Jan Chamber Forum recap: lessons and likelihoods for 2021

January's Chamber Forum featured leaders from some of Oklahoma City’s most important industry sectors, their insights on a challenging 2020 and what may be in store as we move forward in 2021. Panelists included Dave Hager, executive chairman at Devon Energy Corporation; Dr. Jason Sanders, senior vice president and provost of The University of Oklahoma Health Sciences Center; Bob Funk, Jr., vice president of sales and corporate development at Express Employment Professionals; and Greg Smith, director and Oklahoma City site leader of Northrop Grumman. The event was held virtually on Jan. 20.

Hager gave a short summary of the energy industry’s history and the changing nature of demand and how it relates to a typical firm’s activities. In the past, where firms would typically attempt to maximize production, in the current environment, growth in demand has slowed such that it is easy for firms to collectively produce so much, they effectively price themselves out of profitability. While growth in production brings benefits such as American energy independence, it also serves to hold down prices without commensurate growth in demand. The pandemic then served to exacerbate existing demand issues and create a “demand crisis.” Presently, however, things are looking better. “I would summarize it all by saying we're guardedly optimistic,” Hager said, noting that firms are doing a better job of showing discipline and not growing production.  And while it will require still more time and discipline for the industry to get in a better financial place, Hager expressed confidence in the sector going forward.  “I feel, overall, much better [about the fact that] companies are where they can do OK. But it's still going to take a lot of discipline and waiting for this demand to really recover post pandemic.”

Dr. Sanders began by thanking the Chamber and the business community for its support of our local healthcare workers. “They’re exhausted, they’re stressed, they’re grieving… They've really gone through emotional trauma.” However, the advent of vaccines has added hope to the situation, and our healthcare workers are soldiering on. “Individuals choose to go on healthcare because of altruism, because of dedication, and professional commitment. COVID has been a stress on healthcare workers, as [it has for] everyone else in our metro area. And they're really glad to have the hope of vaccines, and again, the appreciation and support of business leaders.”

When it comes to strengths and weaknesses of the healthcare industry in Oklahoma, Sanders remarked on how COVID was a sort of “stress test” on the sector and on our economy, and that the pandemic has revealed a significant return on investment when it comes to prevention and “the power of research, big data, and different approaches.”

Sanders also noted that, more broadly, he thought COVID has shown the need to be able to stimulate economic demand when situations call for it. “Whether it's a pandemic, other healthcare issues, or other major external forces, we can't lose sight of the power of economic demand, and what gives people confidence -- either going in person or going online -- what gives confidence in spending earned income. And so I'm really hopeful going forward. Oklahoma City has so many things to [enable us to] have that confidence” in the metro’s ability to stimulate spending and keep the economy moving.

Greg Smith spoke next about the metro’s aerospace industry and COVID’s effects. He noted that even though there were obvious challenges, especially with regard to labor availability and manufacturing due to the pandemic, the government had prioritized national defense and that resulted in less effect on the local defense-related aerospace industry than in some other areas of the state. Companies have also been able to adapt and find ways to minimize impacts of outbreaks on their employees and their business at large, but that smaller firms have perhaps not been able to handle the ups and downs of the current environment quite as well. “Smaller suppliers in particular have had some significant challenges throughout the pandemic. Sometimes that's because of small workforce and the requirement to work closely-- a small manufacturing operation, possibly -- that creates risk, and it makes it difficult for them to do their work,” he noted. This can be exacerbated by the challenges presented by the necessity of collaboration alongside security clearances and more conventional remote work options that may not be secure enough. “But we're getting it done and we haven't had significant impacts because of it,” he said.

Smith also noted that the pandemic’s effects have been somewhat muted because of new programs and companies that are in an early phase requiring employment expansion, like Kratos, Skydweller and the Air Force’s B-52 modification and modernization program. “There are some real positives because of new programs that are still in growth,” he said. “I see this year as one where we'll have growth, and hopefully we'll breathe a sigh of relief as we get vaccines out into our workforce, and we're able to come and go more freely. That's going to definitely make the whole work environment much easier for not just aerospace, but for everyone else.”

Bob Funk Jr. spoke about the pandemic’s overall effects on employment and the sectors that have been hardest hit, noting that though some industries were deemed “essential” and remained in relative good health like manufacturing and distribution, layoffs and furloughs across multiple industry categories were common at the beginning of 2020, with hospitality, the “gig industry” and day-to-day labor industries being hit the hardest.

“There were definitely hiring freezes across the board and across all categories,” he said, noting that six months of slow recovery were followed by an increase in supply of workers as unemployment benefits and stimulus payments began to cease. “Once that occurred, it really opened up our associate market for employees and gave us a wide breadth of skills that we were able to begin to reemploy in Q3 and Q4 across all major into industry sectors at that point.” Though the hospitality and gig industries are still suffering, “we've seen pretty dramatic increases in Q3 and Q4 across manufacturing, distribution, cleaning companies, things of that nature that are specifically related to the pandemic.” He noted that he expects recovery in the manufacturing and construction industries to carry forward into the first two quarters of 2021.

Smith was then asked about OKC’s appeal to non-defense-related aerospace companies and what Oklahoma City can do to accelerate its growth in this area. “I agree that this is a natural place for aerospace growth,” he said, noting not only OKC’s pro-business, pro-growth environment, but also the aerospace engineering tax credit and cybersecurity tax credit programs they use to help recruit, the quality of the local workforce, and the success of the quality-of-life investments Oklahoma City has made over the years. “I think you're doing the right thing and we're on a trajectory to make more people from the nation want to come here [and] be part of Oklahoma [and] what's happening.”

Dr. Sanders was then asked a similar question about the healthcare industry’s growth in OKC and what Oklahoma City can do to foster more expansion. He remarked on the well-developed nature of the industry here across multiple functionalities and the ability for OKC to be competitive nationally because of the ability for horizontal integration across sub-sectors and offerings, and the ability for providers to address ever more specific problems and needs while also maintaining an ability to provide a comprehensive, more holistic level of care across systems. He also said that people and the ability to recruit them, both on the provider side and the patient side, was imperative to positive growth and momentum.

“Oklahoma city's growth and economic development just helps us very practically when we recruit and retain… Certainly with the convention center, all the excitement of [new] developments, that is going to help us be a destination location regionally for patients who want to seek care in our sort of excellence. Patients certainly travel. And we've seen that nationally -- all the growth of our city does help us communicate to patients to come here.”

Sanders also noted two aspects that could impact growth in the future, policies dealing with Medicaid and the uninsured, as well as businesses in other sectors partnering directly with healthcare entities and providers to improve outcomes, provide more preventative care and positively impact healthcare costs.

“We are really interested in doing this preventative intervention and then just working with the health system directly to help you achieve that lower the cost for your employees -- direct health care,” he said.

Funk talked about how new technologies may impact hiring practices going forward. He said that it was likely that some introductory phases of recruiting, prospecting and interviewing may be done using videoconference technology in some industries, but that later phases and other industries would likely rely on in-person methods. “I think you'll see a lot more adept use of those different platforms, as we're on today… especially in those introductory phases in and around the professional [environment]. Probably not so much in our light industrial component, but more so probably in the office services and the professional area,” he said.

Hager was also asked about what the recently announced merger of WPX Energy and Devon means for OKC. “It means we have a very strong, viable company for the state of Oklahoma that’s going to be headquartered right here in Oklahoma City,” Hager said.