The brewing recovery in Western North Carolina

0:01NPR.

0:11Robert, you will never guess where I was last week. I heard. You were inside the Chicago Federal Reserve Bank. I imagine there are piles of money everywhere. Not that they let me infiltrate, but I was there to moderate a panel, and they didn't want me recording any Fed business, though I was able to sneak a little voice memo of the catering spread. Ooh. For breakfast, they had a yogurt bar, and they had a lovely fruit spread, Raspberries, blueberries, not just the honeydew and the cantaloupe. They had very nice feature fruit, not just the filler fruit. And apparently a great soundtrack, too. It is good to be the organization that creates money.

0:56Yes, and I was invited because we here at The Indicator are the biggest fans of one of the obscure documents the Federal Reserve puts out. The Beige Book. We are obsessed with the Beige Book. And every time it comes out, we do a little award show to celebrate. I warn them, though, raspberries cannot bribe us. We are as impartial as ever. Let the chocolate chips fall where they may on the metaphorical yogurt bar breakfast buffet.

1:28It's the Beige Awards, our eight times a year salute to the art and science of telling stories about the economy. I'm Robert Smith. And I'm Waylon Wong. The last Beige Book of 2024 is like Spotify wrapped, but for the economy. There's a little bit of everything inside. Labor markets, inflation, and even natural disasters. We'll let you know who wears the crown going into 2025 after the break.

1:57This message comes from NPR sponsor Zendesk. Introducing the next generation of AI agents built to deliver resolutions for everyone. With an easy setup that can be completed in minutes, not months, Zendesk AI agents resolve 30 % of interactions instantly, quickly giving your customers what they need. Loved by over 10 ,000 companies, Zendesk AI makes service teams more efficient, businesses run better, and your customers happier. That's the Zendesk AI effect. Find out more at Zendesk.com. We always like to remind you how this award show works. There are 12 regional banks in the Federal Reserve System.

2:34each one carefully studies their local economy and brings back these little stories of what they see, publishes them in a document known as the Beige Book. We read it and give awards to the best stories. And before we get to the biggie, we like to recognize the runner-up. This time, it's the Minneapolis Fed. Always a strong contender. Here's the anecdote that got us thinking. Quote, many rural businesses struggled for labor. The owner of a Montana grocery store reported traveling out of state to hire immigrant workers with the promise of providing housing. It's really interesting. We saw some of this a couple of years ago when companies were desperate for workers.

3:11Yeah, and it reminds us to pay attention to the rural job market. I would expect that rural areas will be the first to see any impacts if there's a real crackdown on immigration under Trump. This Montana story may be a sign of the kind of bidding war companies can get into for workers. Congrats to our runner-up and now our first place winner. And this is a special award for reporting on economic conditions under difficult circumstances. The Beigie goes to the Richmond Fed. Coming to the stage is Hunter Jones from the Richmond Fed. We talked to him last Friday. Hunter, congratulations. Thank you so much.

3:52I really appreciate it. We've decided to give the Beigie to the Richmond Fed and to you, Hunter, because your entry in the Beige Book told a lot of stories about the impact of Hurricane Helene, which hit in late September. We all saw the terrible images of the flooding. Buildings swept away, roads crumbling, gone in some cases. At least 232 people died in six states, most of those deaths in North and South Carolina. Three months later, the news crews have moved on, but businesses are still trying to reopen. Here's one of the quotes from the Beige Book. Quote, a food manufacturer lost five production days, infrastructure and livestock due to the hurricane, an estimated six to nine months to become fully operational.

4:37Hunter, I imagine that for some businesses in Western North Carolina, they might be thinking hard about if they even want to reopen, if it's going to take six to nine months to become operational. It's still a little unclear. Some of probably the smaller businesses are really trying to decide side on do we want to reopen? Is it going to be a challenge to reopen? I've heard both sides. I mean, some, it's actually kind of added a little bit of a boom in business. Right. Like for construction firms who are doing a lot of the rebuilding. And in your Beige Book entry, it says that some hotels were seeing increased business because of the influx of repair workers.

5:14Yeah, but I guess the hard part is after all those dramatic photos of the damage, getting tourists who are sort of the lifeblood of Western North Carolina to start thinking about going back to places like Asheville again. The local organizations there have done a really good job using social media and those resources to promote that, hey, they're open for business. We may not have the hotels that you normally stay in, but if you can come visit for a day and shop in our stores, it's greatly appreciated. We wanted to hear directly from someone rebuilding a business and the questions they're facing now.

5:49So we reached out to Brent Manning. He's the co-founder of Riverbend Malt House, located in Asheville. And Brent had to walk me through what a malt house does. It is a production facility that takes in barley grain and allows it to germinate into malt, which is the building block to make beer. So we opened back in 2010 and have grown steadily from a tiny little one-ton operation to now we're producing close to 5 million pounds a year. Can I go get beer at your place? No, we're a manufacturing facility. We don't have hamburgers and draft beer. It'd be nice, but we just make malt. Helene hit Asheville and Brent's factory in the middle of the night.

6:33Just getting out of his neighborhood was difficult, so it was days before he got to see his factory. The good news is that it was intact, but without power, all his product was spoiled. And so we had 100 ,000 pounds of dying grain on our hands in the wake of Helene. 100 ,000 pounds? Yeah, it was pretty nasty. Brent kept paying his staff. Eventually, they cleaned out all the tanks and dumped the bad grain. And they are making malt again, but... We estimate that our business interruption expenses were around$150 ,000. Oh, ouch. And from a longer-term perspective, are your sales still down? They are.

7:15Yeah. I mean, in some cases, I mean, we have customers that their buildings were literally wiped off the map. I mean, like they went to visit their brewery and it was a gravel patch of dirt. And in one case, one of our customers found their cooler box a mile and a half down the river wrapped around the McDonald's and built more village. It had 150 kegs of delicious beer in it, but he had nowhere to sell it because he had no brewery. The owner of that brewery, like Brent himself, is waiting to see what insurance payouts they might get. There are also federal funds coming to help rebuild. But in some of these destroyed sites, they may not be allowed to put up structures again.

7:57Things are still very uncertain in the region. And there are, of course, more challenges for Western North Carolina beyond the beer industry. But you can see how the whole supply chain gets hit in a case like this. Fear of tourists drinking less beer plus destroyed breweries means that less malt is needed from Brent, and this eventually hits barley farmers far from the devastation. The man who alerted us to all this, Hunter Jones from the Richmond Fed, told us he grew up in the region hit by the hurricane. I asked him if he was going to, you know, head back down there to support them with a few tourist dollars.

8:28I was actually there last week for Thanksgiving, so I did a little bit more, say, off the beaten path, traveling around the area, looking at, again, the damages, and as, again, roads come back online, being able to go see other parts that have kind of been disconnected. So you did your part. Yep. Hunter Jones from the Richmond Fed, thank you so much for talking with us, and congratulations again. Thank you, Robert. This episode was produced by Julia Ritchie with engineering by Jimmy Keeley. It was fact-checked by Sierra Juarez. Kicking Cannon edits the show. The Indicator is a production of NPR.

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