the current boom in home improvement — fueled by the pandemic and people being in their homes much more than would be considered normal — has created both a supply and a demand for items at EcoBuilding Bargains.

“It used to be that environmentalism was thought of as a fringe thing or a nice thing to have. But the work we do in saving energy and reducing waste helps people live better lives, as well as addressing the urgent issue of climate change.”

“All the home improvement that’s going on means more materials we can capture for donation and reuse,” he noted. “Then, when people renovate with these materials, they can save lots of money, help the planet, and make their homes look super-cool.”

Likewise, the pandemic hasn’t slowed business for the store. EcoBuilding Bargains is open for people who want to shop in-person and also offers virtual appointments so people can shop over the phone. With video calls, Majercak said, staff can show items, and customers can ask more specific questions about a piece.

Other parts of CET’s business have also adopted a combination of in-person and virtual interaction. Energy audits, for example, have a whole new feel that creates opportunities and challenges.

“We have people who are happy to get on a Zoom call and show us around their home or business for an energy audit,” Majercak said. “On the other hand, those who wanted an in-person visit are on a waiting list until after the pandemic is over.

“After the pandemic, I’m sure we’ll be doing plenty of things in person again, but we will continue to go virtual for those who prefer that approach,” he went on. “In that way, it opens more opportunity for mission impact.”

 

Cool Ideas

With a stated mission to “research, develop, demonstrate, and promote those technologies that have the least disruptive impact on the natural ecology of the earth,” one of CET’s goals involves reducing carbon emissions equal to removing 100,000 cars off the road for a year by 2022.

There are many ways people can reduce their carbon footprint, all of which use less energy without compromising comfort. Converting to LED lights and adding insulation are two easy ones.

John Majercak says a central focus for CET over the years has been pursuing technologies with the least disruptive impact on the environment.

John Majercak says a central focus for CET over the years has been pursuing technologies with the least disruptive impact on the environment.

“Weatherization is a good example because installing air-sealing insulation in the home increases the comfort dramatically and uses less energy — and, therefore, less carbon,” Majercak said. “We’ve been doing these programs for years, and they save lots of energy and carbon.”

He cited a recent effort in which CET has partnered with colleges in the Community Climate Fund, which provides support for local carbon-reduction projects. By investing in the fund, colleges support the community, as well as creating learning opportunities for students who conduct research and gather data. Projects range from recovering used building materials or helping a homeowner get a heat pump to providing loans to farmers so they can make energy improvements to their operations.

“The Community Climate Fund is a great way to extend the impact of our programs and get even more done,” he told BusinessWest.

Massachusetts recently unveiled a plan to achieve a 45% reduction in carbon emissions by 2030 and to be carbon-neutral by 2050. Majercak has reached out to utilities to encourage them to align their energy-efficiency programs with these climate goals. CET is currently working with a municipal utility company to test an energy-efficiency program that measures carbon reduction, as opposed to just energy savings. It’s one of the first programs of its kind in the country.

“Anytime you save energy, it reduces carbon, but the kind of energy you save and the kind of energy you use also affects carbon,” he said, noting that the car you drive and the lawnmower you use can also make a difference in changing your carbon footprint. “For the foreseeable future, we will be studying energy issues by looking through the lens of carbon reduction.”

CET is also working with utilities on promoting the use of air-source heat pumps for houses. While they have existed for years, Majercak said heat pumps were primarily used in warmer climates. With recent technology improvements, they can now withstand the sustained cold temperatures of a New England winter. Unlike traditional heating systems, heat pumps take heat from outside air (yes, even frigid cold air has heat in it) and move it into the home.

For cooling, the heat pump does the reverse and removes heat from the house to the outside. Instead of using oil, natural gas, or propane, heat pumps run on electricity. As long as renewable energy becomes a larger part of the grid, he said, electric power is the logical choice.

“This is good from a carbon perspective because, as the power grid gets greener and as more people use heat pumps and drive electric cars, the more carbon reduction we’ll get,” Majercak noted, adding that heat pumps are just catching on, and we will see a lot more of them in the coming years.

And they represent only the latest cutting-edge technology that CET has helped establish in its 45 years.

“I’m very proud of the people at CET because they’ve always been real innovators and have helped change the way things work,” he said. As one example in the realm of waste and recycling, CET helped to establish the Springfield Materials Recycling Facility (MRF), which serves 65 communities in Western Mass. Back when recycling was a new approach, CET worked with towns to help them prepare their recycling programs for the Springfield MRF.

In the 45 years since CET has been in operation, energy conservation has hit peaks and valleys in politics and policies on the national level. Majercak noted that the state and regional levels have been more consistent, and asserted that CET has never been, nor ever will be, a political organization.

“We’re a solutions organization; we work with everyone,” he noted. ”As long as we keep that focus, we will be successful.”

Elaborating, he said the key is to meet people where they are and help them either solve a problem or achieve a goal.

“If you’re a small business, your goal may be to save money and have your business perform better. Energy efficiency, as well as waste and recycling management, can help you reach that goal,” he said. “A homeowner might want to be more comfortable or lower their electric and fuel bills. We can do that for you, and it doesn’t matter what you think about climate change.”

“All the home improvement that’s going on means more materials we can capture for donation and reuse. Then, when people renovate with these materials, they can save lots of money, help the planet, and make their homes look super-cool.”

For all the energy-saving opportunities out there, Majercak understands that spreading the word about what CET does and how it can help is essential. “Even when people are aware and want to do something to save money or save the environment, we still do a lot of hand holding to get it done.”

Spreading the word through workshops and social media definitely helps to engage people. Majercak pointed to one effort in which EcoBuilding Bargains runs a “Reuse Rockstar” contest on social media that encourages people to post the creative ways they have used items from the store.

“It’s inspirational to see how people apply their creativity and elbow grease to make beautiful houses and rooms for a fraction of what they would normally cost,” he said.

 

Going for the Green

Because climate change is a global problem, it’s easy for people to feel overwhelmed and doubtful they can make a difference, said Majercak, who assures them that they do not have to solve climate change all by themselves, and shows them different ways they can have an impact.

“When someone switches out their lightbulbs, buys an electric vehicle, or installs used cabinets, these are not overwhelming actions,” he told BusinessWest. But when CET helps tens of thousands of people do these little things, they start to add up.

“Consider that people across the state, the country, and the world are doing similar things, and it’s easier to see how each effort contributes to making a real difference. We are firm believers in little things with big payback.”

In addition to turning new approaches into normal processes, Majercak looks forward to the growth potential for EcoBuilding Bargains as it sells more products to people through eBay and, soon, through its own e-commerce site.

When he considers CET’s 45-year history, he appreciates how far the organization has come, but he’s even more excited about the near future.

As much as we’ve done, I think we will really accelerate and see much more progress in the next 10 to 15 years,” he said. “It’s an exciting time to be doing the work we do.”

Technology

Learning on the Fly

Kimberly Quiñonez says her professors

Kimberly Quiñonez says her professors encouraged her to overcome the challenges of online learning and succeed.

Springfield Technical Community College (STCC) had a long-term plan to ramp up online and digital learning.

But then came the COVID-19 pandemic, which forced staff working at STCC’s Center for Online and Digital Learning to move faster than they ever imagined. The staff includes instructional designers who assistant faculty in online teaching methods they incorporate into the classroom experience.

To maintain the safety of students, faculty, and staff, STCC moved classes to remote instruction last March. Instructional designers worked with faculty over the summer to prepare for fully online teaching in the 2020-21 academic year.

Faculty and administrators acknowledge the abrupt change to remote learning created great challenges and, for some, led to a less-than-ideal learning environment last spring. The sudden need to vacate campus resulted in the use of a slew of digital tools to communicate with students, including e-mail, FaceTime, Google Hangouts, and teleconferencing by phone and Zoom.

“Many faculty had been using online tools for the delivery of their face-to face classes. However, for those faculty who were not familiar with the digital space or whose courses required hands-on instruction, the ‘lift’ to online was great,” said Geraldine de Berly, vice president of Academic Affairs at STCC. “Since the summer, STCC invested in tools and training to assist faculty in developing the best truly online experience possible, including the hiring of a third instructional designer. Today, all online instruction occurs in a single platform, supplemented by class discussions using tools such as Zoom.”

The college anticipates spending nearly $800,000 through May 2021 helping faculty develop hundreds of online classes and labs, de Berly said. Today, more than 80% of the credits are offered online, a jump from 12% prior to the pandemic. Over the coming year, STCC also expects to expand its online-only options in addition to its existing in-person and hybrid degree programs.

STCC English Professor Denise “Daisy” Flaim has years of experience teaching students on campus in classrooms, so converting to the online experience was a big adjustment. But she worked closely with the online team at STCC to prepare for the transition, and now feels confident.

“We’re learning technology, just as the students are learning technology,” Flaim said.

Daniel Misco, an STCC alumnus and faculty member in the Digital Media Production program, said he’s well-versed in the online teaching world. Today, he teaches most of his classes online, but misses the face-to-face interactions with students in a classroom.

“I considered myself a face-to-face instructor,” Misco said. “I always excelled in the classroom. I liked being there with students to build a rapport with them.”

The adjustment to online learning can be challenging for some students, but Misco said faculty try to do all they can to help.

STCC student Kimberly Quiñonez, who is studying social work, expressed gratitude for the support from faculty over the past year.

“My experience as an online learner has really been amazing, although there were times I felt like quitting,” she said. “During those times, my professors would reach out and check in with the class. In the very beginning, I must admit that it was quite challenging transferring from an actual classroom to a computer. The classroom brought security to most students because questions were answered immediately. With online learning, you may have to wait for a response through e-mail.”

