A Look Back – 2020

Every quarter the MTM Board of Directors meet. No surprise the MTM management team prepare a variety of reports for Board review. The 11 MTM Board members are just like you, shop owners, CFOs, plant managers, safety managers, H.R and the like. For the upcoming meeting, I thought the Board would be interested in a big picture of what we learned from the completed payroll/premium audits for 2020 policies. Those audits often take 3-6 months before all is finalized.

Back in January/February of 2020 there was some chatter about a contagious disease, but nothing much changed until mid-March. Then most everything was locked down. MTM had just begun delivering member dividend checks and we found we had to slip the check under the door if someone was at the shop at all. With a rapid decrease in shop payroll, we offered to make premium payment adjustments, knowing that some shops were closed or operating at very reduced staff. To our surprise, we had fewer shops requesting that assistance than we expected. That gave us the feeling that more shops were operating as essential than we first thought.

The real picture would be clear in 2021 as audits were done to get the actual 2020 payrolls. And then in the second quarter we started compiling information to give us a big picture of what happened. While each of you knows your particular shop numbers, I thought you might be interested in the aggregate from all the shops that I will be reporting at the August Board meeting. In the first quarter of 2020 and say it was, for the most part, a normal quarter in that it was only in the second half of March 2020 COVID hit and the impact on March numbers was rather small. We could say the first quarter of 2020 was at 100%. Then I looked at the second quarter aggregate and see that payroll for all shops combined had dropped by nearly 50%. It’s a bigger number than I anticipated at that time based on the small number of premium payment adjustments we saw. Then to the third quarter of 2020, I find that payroll had increased by about 50% to near 75%. Finally, 4th quarter payroll was up to 90% of the first quarter. So there was continued improvement in payroll activity but not back to the full 100% from the first quarter.

This information will be helpful to the Board, and I hope it’s helpful to you to have a view of what we’ve seen from all of our shop members. I tried to take an early look at the first quarter of 2021, but most of the audits for that time period are not yet completed. However, in the small sample that is complete, it looks like payroll is higher than the fourth quarter of 2020.

The summary of all this is that COVID hit us all harder than we anticipated. It also shows the resilience and flexibility of our shops. After the 2nd quarter collapse, shops had very strong recoveries in the 3rd and 4th quarters. That is pretty amazing.

Normally at this time of year, I give you an early look at the six-month results. Given the fluctuation in activity and claim submission, the predictions are widely dispersed. We continue to study on this item so that by the October annual members’ meeting we’ll be able to give you an early look at how 2021 has shaped up and the impact on member dividends to be paid in March of 2022.

In the meantime, best wishes for a good summer. And while we have had some hot and humid days, we’ve also had some wonderful Michigan summer days.

Until next month, John.