An economic downturn triggered by the COVID-19 pandemic and the fall of crude oil prices have left small businesses vulnerable and many energy sector employees at risk for layoffs in the Katy area.
There are about 54,000 energy sector employees in the laborshed area, which expands about 30 minutes beyond Katy ISD boundaries, said Lance LaCour, CEO of the Katy Area Economic Development Council.
Economists said with oil prices below $30 a barrel, the U.S. oil industry is bracing for job losses that could end up in five-figure territory.
Several companies have already announced spending cuts for the year, and some are furloughing employees for at least the next two months, said Rick Ellis, vice president of the Katy Area Chamber of Commerce.
The oil and gas industry plummeted before the virus hit U.S. shores, which then additionally left small businesses vulnerable across the region, including many local restaurant owners in Katy.
“This is indeed a double-whammy for our region,” Ellis said. “Business is going to soften. Small businesses will suffer. Families will have to cut back on spending, patronize restaurants less [and] make do with what resources they have at home. It’s going to be a tough time of belt-tightening for a while.”
Nationally the unemployment rate has already hit 4.4%, drastically up from recent record lows, and local rates will very likely mirror that, Ellis said.
Much of the data available for unemployment rates since the coronavirus outbreak is for the Greater Houston area and at the county level, LaCour said. His team is seeking that information for the Katy area but has not yet received it.
“We are monitoring reports for the Gulf Coast region and the reports have not shown major employment layoffs for our area,” he added.
Businesses are filing claims to cover losses due to the virus, but many are finding most basic policies do not cover the effects of a global pandemic, Ellis said.
“Being an optimist and a cheerleader for local businesses, I anticipate that the Katy area will rally and rebound and that our residents will do everything they can to get our local economy back on solid ground,” Ellis added.
Businesses are abiding by the statewide stay-at-home mandate, and residents are mostly staying home, which is taking a toll on commercial businesses.
Patrick Jankowski, the senior vice president of research at the Greater Houston Partnership, said in a March 31 webinar with area business leaders that he believes the Greater Houston area will see more than 150,000 job losses through the end of the year due to the coronavirus and an energy industry downturn.
“Drive-thrus and food to-go services are somewhat surviving the downturn in sit-down restaurant foot traffic,” Ellis said. “Grocers and big-box retailers are doing pretty solid business from folks stocking up, but other small businesses are suffering, and if they can’t weather this storm for too much longer, some will unfortunately have to close their doors.”
The uncertainty the coronavirus is creating among residents is having the most significant effect on the economy, Ellis continued.
“As the infection rates rise, fear of contracting the virus may keep some would-be shoppers at home,” he said. “No one knows how long these challenging times are going to last.”
Business leaders in the Katy area are taking steps to keep small businesses afloat.
Don McCoy, president of the Fulshear-Katy Area Chamber of Commerce said they are equipping businesses with marketing tools to help innovate and continue making transactions.
“If we stay focused and help each other we can overcome anything,” McCoy said. “We have been here before and Texans found new ways to survive and be fruitful. I believe we will come out of this stronger than ever.”
The Katy Area Economic Development Council is trying to help business owners connect and find available resources using online resources, LaCour said.
He added that the Katy EDC is working with over 25 projects and actively responding to development projects and opportunities in the community.
“We are all in this together and we must continue to work together to get through this unprecedented time,” he said. “We strongly encourage people to continue to follow social distancing guidelines. The better the guidelines are followed, the sooner we will be able to return to a sense of normalcy.”