Aminah Bergeron, a mechanical engineering technology student at STCC, said she found benefits to online learning, noting she has “gotten the hang of it” after a year of studying from home.

“It wasn’t as difficult as I thought it would be. It was for sure different, but a ‘good’ different,” she said. “I didn’t have to worry about getting ready, or making sure my house doors are locked, or even thinking in the back of my head, ‘did I leave the faucet running?’ I just had to open my laptop and start my schoolwork, whether at my own pace or scheduled Zoom meetings. I also had much more time to research and not worry about calculating the time I’d lose on commuting from one location to another.”

STCC will return to face-to-face, on-campus instruction when it’s safe to do so, de Berly said, but will continue to offer online options and apply digital tools to enhance the classroom experience.

Manufacturing

Keeping Pace

Both the immediate and long-term future of the manufacturing industry will be defined by the development of a number of ever-evolving and prominent trends, according to the Assoc. of Equipment Manufacturers. These trends are poised to have a significant impact in 2021 (and, in many cases, beyond), so it’s critically important for manufacturers to develop a keen understanding of what they are, how they will grow over time, and how they will impact the industry and the customers it serves.

 

COVID-19 and Employee Safety

It almost goes without saying that workplace safety and compliance with CDC guidelines and OSHA regulations (along with local safety measures) will remain front of mind for manufacturers as 2021 gets under way. With COVID-19 cases on the rise in many parts of the world, organizations will need to continue to be vigilant in their efforts to protect employees. Doing so, however, requires a significant investment of time, effort, and resources on the part of company leaders.

While an efficient rollout of an effective vaccine for COVID-19 would bode well for an eventual return to normalcy for the manufacturing industry, the impact of such a rollout won’t be felt for some time. In the interim, organizations will need to continue practicing social distancing in the workplace, restricting visitors to facilities, encouraging the practice of good hygiene, and ensuring employees are healthy and fit for work before allowing them on the job.

It’s been nearly a year since the COVID-19 pandemic took hold in the U.S., and it remains a major challenge for manufacturers across the country and around the world. While companies do have plans and protocols in place to combat the virus, adhering to them and ensuring the health and well-being of employees is — and will continue to be — no small task.

 

Connected Workforce

The desire to equip workers with technology capable of allowing them to connect and collaborate from a distance has long been on a trend on the rise within the manufacturing industry. As older generations continue to leave the workforce and are replaced by younger employees, and the rise of the big-data era in manufacturing takes shape, finding tools and technologies to make an increasingly spread-out and remote workforce as productive as possible is a top priority for companies today.

As a recent article from McKinsey explained, the ongoing COVID-19 pandemic has led to an increased reliance on digital collaboration to establish and maintain a connected manufacturing workforce. An increased emphasis on safety and changes to work processes, in an effort to maintain social distancing and minimize physical contact, has led organizations of all types and sizes to adopt cutting-edge ways to allow for workers to communicate and interact virtually.

While the widespread impact of the pandemic has caused this trend (and the adoption rate of related tools and technologies) to grow, it remains critical for manufacturers to provide training and resources to employees as they try to maximize productivity from afar. Why? Because doing so is poised to pay off over time. According to McKinsey, “by digitizing processes to improve equipment management and optimize physical assets, digital collaboration tools give manufacturers ways to boost productivity while enhancing quality.” And those who do it first — and well — will achieve a significant competitive advantage.

 

Internet of Things

The Internet of Things (IoT) has long been a trend to watch in manufacturing, and this year is no different. As it continues to grow in prominence and becomes more and more widespread over time, IoT technology will drive value for the industry by allowing organizations to make measured, informed decisions using real-time data in an effort to increase efficiency and positively impact their bottom lines.

According to a recent study conducted by the MPI Group, approximately 31% of manufacturing production processes now incorporate smart devices and embedded intelligence. Furthermore, more than one-third of manufacturers have established plans to implement IoT technology into their processes, while 32% plan to embed IoT technology into their products.

IoT technology offers both remote-monitoring and predictive-maintenance capabilities, making it even more valuable for organizations looking to maintain visibility of equipment performance from afar. With the COVID-19 pandemic continuing to impact the industry in 2021, IoT technology will continue to be a go-to for manufacturers looking to maintain efficiency and productivity.

 

Localized Production and Near Sourcing

The rise of customization and personalization has given way to large opportunities for manufacturers willing — and, perhaps more importantly, able — to succeed in a localized economy. By rethinking the way products get out to the public, organizations can craft an ecosystem of smaller, flexible factories located near existing and prospective customers.

Manufacturers are used to thinking on a global level. However, shifting their focus to a local level, they may be better able to meet the ever-changing needs, wants, and preferences of the markets they serve. Consumers are making it abundantly clear that authenticity matters, and a localized approach to manufacturing is proving to be among the most effective ways to for organizations to respond accordingly.

The impact of COVID-19 also cannot be discounted. The pandemic has led manufacturers to re-evaluate and reconsider sourcing, largely due to supply chain disruptions (especially in the earliest days of COVID-19). As a result, manufacturers have made a concerted effort to bring their operations closer to where their offerings are sold, and there has been an increasing desire on the part of many companies to source raw materials from domestic suppliers. All this is being done in an effort to avoid pandemic-related disruptions and support the U.S. economy during these uncertain times.

 

Predictive Maintenance

It’s no secret that the ability for manufacturers to predict impending equipment failures and — more importantly — prevent equipment downtime is incredibly impactful to their bottom lines. Advancements in technology now allow organizations to do just that (and much, much more).

The benefits, according to a recent blog post from EAM-Mosca Corp., showcase why predictive maintenance (PM) is so valuable to organizations today. PM helps companies reduce costs, decrease failures, minimize scheduled downtime, and optimize parts delivery

Effectively conducting predictive maintenance is no easy task, however. Adopting a (successful) predictive maintenance model requires manufacturers to gain insights into the variables they are collecting and — more importantly — how often those variables present themselves on factory floors. Therefore, it’s imperative for manufacturers to possess accurate and relevant knowledge about their equipment. They must know what previous failures have taken place, and they need to make decisions around lead time — becausem the closer to failure a machine is allowed to go, the more accurate the prediction will be.

 

This article was written by the Assoc. of Equipment Manufacturers.

Coronavirus Features Special Coverage

Welcome Mat

At the practice she owns in Wilbraham, Excel Therapy & Conditioning, Dr. Sara Hulseberg is used to multiple physical therapists and coaches treating a host of patients each day, and for the center’s gym to be a hive of activity for members recovering from injury or improving their performance.

It’s quieter now, with a fraction of the usual patients in treatment rooms and in the gym at a time, and plenty of space between everyone.

That’s life in the capacity-limited world of doing business in the age COVID-19, but Hulseberg has rolled with the punches because … what choice does she have?

“With the way things are going for some of my friends who have closed down, I’m thrilled we’re still open,” she told BusinessWest. “I’ve had to take advantage of PPP loans and disaster-relief loans in order to make sure we can stay open, but we are still able to serve our patients and clients, and they’re excited to be coming in.”

That said, she added, it’s difficult to make a profit in survival mode, when the first priority is keeping the doors open and keeping employees paid.

“Those are small victories, and it’s a testament to the fact that we’re doing something right, because people feel safe coming in for group classes. In so many places, group classes have all but disappeared. I’ll take the small victories, and hopefully, we’ll find a way to combat this season and actually start making money again. The goal is to serve people, but it would be nice to make money while doing it.”

On the other hand, Nick Noblit, general manager of Yankee Mattress in Agawam, hasn’t struggled too badly with the past eight months of forced 25% capacity, because that capacity isn’t too onerous in a store with more floor space per customer than most.

“With the way things are going for some of my friends who have closed down, I’m thrilled we’re still open. I’ve had to take advantage of PPP loans and disaster-relief loans in order to make sure we can stay open, but we are still able to serve our patients and clients, and they’re excited to be coming in.”

He did feel the weight of the restrictions during the state’s tax-free holiday back in August — when the store typically does about two months of business in one weekend.

“At that point, we were still at minimum capacity, and we did have to have a greeter at the door monitoring how many people were in the store at one time. We had some folks waiting outside or in their cars, and we had water for them.”

Still, Noblit added, “it wasn’t a huge issue for us, to be honest. I can imagine a retail store that sees a lot more foot traffic, like a small grocery store or a small drugstore — they’re more affected.”

No matter to what extent each business is affected by capacity limits, they collectively cheered Gov. Charlie Baker’s raising of those limits from 25% to 40% on Feb. 8.

For many operations just trying to survive, every bit helps, especially when they’ve not only followed state mandates for keeping their workplaces safe, but in many ways gone above and beyond, said Nancy Creed, president of the Springfield Regional Chamber.

Nancy Creed says businesses have become adept at pivoting

Nancy Creed says businesses have become adept at pivoting and dealing with state mandates, but some, like restaurants, have been especially challenged economically.

“I have to give our business community a lot of credit because when sector-specific protocols came out, and everyone needed to sanitize all these things to keep people safe, they stepped up to the plate, and did that at a lot of expense to themselves. They deserve a lot of credit.

“I really think it’s a testament to our community that the business community said, ‘we want to be part of the solution and not part of the problem,’” she added. “I give them a lot of credit because they could have thrown in the towel if they wanted to.”

Raising capacity limits isn’t a cure-all to businesses’ struggles, of course, especially when the governor has moved in both directions in the past year, loosening restrictions only to tighten them again. But it’s a start.

 

Traffic Report

Businesses affected by the capacity change include restaurants, arcades and recreational businesses, driving and flight schools, gyms and health clubs, libraries, museums, retail stores, offices, places of worship, and movie theaters, to name a few. Workers and staff do not count toward the occupancy count for restaurants and close-contact personal services.

