Adam Sichko of The Business Review (Albany) reports that Timothy McCann has six business plans ready to go to expand his dry cleaning company, and there’s one factor dictating when he will carry them out.
“The recession’s length in New York impacts where and when we decide to start new things,” said McCann, co-owner of Loudonville-based Best Cleaners.
For McCann and many others, their businesses hinge on a key question: When will New York’s recession end?
The state now projects it will drag on until the second half of 2010—an eye-opening timeline prompting business owners to wonder just how much more they can squeeze their bottom lines to fight the economic slide.
Statewide, private-sector jobs are disappearing, and wages are dropping at record rates. Unemployment is projected to continually rise through the first few months of next year. State legislators must erase a new, $2.1 billion deficit, a task that could lead to higher taxes and cuts in state spending.
In the past three recessions, New York’s economy has not started to rebound until 20 months after a national downturn ended, on average.
“We still have to work through the financial shock … and household confidence is still very, very weak,” said Christy Caridi, an economist at Marist College in Poughkeepsie.
“Until all that settles and people are confident that they’ll keep their jobs, you won’t see the consumption necessary to keep the economy going, especially New York’s,” Caridi said. “It will take a lot of time to rebuild that kind of confidence.”
McCann’s customers are wearing their clothes longer and turning in fewer items to be dry cleaned.
Revenue is expected to grow 1.5 percent, after three years of growth in the 30 percent to 40 percent range. McCann is spending more on gasoline because he expanded his home delivery service to secure the gain in revenue.
McCann said he wouldn’t be surprised if the state recession lasted beyond the state’s projections.
“For us to be flat, I’m pretty ecstatic,” McCann said.
“Also, employment is an enormous factor—there are just fewer people out there wearing those dress clothes,” McCann added. “And when the economy rebounds, I don’t expect people to return to their old habits.”
McCann has 35 employees, including two new managers who start on Aug. 10. McCann is opening a new division within the company that will clean and repair clothing, drapes and other items damaged by fires.
Like McCann, Jon Phillips is finding ways to combat the ongoing decline in consumer spending.
Phillips hasn’t cut a single hour for any of his 50 employees at his Phillips Hardware stores. The company budget is already as lean as possible, he said.
“The scary part I see is that locally, there’s a lot of pullback,” Phillips said. “My feeling is, how much longer can I hold the line?”
Phillips remains aggressive to lure customers away from the “big box” retailers such as Home Depot and Lowe’s. For instance, he has started a rewards program for frequent shoppers.
Read more at: The Business Review