Local firms are ready for an improved economy
The recession might be over, but you won’t find many local executives singing “Happy Days Are Here Again.”
In fact, executives at some of the Buffalo Niagara region’s biggest companies still are downright skeptical that the recovery is upon us. They’re more apt to talk about their hopes that their businesses are starting to stabilize after a year of steep declines.
And they’re being very cautious in their outlook for next year. “I will not be surprised if it takes a couple of years to get out of this recession,” says Robert T. Brady, the chairman and chief executive officer of Moog Inc., an Elma-based motion control equipment manufacturer.
“I don’t think the folks who make decisions to buy capital equipment are going to make significant investments until they see signs that the consumer has come back to life,” he said. “And I don’t see that happening until the employment picture brightens,” which most economists don’t expect to happen until we’re well into next year.
We’re fighting a vicious circle. Consumers are worried about losing their jobs, grappling with pay cuts or shortened work weeks and trying to work off the debt they accumulated before the boom went bust. They’re not spending like they used to, and when they do spend, they’re hunting for bargains.
That’s hurt business, so companies have streamlined, cutting jobs and costs relentlessly as their markets have declined. That’s put local companies, like Gibraltar Industries and Columbus McKinnon, in a position where they expect to make more money than ever once the economy rebounds because they’re so much more efficient than they used to be.
Yet no one is sure when that will be. “With visibility hazy at best, I’d hesitate to claim that things have bottomed out,” says Kenneth Myszka, the president of Sovran Self Storage, the Williamsville company that runs 283 Uncle Bob’s self-storage facilities in the eastern United States.
“Up until a few weeks ago, I think there was more of a positive sentiment than exists today,” says Brian J. Lipke, Gibraltar’s chairman and chief executive officer. “It hasn’t gone negative, but it’s not quite as positive as it was.”
“What will customers do during the month of December? Will the automotive companies shut down [temporarily in December]? . . . Will the major retailers have a good season, or not?” he says. “There’s just a lot of uncertainty in every year, and it’s probably greater this year than in past years.”
To keep its self-storage units filled, Sovran has been giving customers at its Uncle Bob’s facilities their first month rent-free, and lets them name their own price in the second month. Even so, occupancy rates have been dropping. “The leasing environment is as competitive as we’ve seen and we are, of course, buying occupancy,” says David Rogers, Sovran’s chief financial officer.
Credit still is tight, too. Taylor Devices, the North Tonawanda shock absorber manufacturer that depends heavily on making equipment that can protect buildings and bridges from damage during earthquakes, has been hit hard by the squeeze, the credit crunch and the recession have put on the commercial construction market.
“In my opinion, the United States is doing worse than our trading partners,” especially in the Far East, says Douglas
P. Taylor, the company’s president. He had hoped the federal stimulus program would spur a flurry of bridge construction and repairs, some of which might include the seismic protection equipment that Taylor Devices makes.
So far, Taylor says he’s disappointed. “We keep hearing about stimulus funds. I’m still waiting to see them,” he says.
So companies and consumers keep hunkering down as unemployment hits a 26-year high of 10.2 percent. Maybe things have stopped getting worse. But when will they start getting better?
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