“Clearly, the restaurant industry has been the most impacted,” Creed said. “With other business sectors and office workers, it’s easier for them to reduce their capacity limits because they can work remotely. And small restaurants have struggled the most — when you have six or eight tables to begin with, it’s not worth doing in-person dining if you have to scale down to one or two tables.”

While some sectors are struggling more than others, she added, most members she’s heard from understand the reasons for the state’s mandates, even when they feel they’re too strict.

“I’m not hearing people complain as much; I think they’re now used to it and able to figure out what to do. I’m hearing a lot of stories of restaurants that are doing well with takeout, which helps make up for the low capacity, but it’s still not easy.”

The same goes for outdoor dining — like takeout, a feature many restaurants either launched or vastly expanded out of necessity, but plan to stick with post-pandemic.

“A lot of places will continue with that because they can expand their capacity with outdoor dining and had such success with it,” Creed said. “Customers are telling them, ‘we’ve always wanted outdoor dining, and we hope you keep it.’”

Yankee Mattress saw intriguing changes in customer behavior as well.

“The number of people who don’t want to stop in, we made up for over the phones,” Noblit said, noting that 2020 was a strong year for online sales as well. “Because of the shutdown, we were closed almost three months, and during that period of time, the only way you could get a mattress was online.”

Nick Noblit says he’s had to manage overflow lines rarely during the pandemic, most notably during tax-free weekend in August.

Even after stores were allowed to open later that spring, many customers continued to use the online option, which was a bit surprising, he added. “This is definitely an item, I believe, you should try before, so you know what’s comfortable for you. But it was a sign that our customers in this area took the pandemic very seriously and are taking precautions, and if that meant calling over the phone and making decisions based on our products and our name, that’s OK too.”

While companies have rolled with the capacity changes, and, as noted, honed new ways to do business in the long term, what they don’t like is sudden change, like what happened in Amherst and Hadley last week.

On Feb. 8 — the morning the 40% capacity change went into effect statewide — the Amherst Board of Health issued an emergency order that will continue the 25% limit in town, as well as an early-closing order, due to an outbreak of COVID-19 on the UMass Amherst campus that, at press time, had risen to 540 cases. The town of Hadley followed, also keeping capacity levels at 25%.

“This is not the direction that we, as a town, nor our businesses, want to go, but it is imperative that the town take decisive action immediately to address this increase in cases,” Amherst Town Manager Paul Bockelman said.

Claudia Pazmany, executive director of the Amherst Area Chamber of Commerce, which has members in both towns, said some businesses chose to close completely for two weeks, either for safety or because UMass students are quarantined to their rooms for the time being, cutting off a supply of customers and, in many cases, employees.

“They’re crushed. They were finally opening at 40%,” Pazmany said, adding that some businesses consider the move unfair, especially the ones that have a strong track record in safety, sanitization, and keeping exposure down over the past year.

“As a chamber, we’re so concerned for everyone’s safety, and a lot of businesses are choosing to close temporarily for the safety of their staff,” she added. “Personally, I don’t want to see anyone struggling, but we want to keep the safety of businesses and the community paramount. It’s tricky; it’s such a layered issue.”

Even as the extension order went down, Amherst Public Health Director Emma Dragon emphasized that “it is in the interest of the health of our entire community that we continue the restrictions that are currently in place. Never has it been more important to follow those key public-health protocols of wearing a mask, washing hands, and maintaining social distance.”

 

Doing Their Part

Mention those tips to many business owners, and they’ll say they’ve been insisting on all that — and much more — from the beginning. “The biggest thing, early on, was the uncertainty, not knowing how the surge was going to affect us,” said Dr. K. Francis Lee, owner of Advanced Vein Care Center in Springfield.

But there are lessons, he says, in how his office responded to the pandemic — and continue to respond — that apply to many places of business. The first was making sure employees understood safety protocols and the importance of keeping themselves out of harm’s way.

“We immediately talked to our staff about their concerns, and our staff came to understand that this pandemic was real, and something that affects everyone’s bottom line — not just the business bottom line, but each person’s bottom line,” he said. “Our people took this very seriously, and everyone knew they had to behave in a way that minimized exposure and minimized transmission, to not bring it into the office and spread it amongst each other.”

The second step was communicating with patients, who were screened twice by phone before appointments — with questions about possible COVID exposure — and then again on the day of the appointment. If there was any doubt, patients were rescheduled or moved to telehealth visits.

“This is something that hits close to home for each individual; at the end of the day, it’s all about their jobs and our business functioning, and people are responsible for doing their part.”

Finally, Lee put in physical safeguards in the office, from PPE — he collected so much, he was able to donate 1,000 facemasks to Baystate Health last April — to installing 22 HEPA-filter air purifiers, at least one for every room. “We have a 50-page COVID safety protocol,” he added.

For customers who visit Yankee Mattress, Noblit said, the store is completely sanitized multiple times a day, with attention paid to common touch points like door handles and surfaces, while customers are given a sanitary sheet — he calls it a ‘comfort test guard’ — to lay on as they try various mattresses. Plastic barriers also went up at counters to separate customers from staff.

“We wanted customers to feel safe and come in and do what they needed to do, and not have to worry about any issues with that,” he noted.

Making people feel confident to go about their business should be a community-wide effort, Lee suggested.

“It comes down to normalizing people’s behavior. That involves dealing with the COVID virus itself, which involves paying a lot of attention to science, and that’s what we did in the first place. We started inside people’s heads — we helped our people understand that this is real, and if people screw up, the whole office could shut down. But we never had to shut down — except for April and May, when everyone was shut down.

“Everyone understood this was their own job security at stake,” he continued. “Major workplaces have been shut down because of this. This is something that hits close to home for each individual; at the end of the day, it’s all about their jobs and our business functioning, and people are responsible for doing their part.”

For just about every customer-facing business, there’s a balance to strike between commerce and safety. Because Excel isn’t just a gym, but a full therapy practice, Hulseberg doesn’t have to maintain a laser focus on gym membership. “Our gym, at its core, is a love note to our patients,” she said. “We tend to run our gym differently than the big chain conglomerates, so the limits have hurt us less.”

Specifically, during the past several months of 25% capacity, she sold memberships only up to that level.

“I don’t want people buying memberships and then finding it too occupied or they don’t feel safe,” she said, adding that she implemented a timed appointment platform online, but members can also call last minute to check on availability. “It gives everyone peace of mind that we’re here for a massage or a group class, but everything has a cap on it, and we have safety requirements in mind.”

 

Winds of Change

In fact, even though the state has raised the capacity limit to 40%, Hulseberg is keeping it at 25% — for now.

“We’ve had a year’s experience with this,” she said. “We’re going to wait to implement any of their changes because they tend to roll back on us, and we end up spending time and money implementing new changes, just to have them roll back in a week or two.”

Besides, she said, she doesn’t want to be part of the problem that leads to a spike — although gyms and wellness practices, by and large, have not been identified as viral-spread locations. “We’re just happy we’re hanging on thus far and people are enthusiastic about what we’re doing, so we don’t have to close our doors.”

The worry that loosened restrictions can just as easily be re-tightened is common to most businesses, Pazmany said.

“The one guarantee this year is that whatever we’re dealing with today will change tomorrow,” she said, and that reality has worn on business owners, especially those in Amherst and Hadley, who can’t seem to catch a break right now — and who continue to remind customers that they’re still open for business.

“They are exhausted,” she added. “They’ve implemented safety protocols, they’ve kept everyone safe, they’re building confidence because they want everyone back. They’ve proven you can trust them, and trust is everything to a small business. So they were excited to expand to 40%. I can tell you, if this is prolonged, it could mean more closures. They need to get to 40%.”

It’s a reminder that all these numbers — case counts, capacity limits, profit-and-loss statements — add up to something significant for a regional business community that’s just trying to get back to normal … or, whatever capacity level passes for normal these days.

 

Joseph Bednar can be reached at [email protected]

Autos Special Coverage

Revving Up

By Mark Morris

 

In the early days of the pandemic, people huddled in their homes while streets were abandoned by nearly all traffic. Area auto dealers, understandably, braced for a slow year.

Instead, sales for many dealers hit record highs in 2020.

It was that kind of year for Jack Sarat, dealer principal for Sarat Ford, who said the pandemic definitely kept sales down in March. “After that, business rebounded, starting with a strong finish in April, and then every month following kept getting better.”

Auto-manufacturing facilities and many of their subcontractors around the world experienced shutdowns early in the pandemic. Steve Lewis, owner and president of Steve Lewis Subaru, said the delays kept inventories low at many dealerships and were also a factor in sluggish sales early in the spring.

“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build,” Lewis said. “Believe it or not, 2020 was our best year ever.”

“After [March], business rebounded, starting with a strong finish in April, and then every month following kept getting better.”

Even with inventory delays, Lewis continued to take pre-sell orders, so when new cars began rolling into the lot, nearly 65% of them were already sold.

Gary Rome, president of Gary Rome Auto Group, said the Korean factories where Hyundai and Kia are made were fortunate, with only brief shutdowns due to COVID-19 concerns.

“Hyundai and Kia never took their foot off the gas when the pandemic hit,” Rome said, which set the table for a strong year. “Our sales increased nearly 20% in 2020; it was one of the best years we’ve ever had.”

Every year, Presidents’ Day represents the first big sales push for local dealerships. Sarat pointed out that Presidents’ Day as a sales event tends to be more of a Northeast phenomenon.

