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Suppliers to local small businesses see signs of gradual economic revival

May 20, 2012|By ARNOLD PLATOU | arnoldp@herald-mail.com

WASHINGTON COUNTY — Amid the bags of ice, cases of two-ply toilet tissue and stacks of lumber being delivered to Washington County businesses, there are signs of economic revival, but uncertainty, too.

Small businesses — more than 85 percent of the roughly 3,500 companies in the county — are gradually increasing their orders of many kinds of products, according to interviews with several suppliers.

“I would think we’re past the bottom and on the way up,” said Richard Weiss, president of Weiss Bros., a Hagerstown-based company that supplies food-service products to about 500 companies in the region. Among its products are paper and plastic cups, and plastic utensils; packaging such as shrink wrap; safety products such as glasses and hairnets; and janitorial supplies such as cleaning towels and tissues.

“But it’s not the typical recovery from a recession, and it may take years until we’re back up to where we were,” Weiss said.

Small home-building companies are a bit busier so far this spring than last, said Peggy Bushey, president of Cavetown Planing Mill Co. Most of its approximately 300 business customers are small builders, as well as plumbers and electricians, she said.

“Not seeing a lot of new houses being built, but you’re seeing more renovations, additions,” Bushey said. “We’re seeing more of those little bits. It’s much more promising. People seem a little brighter, a little bit busier.

“Are they where they want to be? No, but moving in the right direction is a good thing,” she said.

According to the U.S. Census Bureau, 1,665 — nearly half of the 3,497 businesses in the county in 2009 — had fewer than five employees. Those are the most recent census figures of this type.

Counting all local companies with fewer than 20 employees as small businesses, there were a total of 2,984 such companies here in 2009, a census report shows.

Financial roller coaster
As elsewhere in the nation, local businesses and consumers have been on a financial roller coaster since about 2004.

Economic boom, fed by easy credit, sent the demand for new homes and thus, their prices, soaring. Much of the rest of the economy grew quickly, too, but began deflating in mid-2006 when the riskiness of subprime loans was realized, loan credit standards tightened, “foreclosure” and “short sale” became household words, and home sales and prices began dropping.

“I think when we were in 2004, 2005, 2006, all of us just thought, this (economy) just keeps going up. No one knew the roller coaster that was coming. We definitely saw a big drop from ’06 to ’07,” which seemed bad enough, Bushey said.

Over the next four years, Cavetown’s sales of lumber, doors, windows and many other building supplies “kept going down,” she said.

“Last year, I wouldn’t have wanted to talk to you,” Bushey said with a grim laugh. “What we’re seeing now is certainly nothing like 2006, 2007, but definitely better than last year.”

Cavetown has 52 employees now, she said.

For Weiss Bros., business continued to grow until fall 2008, when some area companies began idling workers, Weiss said.

“We had a down 2009. We had a farther down 2010. We had an uptick in 2011. And this year, up again. But it’s not like happy days are here again,” he said.

Slow recovery
The economy doesn’t seem to be recovering as quickly as it has after the other recessions Weiss has experienced in the past 41 years, he said. Normally, “when things are getting better, the unemployment rate is getting better, but this time, it hasn’t been as quick as it’s been in the past.”

The company had about 48 employees in 2007. Its work force dropped during the recession when a few people left and their positions weren’t filled, company Vice President Michael Weiss said.

It now employs 43, including a new office worker and a worker just hired for the company’s new foray into selling laundry supplies and equipment — an effort to broaden appeal to a wider market, Michael Weiss said. And, he said, the company has just doubled its retail space to about 1,500 square feet for walk-in customers.

The recession has had varying impacts on other area suppliers.

Reddy Ice Holdings Inc., which has a distribution plant in Martinsburg, W.Va., and is the nation’s largest manufacturer and distributor of packaged ice, filed a voluntary plan of reorganization under Chapter 11 of the U.S. Bankruptcy Code last month, according to the company’s website. The company has secured additional financing and expects to emerge from Chapter 11 soon, it said.

Raymond Kwek, office manager for Reddy Ice in Martinsburg, said the action doesn’t change the local plant’s commitment or service to customers. Moreover, he said, the local operation has proven itself to be one of the company’s best.

“Our location here in Martinsburg, we were one of the top three in the entire company in our entire delivery cost per unit. That’s effective routing, efficiencies, good people, a great safety record. All of those contribute to that,” Kwek said.

The local plant, which serves groceries, corner stores, liquor stores and others in an 80-mile radius that includes Washington County, had about 400 business customers before the recession, he said.

After years of steady growth, sales here fell “a bit” in 2007 and 2008 and, in all, the plant lost about 50 business customers due to the economy, Kwek said. And, some customers, “particularly the mom and pops,” cut back on orders, he said.

The general decline in the construction trades hurt, he said. “When those guys are not out building houses, they don’t need ice for their coolers every day.”

‘Not gloom and doom’
In the past few years, however, the plant has managed to increase its business customers to about 500 in all “as a direct result of good service,” Kwek said. He declined to release sales figures, but said the recession has “taught all Americans to watch pennies.”

The Martinsburg plant employs about 14 people in Martinsburg during the summer and about nine through the winter, he said.

Of the suppliers contacted, one seems to have drawn some strength from the economic pressure the recession has put on most Americans.

“We’re staying steady. So it’s not gloom and doom,” said Tom Venetta, a manager and 30-year employee at Hagerstown’s Car Quest Auto Parts. The company sells parts to about 100 small local businesses, including repair shops, independent garages and companies that maintain their own fleets of vehicles, he said.

During a recession, “when people are keeping vehicles a little longer, we’re doing a little better,” Venetta said. “People are having more repairs done to vehicles they already own.”

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