Yahoo Finance Supply chains and labor crunch are making things 'impossible' for music festivals
Shut down for two years due to COVID-19, festivals like Coachella and Stagecoach are finally making their comebacks — but the return of live events comes with a new set of hurdles as labor shortages, supply chain backlogs, and rising costs rock an industry that's in the midst of a recovery.
"We lost over half our staff to other industries," said Daniel Nickleski, the COO of Illinois-based festival, concert and event production company Sound Works Production.
The executive explained that pandemic-induced shutdowns were a big blow as the company, which was founded in 2007, consistently outperformed — even during economic downturns.
"We thought we were always going to be there ... we went through the recession in 2007, and we thrived through it, because people still wanted to go out and see a concert to get their minds off of what was going on," he said.
But when COVID hit, "it felt like the government pretty much said, 'No, you can't do your job.' We lost a lot of people from that."
As things began to bounce back in the summer of 2021 (before the Delta and Omicron variants disrupted operations), Nickleski explained that equipment was suddenly impossible to come by.
"Trucking was a big thing. A lot of us sold off trucks or got rid of the leases on trucks, because why would we pay not to use them?"
But when the company looked to repurchase, the inventory was not there — not even for rentals.
"The business went away. To this day, you still can't get a truck. The last I was quoted was two years," Nickleski said. "It's something we'd never dealt with before."
Trucking proved to be a lucrative business alternative throughout the pandemic with Amazon (AMZN) ramping up deliveries, but supply chain issues created severe bottlenecks.
Experts say that disruptions within the supply chain will not be resolved this year.
We lost over half our staff to other industries...Daniel Nickleski, Sound Works Production COO on pandemic impact
Today, Nickleski revealed that things are "coming back full force" and the goal is to "invest a lot" in the company again in order to get back to pre-pandemic levels.
Yet, Sound Works does not have the gear to keep up with demand since, coupled with supply chain headwinds, the chip shortage has made it incredibly difficult to build audio, video, and lighting equipment.
"The chip shortage is probably one of the biggest supply chain issues we're seeing. It also trickles down to the labor shortage that can't keep up with supply and demand right now, because everything just kind of opened up at once," Nickleski said.
He added, "It's making it impossible to plan a busy season right now."
In 2019, Sound Works was putting on about two dozen events a week. Now, Nickleski said, the company is lucky to accomplish five or six.
As the business attempts to lure back workers, the executive explained that "a lot of the problem is new people aren't trained."
Surge in costs
Other production companies are experiencing similar stress points.
"There is a shortage of experienced tour techs, experienced show techs — that's probably challenge number one," said Craig Mitchell, managing director at LMG Touring & Entertainment, which provides video, audio, lighting and LED services for tours, concerts, and festivals throughout the country.
LMG, which has produced arena tours for big-name performers from Lindsey Stirling to J. Cole, created several educational programs in order to train new workers.
Yet, Mitchell — who claims it's more important than ever to ensure that workers have a good experience — told Yahoo Finance that the process is "ongoing."
Impossible to plan a busy season right now...Daniel Nickleski, Sound Works Production COO on labor and supply chain challenges
Compensating for the lack of labor means that a job that used to be done by 100 people now must be done with only 20.
It also means that the cost of labor has surged significantly, bleeding into the overhead costs for clients.
"It's a very physical job with a very unique skill set, and the technical side of the business has only gotten more complex," Mitchell explained. He added that it takes a "unique personality" to fit the fast paced, on-the-go lifestyle that the sector demands.
Besides labor, the industry has also seen price increases for freight and trucking, exasperated by sky-high gas prices.
One independent, Iowa-based trucker, Michael Whitaker, told Yahoo Finance that it cost $600 or $700 to fill up his truck tank in the beginning of the year. Now, he's paying about $1,000 as diesel averages recently hit their highest level since 1994 in mid-March.
"The touring industry, specifically, is dramatically affected by freight costs — especially over the past couple of weeks with the increases in fuel prices," LMG's Mitchell noted.
Not only that, but "there's a shortage of tour buses. More importantly, there's a shortage of tour bus drivers, and tour truck operators. So even if the trucks are available, the drivers might not be. And that's a big part of our business," he continued.
Moving forward, the live-event space might forever be changed as the virtual world blends into reality.
"The trends we're seeing now is how to be more efficient, how to do more with less crew, how to have technology enable things that weren't possible before," Mitchell said.
"As the technology progresses, we'll see a mixture of both the virtual and the real life," he predicted.
For now, though, it is estimated that more than 125,000 concertgoers will attend each day of the sold-out Coachella festival, which is set to last over two weekends, April 15-17, and April 22-24, 2022.
Stagecoach, which will take place the following weekend (April 29-May 1), has a capacity of more than 75,000.
Neither event will require COVID-19 vaccinations, tests or masks, in accordance with local guidelines.
How's that for return to "normal"?
Alexandra is a Senior Entertainment and Food Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193
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