Jack Sarat (left) and Jeff Sarat

Jack Sarat (left) and Jeff Sarat are among many area dealers reporting strong sales down the stretch in 2020 and into 2021.

“In Virginia, if you ask about the Presidents’ Day sale for cars, they don’t even know what you’re talking about,” he said, adding that ‘Presidents’ Month’ might be a more accurate name because the manufacturers heavily promote sales incentives throughout February.

With an already strong January in the books, Lewis approaches this Presidents’ Day understanding each year is a different experience.

“Last Presidents’ Day, we had a great weekend. Some years sales are magnificent, other years we are slow,” he said, adding that he defines the weekend as running from the Thursday before the holiday through Presidents’ Day Monday.

Good weather is the key to strong President’s Day sales, Rome said. Encouraging car sales on Presidents’ Day has often been a way for people to start thinking about spring and new beginnings.

Steve Lewis

“Once the factories were up and running again, around May or June, our inventory started to build back up, and it continues to build. Believe it or not, 2020 was our best year ever.”

This year, they may be especially clamoring for spring; on top of the normal winter doldrums, everyone has endured nearly a year of pandemic disruption and isolation. In that environment, auto dealers expect plenty of pent-up demand.

 

Rolling Along

Each of the dealers who spoke with BusinessWest shared his thoughts on why people continue to buy cars during the pandemic.

Those who did not suffer a job loss due to COVID-19 were able, in many cases, to increase their savings. After months of staying inside people, Lewis said, people started doing the math and realized that, with used-car values remaining high, they could trade up to a newer vehicle without spending lots of money.

“They capitalized on it, we capitalized on it, and everybody’s happy,” he added.

Sarat talked about customers who canceled vacations that involved air travel but still wanted to get away. “Several customers told me they were buying vehicles just so they could drive to their vacation,” he said.

While zero-percent interest rates across the industry have helped reluctant buyers, Rome said a job-assurance program gave Hyundai customers more comfort about making a purchase. “Through this program, if you buy a car and lose your job, Hyundai will make your payments for up to six months.”

He also believes battling COVID fatigue played a role in many vehicle-purchasing decisions. “People started realizing that life is short, and this might be a good time to do something nice for themselves.”

The pandemic has produced an interesting economic situation in which many homeowners made big investments in their homes, resulting in an extremely successful year for construction and landscape contractors. Sarat reaped the benefit of the contractors’ good fortune in his commercial-truck business. Contractors tend to replace their vehicles in December to obtain a tax credit against their income for the year, so it’s not unusual to see more sales activity then. Thus, the boom in home improvements in 2020 contributed to record sales in December for Sarat.

“We sold twice as many Super Duty trucks than a normal December,” he said. “Contractors were replacing vehicles and, in some cases, adding to their fleet.” Super Duty trucks are a popular choice among contractors because they can be adapted to a variety of trade professions.

While online shopping and purchasing a vehicle are not new, the pandemic brought out more people interested in using this no-touch approach to buying. Before the pandemic, Lewis noted, nearly 45% of his business was generated from the internet, where customers would do their research online, then come in for a test drive before buying the car. Since the pandemic, that’s increased to 70%.

“What’s different now is that people are taking delivery of vehicles they’ve never seen or have driven,” he said, adding that customers who do this are relying on the brand’s reputation.

Website upgrades since the pandemic allow Rome’s customers to complete their entire vehicle purchase online. From figuring out the value of a trade-in to applying for credit, the entire purchase or lease can be generated online and finished off with an electronic signature. “We will even bring the car to your home to test drive if you want,” he added.

Before internet research, the average customer would visit three or four dealers before purchasing a vehicle. Sarat cited industry statistics showing that customers now visit, on average, only 1.3 dealers before making a purchase. “Because they’ve done the research online, they’ve usually made a decision on what they want to buy before they even come in.”

 

Shifting Gears

For several years, buying trends have shifted away from passenger cars and toward SUVs and crossover vehicles.

“SUVs make up 68% of our sales, compared to sedans,” Rome said. “It used to be the inverse.”

He credits the shift to SUVs handling more like a car than earlier models, which were built on truck frames. He also noted that, as buyers age, they prefer a higher vehicle to make it easier to enter and exit.

“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong . I think it’s going to be an exciting year.”

Nearly every model in Lewis’ showroom is an SUV or crossover vehicle. “The crossover is really a replacement for the old station wagon,” he said. “It’s designed to open up the hatchback, put the back seats down, and throw in your junk.”

Ford is another of the many manufacturers moving away from traditional sedans and toward crossovers and SUVs. In addition, Sarat sells one of the most popular vehicles in the U.S., the Ford F-150 pickup truck, calling it his “bread and butter.”

Ford recently released a hybrid version of the popular pickup truck, and the new Ford Mustang Mach E is an all-electric vehicle. And Sarat has made a move toward all-electric vehicles among commercial cargo vans as well. Jeff Sarat, general sales manager, said these vans can run up to 300 miles a day and then plug in for recharging overnight.

“For business owners, it significantly reduces the cost of ownership,” he said, noting that an electric motor eliminates traditional maintenance and substantially reduces the vehicle’s carbon footprint. “We’ve got a lot of good things coming down the road, and our electric vehicles are going to be on people’s shopping list when they look for their next car.”

While hybrid and electric vehicle sales represent about 5% of Rome’s sales, he expects that number to rise to 10% soon.

“The manufacturers have jumped into this market with both feet. Within two years, we expect to offer a dozen hybrid or electric vehicles,” he said, adding that hybrid vehicles can improve mileage up to 140 miles per gallon, while some all-electric vehicles can go 386 miles on a full charge.

“In some ways, it’s like owning an iPhone, where you want to get a new one every three years to stay up on the latest technology,” he added.

Another shift this year has taken place in the used-car market. The economic shutdown last spring affected new-car production, and dealers found they had more empty spaces on their lots. “When fewer new vehicles are coming in, it also creates a lack of used inventory because people are not trading in their cars,” Sarat said.

For this reason, all the dealers we spoke with said used-car prices stayed high last year and will continue to remain strong in 2021.

Rome acknowledged the strength of the used-car market, but said his business runs somewhat counter to the normal trend.

“In our world, we sell about two new cars to every used car,” he explained. “If you can buy a new car with a 10-year, 100,000-mile warranty for about the same price as a used car, why would you buy the used car?”

 

No Slowing Down

With his business finishing 2020 with a 19% sales increase, Rome predicts an 18% increase on top of last year’s success for 2021.

With his dealership in Hadley, Lewis noted that he is located two miles from five colleges and universities. When students and faculty all abandoned campus early in the pandemic, it cut deep into his business. He is hopeful these sales will return as everyone comes back to campus.

“Despite all that, we had our best year ever, and we’re hoping 2021 is as good as 2020,” he said.

Jack Sarat anticipates at least some supply disruptions due to COVID in 2021, but remains optimistic for a good year ahead as well.

“We won’t be back to normal for a while, but everything I read in automotive reports suggests new-car sales in 2021 are going to be very strong,” he said. “I think it’s going to be an exciting year.”

Community Spotlight Special Coverage

Community Spotlight

By Mark Morris

Paul Bockelman said he’s worked with chamber and BID leaders

Paul Bockelman said he’s worked with chamber and BID leaders to address the urgent needs of the business community during the pandemic.

 

Epictetus, the Greek philosopher, first made the observation, “it’s not what happens to you, but how you react to it that matters.”

While Epictetus did not live in Amherst, town officials and business leaders there have certainly adopted the philosopher’s adage in their robust efforts to return the town to vitality in the face of a pandemic.

Last March, when COVID-19 began to affect life in communities everywhere, Amherst took a broader hit than most because UMass Amherst, Hampshire College, and Amherst College all shut down earlier than other area institutions.

Gabrielle Gould, executive director of the Amherst Business Improvement District (BID), said the suddenly empty campuses posed a shock to the system.

“We lost 40,000 people in a 48-hour period,” she recalled. “It was like turning off a light switch.”

With college closings and retail activity coming to a screeching halt, Amherst Town Manager Paul Bockelman said his town lost its two major industries because of the pandemic. Still, he noted, “despite all that, the town has been resilient, and we are prepared to emerge from the pandemic in a very strong way.”

Early on, Amherst quickly mobilized a COVID-19 response team as Bockelman and the department heads of the Police, Fire, Public Works, and other departments met daily to strategize, he explained. “We prioritized the health of our workforce because we wouldn’t be able to help residents if our fire, police, and DPW staff weren’t healthy.”

The next priority was to maintain continuity of government functions. Amherst migrated town staff to remote work and incorporated Zoom meetings to assure key bodies such as the Town Council and the School Committee could keep moving forward. Permit-granting committees soon followed.

“We prioritized the health of our workforce because we wouldn’t be able to help residents if our fire, police, and DPW staff weren’t healthy.”

As plans were coming together to allow outdoor dining, the Town Council passed a special bylaw to delegate simple zoning decisions to the building commissioner. This move sped up the permitting process and cut down on much of the bureaucratic red tape.

“For example, permits for serving alcohol outdoors or expanding the footprint of a restaurant could be done through one person instead of going through an often-lengthy permitting process,” Bockelman said.

To address the urgent needs of the local business community, he also met weekly with Gould and Claudia Pazmany, executive director of the Amherst Area Chamber of Commerce. The BID and chamber share office space on Pleasant Street, so Pazmany and Gould worked together to learn about the many grants available to local businesses impacted by COVID-19. The main goal was to help owners stay in business.

Claudia Pazmany

Claudia Pazmany says one of her most important roles has been helping business owners navigate the grant system.

“We knew that closing their doors would mean closing their doors forever,” Pazmany said. “That’s what we were trying to avoid.”

