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Economy watch:
Local businesses feel pinch from poor economy
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By JANET DERY
Associate Editor
Headlines are scary: Record plunges in the stock markets. Banks freezing credit. Venerable investment and insurance companies bankrupt. Foreclosure and unemployment rates soaring.
How is all this bad news affecting small, Jewish-owned companies in Cleveland and the region?
“Our challenge is the credit squeeze,” says Susan Wagner, CEO of Cleveland-based Phillips Electric DBA Redmond Waltz Electric, which she co-owns with her husband Lorry. “That has really dried up. I had about $300,000 in credit that I don’t have access to anymore.”
The problem, she adds, is exacerbated by customers not paying as quickly as before the crisis hit. “Therefore, I’m paying my vendors later. Because there is a downturn, especially in manufacturing in northeast Ohio, our sales are down 40% from a year ago.”
Phillips Electric repairs industrial motors, sells and distributes new motors, automates factory lines, and, to a smaller extent, supplies and installs wind turbine systems.
The company is taking several steps to staunch losses. They range from looking for cheaper healthcare to giving customers 15 days instead of the standard 30 to pay invoices. Wagner and her husband are also putting off planned capital improvements, not replacing inventory as quickly as usual, and limiting overtime for their 23 full-time employees.
“We’ve cut every frivolous thing, but there wasn’t a lot of fluff in there” to begin with, she notes.
The slowdown in manufacturing has hit her company especially hard, admits Wagner. “Factories aren’t up and running and needing our services. Motors don’t need reconditioning if they aren’t being used.”
Can they make it through this crisis? Wagner sighs. “Some days I think, yeah, no problem. Other days I think, oh my gosh. But this company has seen a lot of ups and downs in the economy in its 60 years. We’ll come out with some bruises, but we’ll weather it.”
Nancy Silverman, president of Plantscaping Inc., says her family-owned business is down 8% in the past month. Plantscaping, which will celebrate its 30th anniversary next year, provides plant services to approximately 600 corporate accounts in Cleveland, Akron and Canton; it also has a hospitality division that provides replica plants and accessories to hotels nationwide.
“We’re an amenity business,” explains Silverman. “We watch our clients disappearing” as they, in turn, cut back on their own costs.
Higher freight costs and lower values of the company’s 401K plans are two of the biggest issues Plantscaping’s owners and employees are confronting. The company has not had to make any layoffs of its staff of 48, and there are still plans to add another 12 to 15 seasonal employees for the holidays. But Silverman and her son and partner Todd are trimming costs by economizing on utilities and paper in their two 18,000-square-feet buildings in midtown Cleveland.
“We had a strategic planning meeting this week with all our leadership, so they can carry the word that we’re not going to compromise on our services. But we want people to think about becoming more efficient and to monitor the supplies we use.”
Herbert Ascherman, one of the city’s most well-known photographers, says his bookings are off 50% compared with last season. “People aren’t spending money on luxury items,” he says. “Clients will go to cheaper studios or just do it themselves.”
Cleveland’s “declining” economy, notes Ascherman, is keeping young people from getting married and raising families here. This, in turn, means less business for the wedding and portrait photographer. On the plus side for him, Ascherman notes he’s been doing “100% more business” than usual outside the city.
Randy Goldheimer, 56, has been in the fitness industry for 27 years. He closed his last gym because of high overhead expenses. He has now opened a studio for personal training only, Private Fitness in Beachwood, which he and his sister Sherryn Kravec run.
“I would not advise anyone to do this,” says Goldheimer, a martial arts expert who helped train Israeli Air Force personnel in hand-to-hand combat in the late 1970s. “It’s crazy to open a studio at this time. I’m doing this is because I’ve been doing it my whole life, and the clients I have are extremely stable.”
Expenses at his new facility are about half of what they once were for a space roughly the same size, he notes. He does not advertise, relying instead on referrals and word-of-mouth.
The furniture industry has been particularly impacted by the economic downturn. Traditionally, slumping housing sales affect furniture sales; with fewer new homes purchased, there is less demand for new furniture. Harriet Kitay, co-owner of the nearly 50-year-old family business Kitay’s Furniture & Design in Bedford Heights, says they’ve been meeting the challenge by opening a small gift gallery in the store. The family is capitalizing on recent closings of several gift stores in the area, adds Kitay. “We’re trying to create an additional market for ourselves. We’re offering goods that other people don’t have. If you can offer unique, that makes (the situation) better.”
As for furniture sales, Kitay admits to being “down a little. It’s easier for us to sell an $8,000 sofa than a $2,000 sofa. Those who are still working on their (existing) houses haven’t stopped. People with a lot of money still do things.”
jdery@cjn.org
You and the economy
How have you been affected by the economic crisis? What does this mean for retirement? Does this change your plans for sending your children to private or day schools? To summer camp? Are you curtailing planned trips, gym memberships, or entertainment? Please contact Doug Guth at dguth@cjn.org or 216-454-8300 ext. 233.
