June 12, 2020

The Impact Survey is a weekly assessment of pro AV industry trends, attitudes and perceptions in light of the novel coronavirus and COVID-19 pandemic.

Top Takeaways

  • Short-term blows to pro AV, while still landing, are no more prevalent than before.
  • Companies still continue preparing to weather declines in revenue.
  • Layoffs, as opposed to furloughs, appear to be ticking up.

There are growing signs the pro AV industry is in for a protracted recovery from the COVID-19 pandemic and the economic challenges it has presented. Revenue continues to be under increasing pressure, and it appears layoffs, as opposed to furloughs, are on the rise.

This is happening at the same time economies around the globe begin to open and the work situation thaws. In many parts of the world, when governments initially imposed restrictions, many AV providers were still able to work on projects already in progress, based on their status as essential telecommunications or construction contractors. But until recently, large swaths of society were still shuttered, meaning it was a matter of time before the wider economic slowdown might catch up to the industry.

“I'd be lying if I said we hadn't taken a little bit of a hit from a revenue recognition standpoint and getting jobs done,” said the head of one AV integrator. “Anytime you see a good chunk of the country shut down, I think you're going to get it.”

Said another, “I am expecting a slowdown because design projects are going on hold. Design usually takes six to nine months. It's been three months of this already, so I'm expecting in three to six months, bid work is going to slow down because architecture is being told to wait.”

The Volume of Negative Impact Takes a Pause

On the bright side, the immediate, week-to-week negative effects from COVID-19 may be easing. In this week’s Impact Survey, fielded June 2-3, 62% of AV providers cited negative impacts over the prior week — still a sizable figure, but down from 66% the week before and a high of 88% in early April.

Roughly 57% of AV end user respondents perceived negative impacts the past week, a percentage that has held fairly steady over several surveys, but is also down from a peak of 83% when AVIXA Market Intelligence first began asking AV Intelligence Panel members about the effects of COVID-19 on their business.

Companies still perceive challenges looming ahead. According to one AV provider respondent, “I think it's very hard to tell which way things will go in the future, whether the future means tomorrow, next year, or five years from now. A lot of the decisions we've made about which way to steer our business in the past have been guided largely by what we hear from current and potential clients. I've heard very, very little from clients in the last two months or so.”

Some are eyeing a distant horizon. “We’re seeing more clients coming back,” said an AV provider, “but lots of planning with clients is for August and after.”

Asked to predict when the bulk of AV project would recommence, the most common answer among AV providers — with 19% — was “Not until next year some time.” But still, 56% said anywhere from July to October.

Among end users surveyed, 25% are thinking the bulk of AV project work will begin in July, possibly reflecting the current re-opening of many organizations and facilities. Another 32% said August-September.

There are, of course, projects underway now and there always have been. “We've been doing a lot of live streaming in churches. We've been doing some videoconferencing,” said an AV provider. “We're currently working with some private schools in the area that are looking toward the fall … And things that were already in motion are moving forward.”

Trends in Revenue, Staffing

The share of all AV providers indicating they’ve experienced revenue declines the past seven days reached 46% this week, the highest that figure has been. Providers saw an average decline of 17% over the past two weeks, with the most commonly cited estimates in the 6% to 30% range.

“We have to hold deliveries until customers are back up and running,” said an AV provider. “Hence, can't bill them.”

Another sign the industry may be in for a difficult slog is workforce trends. The United States Congress just passed legislation that would give small businesses more time and flexibility to spend funds from the Payroll Protection Program. For some, the PPP has helped keep staff working during the pandemic, but a recent study by the National Federation of Independent Business released right before the legislation passed, indicated about 30 percent of small businesses had to fulfill their PPP obligations by June 14.

At the same time, nearly 2 million more American workers filed for unemployment benefits, bringing the total to more than 42 million over the past 11 weeks. It’s hard to imagine such unemployment trends leaving any industry unscathed. So far, according to past Impact Surveys, AV providers have indicated their companies were largely turning to furloughs, rather than permanent layoffs, in order to right-size their workforces to ride out the pandemic. That may be changing.

When we asked AV provider respondents what share of their staff reductions were permanent layoffs as opposed to furloughs, our analysis indicated the average was 22%, up from 18% last week and 14% the week before.

Overall, throughout the pandemic, just over one-third of AV provider respondents consistently reported their companies have laid off/furloughed staff at some point during the ordeal. For the past seven days, 13% said their companies laid off/furloughed staff, a short-term measure that bottomed out at 9% on May 20.

Said one AV provider, “The negative impact is huge, as we have laid off good staff with families who depended on them. That was a difficult one for us.”

According to another, “We are sadly about to announce another round of temporary layoffs, as our initial projections have proven to be overly optimistic on the return of revenue-generating projects.”

But a third hasn’t taken that step yet — and is hopeful the company won’t have to: “We understand what our breakeven point is. And if we lay somebody off and then things come back around, they might get snatched up by somebody else. So, we don't have a desire to reduce our staff, but at the same time, if the work isn't there, we can't keep people. We've communicated to our team that we'll have to make the right decisions for the company but haven't had to so far.”

Getting Back to Work

The bulk of AV providers and end user customers continues to report they’re operating at a reduced capacity (65% and 78%, respectively). The share of AV providers at full capacity is 24%, up from 22% last week. One AV provider reported “getting close to projects coming back online.”

Looking at the positives, 42% of AV end users said they’d seen a resumption of projects over the past seven days, a sizable jump from 35% last week and only 30% the week before. As societies open, preparing to get back to work is an important first step.

“We are looking at our venue to see how social distancing can be achieved,” said an AV end user. “It’s fluid at the moment.”

Said another, “We’re revised our COVID-19 policy including sanitation processes, temperature testing for visitors, using Perspex screens, digital signage, and one-way routes.”

Among AV providers, 40% reported a resumption of projects over the prior week, 45% fielded more inquires, and 15% said in-person meetings had resumed — up from 11%. And despite trending data indicating layoffs and furloughs, 16% of AV providers said their companies had done some hiring the past seven days.

“We’re looking for employees,” said the head of one AV integrator. “I have a feeling that the talent pool has definitely opened up for us in our industry. I can't wait until we get to the point where we hire people.”

The next survey results will be released on June 12.

If you would like to participate in the AVIXA AV Industry COVID-19 Impact Survey or other AV Intelligence Panel studies, please join the AVIXA Insight Community at avip.avixa.org.

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