 

Granting a Reprieve

Before the pandemic, the chamber would host 56 events in a typical year. Pazmany said she quickly moved to digital events to keep everyone together. “We went from 56 events to 56,000 connections on Facebook and other social media.”

More importantly, in addition to helping local businesses apply for the federal Paycheck Protection Program (PPP), Gould and Pazmany have successfully secured grant programs at the state and federal level.

A number of Amherst businesses received grants through the state COVID-19 Small Business Grant Program, which provided a total of $668 million for Massachusetts businesses. Amherst also secured $140,000 in federal Community Development Block Grant funds for local businesses.

State Sen. Joan Comerford helped the Chamber and BID to fund the recently formed Relief and Resiliency Microgrant Program. Originally designed to provide $500 microgrants, Pazmany said they were able to secure matching dollars, so $1,000 grants will soon be awarded to 18 of Amherst’s small-business owners in the first round of the program.

“The microgrant money will help defray some costs and allow people to keep going,” she said. “Many of these business owners are not even paying themselves; they just want to pay their bills.”

One of the more important roles Pazmany and Gould have taken on involves helping business owners navigate the grant system. Whether it’s identifying eligible funding, helping to fill out forms, or solving technical issues, Pazmany said they are not limiting their support to just chamber members. “Right now, it makes no difference if you are a chamber member or not. If you need help and you cross our threshold, we will help you.”

While outdoor dining and takeout have enabled restaurants to keep their doors open, the BID launched an effort to do more, buying meals from local restaurants and giving them to families in need. The effort began two months ago with the moniker December Dinner Delights and recently received funding to continue through April. Gould sees this as a win-win.

“We pay the restaurants $1,500 twice a week to help them sustain business, and we provide meals for families in our community,” she noted.

Another effort to support local business involves a gift-card program run by the chamber. Launched at the beginning of the holiday season, the gift cards can be redeemed at more than two dozen local businesses, from restaurants to a cat groomer. Pazmany said she has had to reorder cards to keep up with demand. “It works because you are able to give someone a gift and, at the same time, support a small business; it’s the best type of reinvestment in our community.”

As for town-run programs, last spring, municipal leaders had to figure out what to do about the farmers’ market it runs every Saturday from April through November. In the past, it was held in a cramped parking lot that would not conform to social-distancing protocols. Because the town common had no activities scheduled, the farmers’ market set up there — and had its most successful year ever.

“Right now, it makes no difference if you are a chamber member or not. If you need help and you cross our threshold, we will help you.”

“Our town common is a bucolic setting, and people who were cooped up all week could safely come and buy things,” Bockelman said. The manager of the farmers’ market reported the average sales week in 2020 equaled the best sales week in 2019, and the booths sold out of their products every week.

The farmers’ market was a highly visible way to revitalize interest in Amherst, as are continuing “quality-of-life developments,” as Bockelman called them, such as the newly opened Groff Park and the building of a new playground at Kendrick Park.

But smaller acts, like making picnic tables available in parks and other public places, were popular as well, he added. “As soon as we put out the tables, people were immediately using them. It was awesome.”

 

Forward Thinking

Looking to the future, Amherst is making decisions on four major capital projects slated for construction in 2022. On the drawing board are a new elementary school, a new library, a new Public Works facility, and a new fire station.

“We are trying to incorporate these projects into our ongoing budget so the taxpayer does not have to take on too much of a burden,” Bockelman said.

The desirability of Amherst as a place to live keeps housing prices high, which he calls a two-edged sword because it hurts the town’s ability to build a diverse socioeconomic community.

“People value diversity in Amherst,” he said. Still, he added, “it’s much more diverse than most people realize, especially our school district.”

To deepen that diverse profile, Amherst is looking to invest in property to develop more affordable housing. Bockelman pointed to a recently approved development on Northampton Road and a potential land purchase on Belchertown Road as additional projects in the works. “The town is willing to make the investment to develop and retain affordable-housing units in Amherst.”

To better address diversity in business, the chamber makes available an open-source document for proprietors who want to identify their business as being run by a woman, minority, or LGBTQ individual.

Pazmany said it’s simply good for business, noting that “we are getting steady requests from people who want to do business with various self-identifying businesses.”

Amherst at a Glance

Year Incorporated: 1759
Population: 39,482
Area: 27.7 square miles
County: Hampshire
Residential Tax Rate: $21.82
Commercial Tax Rate: $21.82
Median Household Income: $48,059
Median Family Income: $96,005
Type of Government: Town Council, Town Manager
Largest Employers: UMass Amherst; Amherst College; Hampshire College
* Latest information available

One element in the town’s strategy emphasizes Amherst’s potential as a tourist destination. Several national news articles have suggested that this decade may become a second “roaring 20s” with a renewed emphasis on cultural attractions. If that’s so, Pazmany pointed out, Amherst has plenty to offer, such as Museums10, a collaborative of 10 area museums, of which seven are located in town. Together, the museums cover various aspects of history, art, literature, and the natural world.

“In a normal year, Museums10 will bring more than a half-million people to the area,” she said. “The Emily Dickinson Poetry Festival itself is a global event.”

For the more immediate future, the plan is to have outdoor dining up and running by April 1. The BID was able to supply enough table umbrellas and heaters during the summer to boost last year’s effort. Because there are so many barriers in place to ensure safe outdoor dining, the BID also paid 35 artists to turn the plain concrete into a medium to express themselves.

“The barriers became nice displays of public art, and they give downtown a bit of an art-walk feel,” Gould said.

Simple touches like the artwork and adding planters around town generated positive comments from visitors and business owners alike. Pazmany appreciated the boost of confidence. “In this next phase, we just want our businesses to be up and running so they can take a paycheck and start to rehire people.”

Most Amherst leaders, in fact, look to the coming year with great anticipation. Bockelman noted that the town has several fundamental strengths, including the university and colleges. Pazmany added that UMass has already reported an increase in enrollment for the coming fall.

Gould admits that pushing forward on grants and other relief efforts helped Amherst through the worst of the pandemic. “Despite how hard everyone was hit, we’ve created a resiliency that kept our businesses here.”

Bockelman agreed. “Everyone’s efforts worked because they were sequential and were patiently done. We just kept moving forward.”

Epictetus would be proud.

Features Special Coverage

Entering a Partnership?

 By Brenden Cawley and Gabriel Jacobson 

 

The COVID-19 pandemic has caused several partnerships local to Western Mass. to either consider or actually effect a change in ownership. When navigating the complexities of these changes in ownership, partnership basis is a vital component.

For tax advisors and taxpayers alike, basis would be better as a four-letter word. However, understanding the basics of cost basis can prevent future headaches.

 

Understanding the Basics of Basis

It stands to reason that the cash spent or provided to acquire an asset would be the cost (basis) of that asset. However, when analyzing partnerships, understand the concepts of ‘inside’ and ‘outside’ basis. The difference is a shift in perspective. The outside basis is established when the partner joins or forms the partnership through the contribution of cash (or property, which adds additional complexity). The partnership then uses that cash to purchase assets.

The cash outlay to acquire those assets establishes the total inside basis of the partnership. Based on each partner’s ownership, a share of the inside basis of the individual assets is assigned accordingly. This inside basis does not fluctuate with changes in market value of the assets. When a tax year closes, the partners each receive a Schedule K-1 and adjust their outside basis by the income, expense, gain, or loss disclosed on the Schedule K-1.

Brenden Cawley

Brenden Cawley

“For tax advisors and taxpayers alike, basis would be better as a four-letter word. However, understanding the basics of cost basis can prevent future headaches.”

Over the life of the partnership, cash or property will be distributed to the partners, which will decrease their outside basis. The inside basis of the partnership will similarly be reduced as the cost of assets is removed from the books through sale or distribution. When the partnership is in need, the partners may contribute additional cash or property. Additional contributions have the same positive impact on outside basis as the initial contribution that formed the partnership or acquired an interest.

As time goes by, differences can arise between the inside and outside basis of the partner(s). As the inside and outside basis of the partnership fall out of alignment, the partners can experience negative tax consequences. Each taxpayer is responsible for maintaining their own outside basis, so consult your tax advisor if questions arise. Through a Section 754 election, the partnership has an opportunity to avoid these consequences.

Like anything worthwhile, this election takes work. It is perhaps especially laborious if the partner or partnership have not been actively tracking the inside and outside basis disparity. The partners’ Schedule K-1s could offer a lifeline. Prior to 2020, each partner’s capital account in item L could be prepared on a book, GAAP, Section 704(b), or tax basis. It is possible that the partner’s capital account prepared using book, GAAP, or Section 704(b) is a reasonable approximation for the inside basis of the partner.

This is a highly simplified approach that needs to be vetted with the partnership’s tax advisor. Starting in 2020, the IRS has mandated that Item L of Schedule K-1 must be prepared on a tax basis. The partner’s tax capital account is a good starting point for both outside and inside tax basis. Again, this simplified assumption needs to be discussed with a tax advisor. Please note that tax capital reported on the Schedule K-1 is not equivalent to outside tax basis. Instead, outside tax basis considers liabilities of the partnership for which the partner is individually responsible and partner-specific adjustments.

 

Everyday Example

In year one, Ann and Bob purchase a building for $200,000 and split the cost evenly, giving them each 50% ownership in ABC Partnership. Initially, they each had outside basis equal to their inside basis of $100,000. In year two, as a result of COVID-19, Bob wants to exit the partnership. The building has appreciated in value to $300,000, so he sells his interest in ABC Partnership to Carl for $150,000. Bob will recognize a $50,000 gain in year two as a result of the excess cash received compared to his cost basis.

