Asian worries hurt some local businesses

January 29, 1999|By BRENDAN KIRBY

When Asia's economy caught the flu, some Tri-State area businesses got a cold.

Although some area companies with dealings overseas have been hurt by Asia's continuing woes, economic development officials and business owners said the damage has not been critical in most cases.

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"Really, this area does not do as much exporting as other areas might do, which has its pluses and minuses," said Robert T. Crawford, executive director of the Berkeley County (W.Va.) Development Authority.

But the region's link to international developments is greater than many may realize, said L. Michael Ross, president of the Franklin County (Pa.) Area Development Corp.


Ross pointed to firms like Grove Worldwide, which laid off 210 workers at its Shady Grove, Pa., plant this week. The firm, which makes mobile hydraulic cranes, truck-mounted cranes and self-propelled aerial work platforms, also laid off about 225 workers last August.

"They are very much invested in the Asian market as well as the Russian market," Ross said.

Robert Kannel, a spokesman for Grove, said business in the Pacific Rim is down between 30 percent and 40 percent. But he downplayed the significance.

"That (area) doesn't represent a significant part of our business," he said. "We continue to be hopeful in terms of developing that market."

For much of the past year, the economies of Asia and Russia have struggled. Declining demand for foreign products in these countries has hurt American companies that depend heavily on exports to those markets.

AMP Inc., one of the largest employers in central Pennsylvania, announced two weeks ago that it would close three York County, Pa., facilities.

The company, which employs about 250 people at its Waynesboro, Pa., plant, manufactures electrical, electronic, fiber-optic and wireless interconnection devices.

"The crash of the Asian market has had a devastating impact on AMP Inc.," Ross said. "Interestingly, it hasn't affected Franklin County's facility as much as others."

Asia's economic slump has not affected only local companies that do business abroad; it also has hurt firms that sell to companies that do.

Michael Hurt, president of T.B. Woods in Chambersburg, Pa., said the company's sales declined in the last half of 1998.

"It's a ripple effect," he said.

The company, which employs between 500 and 600 workers in Franklin County, makes power transmission equipment.

Hurt said less than 20 percent of the company's business is in foreign countries, but said it also sells to machinery manufacturers that do business in other countries.

Still, he said a European electronics firm that T.B. Woods bought in December 1997 exceeded expectations last year. Hurt said that the soft economy has helped the business in other areas.

"When exports slow down, we still have good demand for replacement parts because companies start replacing rather than buying new (equipment)," he said. "We had a good year; we just didn't have a great year."

Noting a slight improvement in sales this month compared with last November and December, Hurt said he is optimistic about the second half of this year.

Brentwood Industries, which has a plant in the Berkeley County Industrial Park, has suffered a "double-whammy" as a result of the economic turmoil in Asia.

Palle Rye, vice president of the Reading, Pa., firm, said the company's major areas are infrastructure, petrochemicals and power.

Many Asian companies have devalued their currencies, making the U.S. dollar much stronger. That makes Brentwood's products more expensive and harder to sell abroad, Rye said.

Exports are off between 15 percent and 20 percent over two years ago, he said.

At the same time, Rye said, the economic problems have devastated foreign governments' ability to invest in infrastructure improvements. Depressed oil prices have contributed to the problems.

Brentwood Industries makes cooling towers and other equipment for the power and waste water treatment industries. Rye said the company sells a lot of products to companies under contract by foreign governments.

"When there's not contracts being let, we get no business," he said. "If no power plants are being built, they don't need any cooling towers."

Despite the problems, Rye said he expects the work force to remain stable at the Martinsburg facility this year.

Not all businesses that have dealings in Asia are feeling the pinch.

Garden State Tanning, a Williamsport firm that manufactures leather used to make the seats for several makes of Toyota's luxury and mid-priced cars, enjoyed increased business last year.

Glenn D. Thornley, vice president for operations, said the company has avoided the economic problems because the cars are sold in the United States, not in Asia.

"We just don't feel the effects of the Asian flu," he said.

Leanne Mazer, director of business programs for the Tri-County Council for Western Maryland, said companies that trade heavily with Asia have looked for other foreign markets over the last year.

"A lot of the companies are trying to diversify because of the Asian situation," she said.

Despite the ailing economies in many emerging markets, Mazer said she has not detected a desire among businesses to pull back from the global economy.

Ross, in Franklin County, said it would be impossible even if they wanted to.

"The realization that we all have to come to at this point is that we are living in a global economy whether we like it or not," he said.

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