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Each week, WFAE's "Morning Edition" hosts get a rundown of the biggest business and development stories from The Charlotte Ledger Business Newsletter.

BizWorthy: Coronavirus Has Some Charlotte-Area Businesses Worried

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Centers For Disease Control and Prevention
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CDC.gov

Coronavirus not only has people around the world worried, but also businesses – including some here in the Charlotte area. Companies like and Lowe’s and Honeywell get some of their products and materials from China, where the virus has led to the deaths of about 2,000 people and caused major disruptions. 

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For more on this and other business news we’re joined now by Tony Mecia of the Charlotte Ledger Business Newsletter for our segment Biz Worthy.

Marshall Terry: Tony, you reached out to Lowe's and Honeywell, also to BMW, which has a plant near Greenville, South Carolina. What effects are they seeing from coronavirus?

Tony Mecia: Well, Marshall, they're saying that it's still a little bit early to tell. They say they're monitoring the situation over there. The problem really has to do with the factories in China. A lot of them haven't been able to reopen. And the ones that are reopening, they're not fully staffed because there are a lot of migrant workers that are quarantined or there are travel restrictions.

And you might say, "Well, that's all stuff that's going on in China. You know, how does that really affect me? Why? Why does it matter here?" And the truth of the matter is that a lot of businesses in the Carolinas are intertwined with China, that they that they get supplies from China for their factories. It's been obviously a big place to source all kinds of materials. I did talk to the head of the Carolinas Chinese Chamber of Commerce, that works with companies in the Carolinas, you know, encouraging trade with China. He said the people he talks to are pretty worried.

They're getting a little bit nervous about some of the effects on their businesses. I mean, you think of a whole wide range of things from, you know, that come from China, construction materials, tool parts, consumer goods, you know, compounds used for pharmaceuticals. I mean, there's all sorts of things that we don't really think of in our daily life, but that, you know, that wind up being in products that we want to buy. So, I think we're going to see some effects they say, you know, maybe in the next few weeks.

Terry: And what sorts of effects could this have on consumers?

Mecia: Well, I think some of the people I talked with, Marshall, said that you might start seeing some empty store shelves. There are a number of consumer products that come primarily from China. I talked to an economist at UNC Charlotte who said, you know, things like toaster ovens and coffeemakers, things like that, a lot of those are made in China. And then, you know, again, some of these industrial products really can sort of ripple through the economy here, drive up prices potentially of construction and other goods that consumers buy.

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Credit Dashiell Coleman / WFAE
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WFAE
University Place at J.M. Keynes Drive in Charlotte.

Terry: Speaking of construction, there are some big plans for Charlotte's university area. You report that developers have announced 4 million square feet of office space projects, which would nearly double the existing amount of office space in that part of town. On this segment, we often talk about booming parts of town, but the university area has not been one of them. So, what's driving this?

Mecia: Yeah, really a number of things. You're right. I mean, I think a lot of the focus and development in Charlotte centered on uptown, South End, you know, other parts of town. The university area, you don't really hear about it a whole lot, but in the last year, there have been a number of developments announced that include an office component.

A lot of that is being driven by the light rail line that was extended a couple years ago up toward the university. The land is also less expensive up in the university area, and so companies are sort of gravitating toward that. Land has gotten very expansive in some of these, you know, hotter areas of town.

So, I think companies gravitate towards, you know, where it's less expensive. And, you know, there are a lot of people who live in the university area. So, it kind of makes sense.

Terry: SDholdings, a Mathews company that operates several Sonic drive-ins and MOD Pizzas, has filed for bankruptcy. Now this is surprising because the company actually appear to be growing, and we've seen a similar situation with Earth Fare, the Asheville-based grocery chain that also recently announced that it's filed for bankruptcy. So, is this a trend among companies that appear to be growing?

Mecia: Well, yeah. I mean, you know, traditionally, Marshall, we think of bankruptcy as you know, "Oh, these companies that have been failing over a long period of time and their revenues are declining and they sort of finally succumb and file for bankruptcy protection." And that certainly happens.

But the other thing you sometimes see is these examples that you mentioned, Earth Fare, SDholdings franchisee, you know, that owns some restaurants, where they grow and they take on a lot of debt, and then if something happens to their business, they don't quite hit their numbers, all of a sudden they have all these debt payments and they can't make them. And so, you know, sometimes growing fast and taking on a lot of debt can be just as dangerous as is going the opposite direction.

So, I think you will see you will see more that. I mean, you've seen just this week additional bankruptcies. Pier 1 filed for bankruptcy earlier this week, closing a store in Gastonia. So, I mean, I think you're gonna continue to see bankruptcies throughout this year. Some are particular to those industries. Retail's having a hard time. There are some other industries that are falling on hard times. But I think it's something definitely to keep an eye on.