First, let’s imagine the partnership does not make a 754 election at this point. Carl steps into Bob’s inside basis of $100,000. However, his outside basis equals the total amount he paid, or $150,000. In year three, Ann and Carl decide to sell the building (for simplicity’s sake, let’s assume no depreciation has been expensed), which is still valued at $300,000 and therefore results in a gain of $100,000. Both Ann and Carl receive Schedule K-1s with a $50,000 gain for the year because they both had an inside basis of $100,000 prior to the sale.

Gabriel Jacobson

Gabriel Jacobson

“Partnerships may be relatively easy to form, but the tax implications can be very complex.”

After recording the gain, their inside basis increases to $150,000. Ann’s inside and outside basis remain aligned, but Carl’s basis disparity persists as the $50,000 of gain impacts his inside and outside basis in the same manner. In year four, Carl and Ann decide to dissolve the partnership. At this point, the $300,000 cash they received from the sale of the building is distributed to both partners evenly. Ann receives $150,000 in cash, which equals her outside basis. For this reason, she recognizes no gain or loss on the dissolution of the partnership.

Alternatively, Carl recognizes a $50,000 loss outside of the partnership since his total outside basis is $200,000. At this point Carl is kicking himself because he paid taxes on a $50,000 gain in year three only to recognize a loss of $50,000 one year later. If Carl does not have any capital gains in year four, he can only utilize $3,000 of the capital losses on his tax return. The remaining losses are carried forward indefinitely.

Now let’s imagine the partnership made the 754 election when Carl purchased his 50% interest in year two. At that time, his inside basis would have been increased by $50,000 to match his outside basis. The partnership would have adjusted Carl’s inside basis in the building to $150,000, matching his outside basis. Then in year three, when Ann and Carl sell the building, Carl would not recognize any gain because his inside basis matches his share of the sales proceeds ($150,0000).

In year four, when the partnership dissolved, Carl would not recognize a loss on the distribution of cash from the partnership because his portion of the partnership’s cash balance ($150,000) equals his outside basis ($150,000). Carl avoided the timing issue regarding any taxable gain on the building sale and any loss on dissolution by making the 754 election.

 

On an Income-tax Return

If Carl and Ann decided to hold onto the building instead of selling in year three, Carl could deduct from his Schedule K-1 the basis adjustments related to the Section 754 election. The total Section 754 adjustment of $50,000 is reduced to zero over time using the same mechanics as the depreciation on the building. The 754 adjustment reduces both Carl’s inside and outside basis equally. The benefit is that he will receive deductions on line 13 of his K-1 against income on his tax return each year until the $50,000 is fully deducted.

Partnerships may be relatively easy to form, but the tax implications can be very complex. Section 754 is important for a partner purchasing an interest and for existing partners looking to secure a new partner to help their business. Accurate tracking of inside and outside basis is of the utmost importance to reduce negative tax consequences down the line.

 

Brenden Cawley is a senior associate at the Holyoke-based accounting firm Meyers Brothers Kalicka P.C., and Gabriel Jacobson is an associate with the firm; (413) 536-8510.

Education Special Coverage

Portrait of a Graduate

 

The program is called ‘Portrait of a Graduate,’ and that name pretty much says it all.

But maybe an adjective is in order to get the complete picture, pun intended.

Indeed, what the Springfield Public Schools are focused on now is creating a portrait of a successful high-school graduate, through an initiative designed to gain feedback from a host of constituencies regarding the skills — as in all the skills — that young people will need to not only earn a high-school diploma, but thrive in an ever-changing, technology-driven economy.

And this portrait will become a valuable blueprint of sorts as school administrators go about creating a new strategic plan for the city’s public schools, said Superintendent Dan Warwick, who stressed repeatedly that Portrait of a Graduate is very much a community-driven process that will define success for Springfield students, including the values, knowledge, skills, and work habits they will need to thrive as learners, workers, and leaders.

Among those providing input are members of the business community, said Trisha Canavan, president of United Personnel and current president of Springfield Business Leaders for Education, adding that their commentary will be critical to creating that portrait and then inspiring needed changes to programming and curriculum.

Made possible by a grant from the Barr Foundation, this Portrait of a Graduate initiative is part of a broad movement across the country to involve the community in shaping a school system’s strategic plan and specific programming and curriculum for helping to ensure student success.

The list of communities that have embarked on such programs grows each year, and now includes Lowell, Shrewsbury, and other cities and towns in Massachusetts, as well as Hartford, Conn., Fairfax County, Va., and many others, said Warwick.

In most of those communities, Portrait of a Graduate is used as part of a strategic plan for a specific school system, said Paul Foster, chief information officer for Springfield Public Schools. Here, though, it will help guide development of a new strategic plan, which is an important distinction.

Dan Warwick

Dan Warwick

“Clearly, this has become a best practice — communities need to take a look at what everyone thinks our graduates should look like, not only the academic skills, but all the other skills as well.”

“Most communities make it one of the activities as part of creating a plan,” he explained. “It’s not as common to create that vision first and then build the plan based on the vision. I think it’s important that we not make decisions on how to change schools until we have that clarity of vision that a portrait provides.”

Warwick agreed. “Clearly, this has become a best practice — communities need to take a look at what everyone thinks our graduates should look like, not only the academic skills, but all the other skills as well.

“Other iterations of our strategic plans were mostly academic-focused, which is what you would expect for a school system to put forward in a strategic plan,” he went on. “But this piece is designed to take a wider look and really get the community to rally around what they want our graduates to look like and what attributes they’ll need, and then we’ll build the actual strategic plan from that profile.”

By most accounts, he noted, it has succeeded in its goal of garnering community interest in helping to create this portrait.

“I think it excited people,” Warwick told BusinessWest. “The community involvement has been tremendous — the breadth of the input from every sector of the community has been significant, and this new concept has helped us with that.”

The acknowledgment that needed skills for success in the 21st-century workplace extends well beyond academics is made clear in the six ‘pillars’ of the portrait — learn, work, thrive, lead, persist, and communicate, said Azell Cavaan, chief Communications officer for Springfield Public Schools, adding that the school system has received more than 1,400 responses to a survey regarding a draft portrait that reflects how these pillars will be addressed moving forward.

All those we spoke with noted that there are few real surprises in the feedback that has been received, and the skills and attributes identified as needed are included in most school systems’ strategic plans. However, it is important to have these sentiments reinforced, and equally important to gain input from a broad, diverse audience, one that reflects the community in question.

“We’ve had hundreds of meetings in every segment of the community, and folks have really stayed with this,” Warwick said, adding that the city has been able to maintain momentum for the initiative even in the middle of pandemic, a clear indicator of its importance to the future of the city and the region.

Paul Foster

Paul Foster

“Instead of traditional educators looking at this problem, we have a wider breadth of involvement from the community at large and the business community.”

For this issue and its focus on education, BusinessWest takes an in-depth look at the Portrait of a Graduate initiative, its goals, and why Springfield school officials believe it will pay dividends in their ongoing efforts to ensure that students not only graduate, but can succeed after they do.

 

Course of Action

Foster told BusinessWest that Portrait of a Graduate, or POG for short, is becoming an increasingly popular response to what has a national issue, or concern — helping students succeed beyond the classroom.

He said the movement, if it can be called that, started several years ago in the private-school arena, and was quickly embraced by public schools as well. The basic concept is to ask a question — what skills and attributes will students need to succeed years and decades down the road? — and ask a lot of different of people that question. It sounds logical, but it in many ways represents a new way of thinking about this issue, Warwick said.

“Instead of traditional educators looking at this problem, we have a wider breadth of involvement from the community at large and the business community,” he explained. “We’re getting a lot of input on the skills and attributes that people are looking for that, for traditional educators like myself, wouldn’t have been the first things we would be thinking about.”

What are these attributes and skills? The list includes financial literacy, problem solving, and perseverance — being able to stick with something until the problem is solved, said Foster, adding that what has been most important in this process has been not only hearing such comments, but hearing them over and over, and from different constituencies.

“What I thought was surprising, and important, was how aligned what we heard was,” he told BusinessWest. “We went from conversation to conversation and heard the same things over and over again. For example, we heard ‘financial literacy’ at every conversation. There wasn’t a group that we spoke with that didn’t say that was important.

“It was the same with things like problem solving,” he went on. “It wasn’t surprising that we heard those things; I think it was surprising that we were hearing the same things from every group; we were talking to business leaders, we were talking to parents, and we were talking to teachers, and they were identifying the same things, which is good.”

Canavan agreed, and said one of the broad goals of the initiative is to create a sense of ownership within the community when it comes to the city’s schools, or a stronger sense of ownership, as the case may be.

“Getting the collective wisdom of the community is important,” she said, “because I’m hopeful that one of the things that will come out of this is our community embracing that notion that this is our responsibility — that it’s not just the responsibility of the schools or just the responsibility of the parents — it’s our responsibility.”

The process of gathering feedback from these constituencies began in the fall of 2019, and the seeds were planted for the initiative maybe six months before that, said Foster, adding that the school department has been hosting what it calls ‘community conversations,’ a phrase chosen over ‘focus groups,’ which comes with some preconceived notions, not all of them good.

These conversations, organized by various stakeholders, have been going on continuously, he went on, adding that they have involved the business community, the refugee community, parents, educators, students, alumni, the faith community, and other constituencies. One was comprised of area business owners who are also alumni of Springfield Public Schools.

Traditionally, these groups, when involved in such conversations, focus on what needs to be done differently in the schools. For this exercise, they didn’t start there, but rather with two questions: ‘what are your hopes and dreams for children growing up in Springfield?’ and ‘what are the knowledge and skills that young people growing up in Springfield will need to realize those dreams?’

