Businesses tire of seeing economy take one step forward, two steps back

Published 12:00 am Monday, June 27, 2011

By Emily Ford
SALISBURY — Some local business leaders say they’re still waiting for the economic recovery to arrive in Rowan County.
Despite government assurances the recovery started two years ago, Randy Hemann said as far as he’s concerned, the recession is still going on.
“It’s the worst I’ve seen in my 24 years of doing this,” said Hemann, executive director for Downtown Salisbury Inc.
With gas and food prices rising and the unemployment rate stubbornly stuck in double digits, business leaders say the local economy seems to take one step forward and two steps back.
“We just can’t seem to stay on track long,” said Mike Jones, owner of Granite Knitwear.
After losing about 20 employees in three years, Jones said his company had a decent Christmas retail season.
But it didn’t last long, as consumer confidence dipped yet again and the price of cotton skyrocketed.
“If we could ever get some stability and folks could stay in the right frame of mind for six or eight months, they will be more prone to go out and buy something and travel,” Jones said.
Jones and others point to the continuing home foreclosure crisis and nagging unemployment as reasons people aren’t parting with their hard-earned cash.
“At the end of the day, folks have to get comfortable spending money again,” said Steve Fisher, president of F&M Bank. “Consumer spending is the driving factor in our economy.”
A lack of consumer confidence, coupled with uncertainty about taxes, healthcare reform and other government regulations, are preventing many local firms from creating jobs and investing in new equipment or expansions, said Frank Goodnight, owner of Diversified Graphics.
The end of the Great Recession doesn’t feel like any recovery he’s ever experienced, Goodnight said.
Normally when a recession ends, small business represents half of all new jobs, he said. The state defines small business as 300 employees or less.
“Small businesses are the engines that create jobs,” Goodnight said. “And small businesses are not growing right now.”
To the curb
After several layoffs in the past three years, the workforce at PowerCurbers is down 60 percent to 60 people, President Dyke Messinger said. The company makes $200,000 curb and gutter machines at its Bendix Road plant.
Sales have fallen more than 50 percent.
Messinger, who serves on the board of directors for the National Association of Manufacturers, had the ear of President Obama for about 15 minutes June 8. But instead of job training, the focus of the president’s visit, Messinger talked to Obama about taxes and healthcare.
“There is so much uncertainty,” he said, which causes pessimism about the economy to linger.
For PowerCurbers — a company reliant on new subdivisions and strip malls that need curb and guttering — Messinger puts the earliest date for a turnaround at 2014. That’s when he estimates banks will have unloaded all their foreclosed homes.
“We’ve got two more years — ’12 and ’13 will be terrible,” Messinger said.
A recent survey by the National Federation of Independent Business says the Small Business Optimism Index fell for the third consecutive month.
While the drop was slight — .3 points to 90.9 — the index makes clear that optimism is moving in the wrong direction: a recession-level reading for an economy fighting its way through a recovery.
Goodnight has been a member of the group’s N.C. Leadership Council for the past 12 years and serves as one of the spokesmen for the 330,000 small business members.
He was interviewed by several national media outlets last week about gathering gloom about the economy.
“It’s disheartening,” he told the Post. “It’s not that long ago that there was optimism. But with all of the unknowns, it’s really hard to maintain.”
Declining to name them, Goodnight said several local businesses that had been doing fairly well have recently started experiencing a major downturn.
He said many owners face an agonizing decision each month — stay in business or cut their losses and close. With that kind of uncertainty, companies can’t create new jobs or expand, Goodnight said.
Lowering expectations
Pessimism about the economy isn’t confined to Rowan County. The federal government has lowered expectations for the recovery.
Federal Reserve Chairman Ben Bernanke last week said the economic recovery is slowing down and the outlook for next year is worse than expected.
Bernanke backed away from an earlier opinion that the recent slowdown was temporary and said he can’t explain why growth continues to come up short of expectations, two years into the recovery.
The Federal Reserve, which left interest rates at record lows, may have underestimated the severity of problems in the housing market and financial sector, compounded by consumers trying to pay down debt, Bernanke said.
“Some of these headwinds may be stronger or more persistent than we thought,” he said during a press conference.
Despite their pessimism, local business leaders acknowledge the economy in Rowan County has improved since 2009.
“We’ve had a horrendous two years,” said Goodnight, the printer. “But we’re starting to see little light.”
Downtown Salisbury has a few specialty businesses, like a new bakery, that are actually doing well, Hemann said. Others are holding their own compared to 2009, he said.
Some F&M clients have reached a point where they’re not as financially stressed, Fisher said. And the bank is foreclosing on fewer homes.
“We are seeing some signs of true stability, but not true recovery,” he said.
Although a few pockets of the economy are doing well, like some manufacturers and retailers, “those are brights spots among the majority, where the rest of us are just bumping along,” Fisher said.
Friday’s local unemployment figures were mixed.
The county’s unemployment rate creeped up .1 percent in May to 10.9 percent, but more people were actually employed, said Debbie Davis, manager for the Salisbury Employment Security Commission and Rowan County JobLink Career Center.
In May, 61,061 people were working in Rowan, compared to 60,599 the month before.
The discrepancy means more folks were looking for jobs in May than April, and they were counted in the overall labor force, Davis said.
“If more people are looking, that’s hopefully a sign that they are less discouraged,” she said.
Her office had 112 job listings last week, compared to 87 at this time last year.
“It was a drastic downturn that will take a while,” Davis said. “But it does appear that we are moving in the right direction.”
Up and down
Robert Van Geons, executive director for RowanWorks Economic Development, calls it the caterpillar effect.
As one sector of the economy improves, another suffers a setback. Just as consumer spending increases, people are hit with high gas prices.
“It has not allowed any real sense of general upward direction,” Van Geons said.
Still, some Rowan County firms are hiring and investing, he said.
TurnKey Technologies moved to Salisbury and poured $210,000 into the former PowerCurbers building. City and county officials last week approved economic incentives to lure 49 new jobs with Universal Forest Products.
A cold storage warehouse could bring 70 jobs to Granite Quarry. Rowan companies Boral, Henkel, Magna and Norandal all hired workers this year, Van Geons said.
Brokers report movement in both residential and commercial real estate, he said, and RowanWorks has seen more than 60 new projects — potential company relocations or expansions — since January 2010.
They’re all signs the local economy is starting to move up, however slowly, from the bottom of the recession, Van Geons said.
“Stabilization is first step to growth,” Fisher said. “We can see it from here, but we’re not there yet.”
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