How is all this bad news affecting small, Jewish-owned companies in Cleveland and the region?
“Our challenge is the credit squeeze,” says Susan Wagner, CEO of Cleveland-based Phillips Electric DBA Redmond Waltz Electric, which she co-owns with her husband Lorry. “That has really dried up. I had about $300,000 in credit that I don’t have access to anymore.”
The problem, she adds, is exacerbated by customers not paying as quickly as before the crisis hit. “Therefore, I’m paying my vendors later. Because there is a downturn, especially in manufacturing in northeast Ohio, our sales are down 40% from a year ago.”
Phillips Electric repairs industrial motors, sells and distributes new motors, automates factory lines, and, to a smaller extent, supplies and installs wind turbine systems.
The company is taking several steps to staunch losses. They range from looking for cheaper healthcare to giving customers 15 days instead of the standard 30 to pay invoices. Wagner and her husband are also putting off planned capital improvements, not replacing inventory as quickly as usual, and limiting overtime for their 23 full-time employees.
“We’ve cut every frivolous thing, but there wasn’t a lot of fluff in there” to begin with, she notes.
The slowdown in manufacturing has hit her company especially hard, admits Wagner. “Factories aren’t up and running and needing our services. Motors don’t need reconditioning if they aren’t being used.”
Can they make it through this crisis? Wagner sighs. “Some days I think, yeah, no problem. Other days I think, oh my gosh. But this company has seen a lot of ups and downs in the economy in its 60 years. We’ll come out with some bruises, but we’ll weather it.”
Nancy Silverman, president of Plantscaping Inc., says her family-owned business is down 8% in the past month. Plantscaping, which will celebrate its 30th anniversary next year, provides plant services to approximately 600 corporate accounts in Cleveland, Akron and Canton; it also has a hospitality division that provides replica plants and accessories to hotels nationwide.
“We’re an amenity business,” explains Silverman. “We watch our clients disappearing” as they, in turn, cut back on their own costs.
Higher freight costs and lower values of the company’s 401K plans are two of the biggest issues Plantscaping’s owners and employees are confronting. The company has not had to make any layoffs of its staff of 48, and there are still plans to add another 12 to 15 seasonal employees for the holidays. But Silverman and her son and partner Todd are trimming costs by economizing on utilities and paper in their two 18,000-square-feet buildings in midtown Cleveland.
“We had a strategic planning meeting this week with all our leadership, so they can carry the word that we’re not going to compromise on our services. But we want people to think about becoming more efficient and to monitor the supplies we use.”
Herbert Ascherman, one of the city’s most well-known photographers, says his bookings are off 50% compared with last season. “People aren’t spending money on luxury items,” he says. “Clients will go to cheaper studios or just do it themselves.”
Cleveland’s “declining” economy, notes Ascherman, is keeping young people from getting married and raising families here. This, in turn, means less business for the wedding and portrait photographer. On the plus side for him, Ascherman notes he’s been doing “100% more business” than usual outside the city.
Randy Goldheimer, 56, has been in the fitness industry for 27 years. He closed his last gym because of high overhead expenses. He has now opened a studio for personal training only, Private Fitness in Beachwood, which he and his sister Sherryn Kravec run.
“I would not advise anyone to do this,” says Goldheimer, a martial arts expert who helped train Israeli Air Force personnel in hand-to-hand combat in the late 1970s. “It’s crazy to open a studio at this time. I’m doing this is because I’ve been doing it my whole life, and the clients I have are extremely stable.”
Expenses at his new facility are about half of what they once were for a space roughly the same size, he notes. He does not advertise, relying instead on referrals and word-of-mouth.
The furniture industry has been particularly impacted by the economic downturn. Traditionally, slumping housing sales affect furniture sales; with fewer new homes purchased, there is less demand for new furniture. Harriet Kitay, co-owner of the nearly 50-year-old family business Kitay’s Furniture & Design in Bedford Heights, says they’ve been meeting the challenge by opening a small gift gallery in the store. The family is capitalizing on recent closings of several gift stores in the area, adds Kitay. “We’re trying to create an additional market for ourselves. We’re offering goods that other people don’t have. If you can offer unique, that makes (the situation) better.”
As for furniture sales, Kitay admits to being “down a little. It’s easier for us to sell an $8,000 sofa than a $2,000 sofa. Those who are still working on their (existing) houses haven’t stopped. People with a lot of money still do things.”
jdery@cjn.org
You and the economy
How have you been affected by the economic crisis? What does this mean for retirement? Does this change your plans for sending your children to private or day schools? To summer camp? Are you curtailing planned trips, gym memberships, or entertainment? Please contact Doug Guth at dguth@cjn.org or 216-454-8300 ext. 233.
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| Economist speaks on Ohio’s future, what businesses can do to weather crisis |
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