The feedback was intriguing, and in some cases powerful, said those we spoke with, especially when it came to students, what their dreams are, and what they need to make them reality.

This is reflected in those six aforementioned pillars and how the assembled feedback has shaped the working portrait with regard to how the school system must address each one.

Under ‘persist,’ for example, it notes that the Springfield Public Schools and the Springfield community will prepare students to:

• Remain focused on goals, using coping strategies and flexibility to overcome obstacles;

• Speak up for themselves and the issues that are important to them;

• Engage in self-reflection to build on strengths and weaknesses;

• Evaluate choices and outcomes when making decisions; and

• Give, receive, and respond to constructive feedback.

Under ‘communicate,’ the bullet points include ‘write and speak with clarity, evidence, and purpose’; and ‘know how to listen to others, ask questions, and seek to understand.’ And under ‘lead’ are these points, among others: ‘be curious, creative, open-minded, and flexible in new situations’; ‘advocate for themselves and for others’; and ‘seek opportunities to understand and serve the community.’

Now that the portrait is essentially complete, said Foster, those leading this initiative are pivoting from writing that document to writing a strategic plan, one that will attempt to prioritize what has been learned over the past year or so and create a blueprint for action and change moving forward. The aggressive timeline has the plan being completed in August, in time to implement changes for the next school year.

“We ended this with a recognition that there are some small ways and some big ways that we need to think differently and change schools,” he explained. “Schooling in the United States has been done in a relatively similar way for a very long time, and some pretty significant things need to change; some of those are going to be one-year changes, and others are going to be five-year changes.”

 

Drawing Conclusions

Moving forward, those we spoke with they expect the POG initiative to help introduce new performance measures and ways of evaluating whether students are ready to not simply receive a diploma, but succeed in what has always been the broader goal — success in the workplace and in life.

“You can have someone has mastered English and mastered math who is not ready for the workforce,” Foster said. “So part of the strategic plan will be introducing new performance measures that are not a replacement of but an addition to the ones we have today; we’re thinking about how you evaluate student performance differently.”

Where this thinking takes the school system is a question still to be answered. But the process begins with a portrait of a graduate, and in Springfield, this is still a work in progress and an important step forward.

 

George O’Brien can be reached at [email protected]

Hampshire County Special Coverage

Uncertainty on the Menu

Fred Gohr says Fitzwilly’s shifted gears in a few ways last year, from expanded takeout service to outdoor dining under a large tent.

Fred Gohr says Fitzwilly’s shifted gears in a few ways last year, from expanded takeout service to outdoor dining under a large tent.

The weekend before March 17, Fitzwilly’s was gearing up for a great St. Patrick’s Day. That’s the day the Northampton St. Patrick’s Assoc. gathers for its annual breakfast, and then about 200 of them march on down to Fitzwilly’s and spend most of the day there.

“We have Irish bands, and we were sitting on 20 kegs of Guinness beer and a couple cases of Jameson’s Irish whiskey for a great big party — and it got pulled right out from under us,” owner Fred Gohr said.

Remember March 16? That’s the day restaurants — and most other businesses in the Commonwealth — were forced to shut down, on just two days notice, by order of Gov. Charlie Baker.

“It was awful,” Gohr went on. “We had a staff of about 75 people, and I had to tell them all, ‘we’re closed, and you guys have to go on unemployment for a while, and we’ll see what happens.’”

What happened, all across Hampshire County’s robust dining scene, has been a series of starts and stops, hope and despair, and especially two themes that kept coming up as BusinessWest sat with area proprietors: uncertainty, but also evolution.

“We were closed completely for a month or so, then we opened and started doing a little bit of curbside,” Gohr said. “And, honestly, when that’s all you’re doing — at least for us — it’s not very profitable.”

But takeout service, never a major factor in the business, has since morphed into a significant part of the model, accounting for about 25% of sales. Other restaurants have relied even more on pick-up service, because they don’t have the interior space or outdoor-dining opportunities that Fitzwilly’s has (more on those later).

“Last year, it felt like you were opening a new restaurant every single week. You had no historical data to compare; you couldn’t look at sales and ask, ‘how did we do this last time?’”

“It’s been such a whirlwind for small businesses the past 10 months, trying to get our bearings with all the changes,” said Alex Washut, who owns two Jake’s restaurants in Northampton and Amherst. “Last year, it felt like you were opening a new restaurant every single week. You had no historical data to compare; you couldn’t look at sales and ask, ‘how did we do this last time?’

That’s because there was no ‘last time’ — no comparable pandemic in the past century, anyway. “Everything was out the window,” Washut said. “We asked, ‘who are we going to be this week?’ Then there was a bunch of changes, and we had to conform to those, and then it was a new restaurant the next week.”

Like Fitzwilly’s, evolving to a takeout model early on was new territory for Jake’s. “We were never a takeout restaurant; maybe 3% of our gross was takeout food,” he said. “So we had no system for it.”

The various systems that area eateries developed, in the weeks last spring when takeout was the only option, involved details ranging from what containers to use to how to present food attractively and, for restaurants that opted for delivery, how to keep it warm in transit.

Casey Douglass

Casey Douglass with some of the supplies used in Galaxy’s takeout business, which has been its dominant model for almost a year.

“We were able to pivot quickly,” Washut noted. “From there, we moved to outdoor dining when that was allowed, but we had never had outdoor dining before” — and questions had to be answered regarding permitting, staffing, health and safety factors.

The positive, he noted, is that, if 2021 follows a similarly bumpy trajectory, “we know what’s expected, and we know how we’ll react in the spring, how we’ll react in the summer, and how we’ll react once the fall and winter come along.”

Indeed, the establishments that survived last year’s storm are, if not stronger for the experience, at least a little wiser, even as many are barely hanging on. The hope, of course, is that 2021 is nothing like 2020. But in this industry, so critical to the economy and cultural life of Hampshire County, nothing is certain.

 

Survival of the Fittest

“We’ve evolved a lot.”

Those were Casey Douglass’ first words when asked what this year has been like at Galaxy, the restaurant he’s operated in downtown Easthampton for the past five years.
The first evolution had to do with meeting customer needs. “We’re part of the food chain,” he said. “We have a lot of customers who don’t go to the supermarket. And we were like, ‘they’re going to be putting themselves at risk going to the supermarket as opposed to getting to-go.’

“So we went to the radio station and created an ad talking about ‘Casey’s comfort food,’” he went on. “And we switched to all a la carte, basic stuff — mac and cheese, mashed potatoes, roasted chicken, meatloaf — and we were cranking.”

So much that, when he secured a Paycheck Protection Program (PPP) loan, he first thought he wouldn’t need it. “Then a couple weeks went by, and we said, ‘thank goodness we got that.’ It changed so quickly.”

Sales dropped to about 45% of what they once were, but he kept 70% of the labor on board, because that’s the main purpose of the PPP program. That money got Galaxy through the end of June. Then things got rough.

Jake’s owner Alex Washut

Jake’s owner Alex Washut says it might be a while before his two locations (this one in Amherst) are packed with patrons again.

After losing a couple of cooks to unemployment, the restaurant cut back from five days a week to four, and when summer rolled around, fewer customers wanted takeout, but outdoor dining wasn’t a draw, either.

Fall brought a reprieve of sorts, with the milder, less-humid weather boosting outdoor dining, but the winter has been exceptionally tricky. Indoor dining didn’t prove to be a workable option; in a space that seats fewer than 50, the governor’s current 25% capacity mandate is especially onerous, and Douglass and his team also felt indoor dining might not be safe — or, at least, feel safe — for a clientele that skews older than some restaurants.

So as winter wears on, Douglass is pressing on with takeout only — now a hybrid of the comfort-food concept and the creative American meals he’s known for — a bank loan, and plenty of grit.

“We’re just looking at survival at this point,” he said, noting that costs like food, loan interest, utilities, and equipment leases don’t just go away when sales are down. “We’re efficient at what we do, but we’re losing about $15,000 a month. And that’s not going to be able to continue.”

However, he insisted, “I do think the spring will increase sales a couple thousand dollars a week, and that’s all it takes. We’ll be fine.”

Evolving to a takeout model was jarring at first to Washut, especially since his two locations — an 1800s-era building in Northampton and a new, modern structure in North Amherst’s Mill District — are so different, with a different set of clientele, and not cookie-cutter businesses like quick-service chains.

“We’re just looking at survival at this point. We’re efficient at what we do, but we’re losing about $15,000 a month. And that’s not going to be able to continue.”

“We didn’t know how to be a takeout restaurant. We were making $50 in sales a day — we were in shock,” he recalled. So he shut things down completely through April, secured a PPP loan and other grant funds, and reopened for takeout in early May, then outdoor seating a couple months later. Armed with the PPP, he was able to bring back the whole staff, and the breakfast-and-lunch establishment added dinners to generate more business. When funds ran dry, dinner went away.

These days, with takeout and limited indoor seating, Washut is bringing in about 30% of typical sales, and the combined staff is down from close to 50 to around 15.

Throughout all the changes, he has prioritized safety. Even if the governor’s 25% seating rule changes tomorrow, he said, “I’m not going to increase my dining room beyond 25%; my staff and I don’t feel that’s appropriate right now. There may be things we’re allowed to do but, in reality, we choose not to do.”

Gohr had a few advantages last year when it came to keeping people safe while generating business. One was a large parking lot next to Fitzwilly’s that he rented from its owner for tented outdoor dining. He could seat 70 there, while the city of Northampton’s decision to turn parking spaces on Main Street into dining space added about eight more tables to the restaurant’s existing sidewalk seating.

