Sunday, November 10, 2002

Top private firms foresaw recession - and many say future remains bleak

By Amy Higgins
The Cincinnati Enquirer

Even before the recession hit in March 2001, Greater Cincinnati's largest private businesses saw the tough times coming. Executives weren't traveling as much; factories had slowed production; companies put the brakes on their spending.

And then, the layoffs began.

Greater Cincinnati 100 (1-60)
Greater Cincinnati 100 (61-100)
"The lights went out in February," said William J. Yung, chief executive of Columbia Sussex Corp. and Affiliates. The Fort Mitchell-based hotel management firm eliminated 300 positions between the 2001 and 2002 Greater Cincinnati 100 surveys.

Almost half of the companies in this year's Greater Cincinnati 100 - the 19th annual list of the largest privately held firms in the region, based on revenues, as compiled and ranked by Deloitte & Touche - reported trimming their payrolls in the last year.

And without significant economic recovery, they say, the trend is unlikely to change. Only 33 companies in the Greater Cincinnati 100 said they were anticipating an economic expansion in the next 18 months. Three predicted a double-dip recession, while the majority, 54 of the 100, foresee a flat economy.

"It can't get worse - it can just stay this bad for longer," said John E. Neyer, vice president of marketing for commercial developer Al. Neyer Inc. "2003 will, in our market, be pretty slow."

Since the 2001 survey, the attacks of Sept. 11, 2001 swept an already struggling economy into outright recession. Families canceled and delayed travels; companies put spending and hiring plans on hold; and corporate profits suffered.

Dozens of local companies shed almost 2,800 jobs, according to the annual survey.

Just as many, however, reported adding employees during that time. Total employment among Greater Cincinnati 100 member companies increased from 66,806 to 70,846.

The recession clearly didn't slow everyone down. In a year that saw record auto sales, car dealership employment jumped 29 percent. Other service-sector companies added 10 percent more jobs.

Contech Construction Products Inc. boosted employment by 374 jobs, mostly through acquisition. Company chief Patrick M. Harlow said that the company used the downturn as a time to look for good bargains, expand product lines and strengthen customer service.

"Even though the overall economy for our products is softening, new products and acquisitions have left us benefiting quite handsomely," Mr. Harlow said.

Average sales among the Greater Cincinnati 100 companies fell 8 percent, according to the survey. Of course, as some companies dropped off the list and others made it on, the stats were perhaps distorted to some degree because of the disparate natures of the businesses.

Businesses are stalling in their construction plans, Mr. Neyer said. A project that used to take three months from first contact to groundbreaking is now taking closer to six months.

"They're uncertain," he said. "They're doing everything they can to avoid making substantial capital investments."

The downturn, and seasonal fluctuations, led Neyer to lower its work force from 150 to 100 employees between the surveys. While the company does expect some large projects in the near future, they will likely only keep company revenues and employment flat, Mr. Neyer said.

"On less volume, you need fewer people to fill that work," he said.

A similar decline in demand for factory machines led Cast-Fab Technologies Inc. to lay off about 100 workers, or one-third of its work force, in the last 12 months.

And until sales and profits concretely increase, Jim Bushman, the Oakley firm's chief executive, said he can't even think about hiring again.

"The recovery didn't materialize. We just don't see improvement," he said. "We're out turning over every rock to open new lines of business, but we still need a pickup in the economy."

And few people expect that to happen anytime soon.

"Hotel gurus say the industry turnaround won't happen until 2004," Columbia Sussex's Mr. Yung said. "We cut back where we can cut back, and ride it out."


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