“We really had a great summer,” he told BusinessWest. “Through the summer, we had a capacity of 100-plus guests, the majority of them outdoors.”

Gohr’s other advantage is a large indoor space with a normal capacity of 280. The 25% mandate has hurt this winter, for sure, as did Baker’s 9:30 p.m. curfew, which was only recently lifted. But seating 70 — separated by plexiglass barriers — is better than seating a dozen.

“We’re very fortunate to have a lot of room in here, and we’re able to distance people. These places that have even 50 seats — and there’s a lot of places in town with just six tables — but even the ones with 50 seats, now you’re down to letting 12 people in. You can’t survive. So we’re fortunate given the size we have. Seventy people gets us by. We can survive on that if it doesn’t change.”

Casey Douglass is confident Galaxy will return

Casey Douglass is confident Galaxy will return to its go-to dining status in Easthampton once it’s safe to eat out again.

A mild winter, weather-wise, helps as well. “If you start getting snowstorms on weekends on top of all the other stuff, then we’d be in trouble. But we’ve had pretty good weekends.”

A PPP loan and other grants also helped, and he’s applied for a second PPP loan, with this round capping the disbursement for certain hard-hit industries, including restaurants, higher than the first, so he’s hopeful for another influx to carry him to the spring. He’s already in talks about renting the parking lot again, and the city has discussed moving outdoor seating into Main Street again as well.

 

Pressing Through

Still, Gohr, like every other restaurant owner, knows 2021 could be another year of upheaval. “We’re hoping everyone gets the vaccine and we get back to normal. But I don’t think it’s going to be real quick.”

He’s appreciative of customers eating in the restaurant, and said gift-card sales were strong over the holidays, although not to the level of a typical year, when more people are out shopping. And he does believe outdoor dining will be a hit again. But it’s harder to pin down when customers will flock to restaurants at pre-2020 levels.

“My gut tells me it’s not going to be in the spring; it’ll be late summer or fall before we get to that point,” he said. “The mindset that I see in the public is all over the place. I know people — friends and some of my regular customers — that have not been anywhere since March. And then there are others, the minute we opened the doors, they were back. Everybody’s obviously more careful, but everyone’s comfort level is completely different. It’s a wide spectrum.”

Douglass senses real community support for Galaxy, noting that some regulars stop by three times a week, and others drop big tips and cheerlead for the establishment among their peers.

“I feel like, at least in this community, [the pandemic] hasn’t hurt on a big scale economically,” he said. “We haven’t had factories shut down. I’ve heard people are paying their rents. And I think, come the spring, people are going to be pouring out. As much as people are still nervous, if the service staff has been vaccinated, if a majority of customers have been vaccinated, people will be coming out in droves. I think people are going to hunker down all February, and then in March, with the outdoor dining, people are going to be like, ‘sign me up.’”

If that’s especially optimistic, Douglass balances the thought by saying he’s had some dark days as well, wondering if it’s worth the effort to stay open right now, and fretting over the possibility of a snowy weekend that could wipe out almost an entire week’s worth of revenues. It’s his staff who have been most enthusiastic about staying open, believing it’s important to stay in the public eye, so that Galaxy is a go-to destination when people start emerging from winter hibernation.

Still, he said, “everyone wants to go back to what normal is, but if this goes on long enough, does normal shift?”

It’s a good question, and one Washut asks himself as well. “Every day, I’m thinking about my business, trying to find that crystal ball,” he said, meaning no one really knows how 2021 will go. But he’s hopeful.

“Once it gets warm again, once the outdoor dining opens up for food-service establishments, I think the initial rush of business will be great. Unfortunately, with restaurants, it’s really hard to be proactive; we’re constantly in a reactive mode.”

Specifically, it’s tough to staff up for a rush that might be around the corner, but restaurants also don’t want to be caught flat-footed if things pick up quickly. And things might not pick up much at all in 2021.

“This will be with us for a lot longer than we want to tell ourselves, and at some level, we have to come to terms with that,” he said. “I don’t think we’ll be hosting 60 to 80 people in our dining rooms this year; we won’t have that level of business for a while.”

Yes, the combination of warm weather — and outdoor dining — come spring, and the prospect of rising herd immunity from the vaccines, might inject some life into the industry, but next winter could be just as difficult as this one, depending on how the pandemic’s endgame goes — if an endgame even materializes in 2021.

Meanwhile, Washut appreciates any community support he gets. “If you only come in for gift cards, awesome. If you only get takeout, awesome. Maybe we’re not in a financial position to pass that goodwill on in an equal manner, but I’ll be damned if we won’t later on. If we all keep that attitude in every level of our life, we’ll get through this for sure.”

 

Joseph Bednar can be reached at [email protected]

Accounting and Tax Planning Special Coverage

Reading the Fine Print

By Julie Quink

 

The economic stress created by the COVID-19 pandemic compelled business owners and individuals to apply for the relief funds provided by the Small Business Administration (SBA) in the form of Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL).

The rollout of these programs came at a time when the reality of the pandemic began to unfold, creating a frenzy for businesses and individuals to apply for the funding, in some cases, before the funding ran out.

Before the ink on the guidance and requirements for these stimulus funds was dry, applications for the funding were being processed, and funds were in the hands of businesses and individuals. To expedite getting funds to those who needed them, much of the clarification about the use of the funds, taxability of the funds, and criteria for forgiveness were ironed out after the funding was in hand and being spent by the recipients. What ensued was months of additions to the SBA’s frequently-asked-questions (FAQ) document clarifying the eligible uses of the funding to ensure forgiveness and further attempts by Congress and the SBA to adjust program requirements as the pandemic continued.

More than 50 FAQs were issued to clarify the PPP requirements, and 20 relating to the EIDL loans.

In the frenzy to obtain the funding for the PPP and EIDL loans, it became clear that not everyone read the fine print, or that the fine print changed as clarity was provided for these programs. The fine print provided recipients with additional requirements for the funding they may have been unaware of at the time of application or even during the spend-down period.

As trained professionals, accountants and business advisors spent months learning the requirements and pivoting as they changed. It would be unreasonable to assume that those who received the funding could keep up with the fast-paced changes that were occurring, including the fine print. For accountants, there have been times we could barely keep up with the changes.

Julie Quink

Julie Quink

“With the second round of PPP funding recently released and requirements more recently clarified, reading the fine print should hopefully not be such a daunting or surprising task.”

The result is that those receiving the funding need to be aware of those items in the fine print for the PPP funding and the EIDL loans that may impact them.

 

EIDL

Recipients of the EIDL loans, which could be up to $2 million in amount, were required to sign loan paperwork, outlining the terms of the funding. In the fine print of these loan documents are provisions that the borrower should look out for and be aware of. Some of the provisions are:

• For loans under $25,000, collateral is not required. For loans of more than $25,000, the SBA is provided collateral through business assets, current and future. Transfers or sales of collateral, except inventory, require prior SBA approval. In addition, prior approval is required by the SBA in the event these business assets will be used to secure other financing;

• Borrowers are required to keep itemized receipts, paid invoices, contracts, and all related paperwork for three years from the date of disbursement;

• Borrowers are encouraged to the extent feasible to purchase only American-made equipment and products with the proceeds of this loan;

• Borrowers must keep all accounting records five years before the loan and three years after in a manner satisfactory to the SBA;

• Borrowers must agree to audits and inspection of assets, if requested by the SBA, at the expense of the borrower;

• Borrowers have a duty to provide hazard insurance on collateral and may be asked to provide proof;

• Within 90 days of the borrower’s year end, financial statements, in the format specified by the SBA, are required to be furnished by the borrower;

• The SBA may require a review-level financial statement for a borrower upon written request by the SBA at the borrower’s expense;

• Prior approval from the SBA is required for distributions of the borrower’s assets to the owners or employees, including loans, gifts, or bonuses;

• Borrowers must submit, within 180 days of receiving a loan, an SBA certificate or resolution. For most borrowers, the SBA has followed up or is following up on this requirement now;

• Default under the provisions may result if a borrower merges, consolidates, reorganizes, or changes ownership without prior SBA approval; and

• The loans can be prepaid, without penalty, if the borrower does not need the funds or secures other financing.

For most borrowers, the requirements may be routine considerations, but for others, these may be new requirements.

 

PPP

In the fine print of the PPP loan documents are also provisions that the borrower should consider, as follows:

• For borrowers who received a PPP loan greater than $2 million, the SBA has indicated it will likely audit those borrowers for compliance with spending requirements;

• Although Congress has confirmed that the proceeds of the PPP loan are not taxable and the expenses paid with PPP are deductible, some states, such as Massachusetts, are not following the federal laws relative to forgiveness of the PPP loans as they have their own rules. For individuals in Massachusetts, the loan forgiveness is taxable income. This affects sole proprietors, S-corp shareholders, and partners of partnerships. A bill, co-sponsored by state Sen. Eric Lesser, state Rep. Brian Ashe, and five other co-sponsors, has been proposed to allow for non-taxability of the forgiveness amounts in Massachusetts;

• Depending on when the PPP loan was funded, the borrower may have a repayment term of two or five years for the loan; and

• Although forgiveness may be granted, the borrower should retain the records used for forgiveness. Generally, most records should be retained for seven years.

 

Bottom Line

Navigating the fine print is key for those who received the PPP and EIDL loans. The navigation becomes increasingly more difficult when the requirements continue to change and the funds have already been received and used to operate the business.

With the second round of PPP funding recently released and requirements more recently clarified, reading the fine print should hopefully not be such a daunting or surprising task.

 

Julie Quink is managing partner with West Springfield-based Burkhart Pizzanelli; (413) 734-9040.