While the past several installments of the monthly survey show stagnation in terms of prospects for hiring and new orders coming in the door, it’s not reached the all-time lows from 2009 to 2011, according to Chris Ferruso, legislative director for NFIB/Ohio.
“It’s kind of leveling off,” Ferruso said.
“We’re not seeing that progression upward.”
Greg Martin, president of Martin Excavating, a Butler County construction business with heavy equipment, said energy costs have been a “huge factor” in his company’s economic woes.
“At the moment, prices are down slightly for the first time in months, but I don’t expect that last very long,” Martin said.
“We’re probably paying 75 percent more on our fuel costs than we were four, five years ago.”
With work in the housing market “virtually non-existent” for the past five years, the company has become increasingly reliant on a different sector.
“All our work is commercial, and commercial lending is still very tight so that market is still somewhat slow,” Martin said. “Fortunately, this year, we’ve developed a backlog of work that, at least for the next four of five months, we have a significant amount of work to do. That’s the first time that’s been that way for four or five years for us.”
Because of that lack of backlog for such a long time, the company has had to reduce its workforce by more than 50 percent. “It’s probably the toughest things I’ve ever had to do, and I’ve been doing this for almost 40 years, is to tell people I’ve worked with for 25 years that I just don’t have anything right now,” Martin said.
Thomas Hall, a Miami University economist, said many businesses will continue to struggle because the economy remains in “a slow growth mode.”
“The question becomes ‘Why is that happening?’ ” Hall said. “I think there’s a lot of reasons. One of them is the home building sector really hasn’t recovered.”
A typical year would see 1.2 million to 1.5 million homes built, but current estimates are 400,000 a year — better than 2008 but “way below where that sector of the economy would be in normal times,” Hall said.
Besides home building, other factors exert their influence, including the enormous amount of debt that continues to restrains consumer spending, the “slow-motion train wreck” that is Europe’s economy and emerging concerns over China’s economic slowdown, Hall said.
Small business owners across the region and the state say they are hurting from fewer orders coming in the door, Ferruso said.
“When the economy tanks, or when there’s a recessionary period, what you tend to see is consumers tightening their belts,” he said. “That has a ripple effect certainly on small businesses. ”
Couple that with some of the costs of doing business, especially costs associated with workers’ compensation, health care and energy.
“It’s hard to budget and prepare for those kinds of things,” Ferruso said.
NFIB’s Index of Small Business Optimism for May showed that individual indicators were mixed. Expected sales continued a three-month decline. However, some employment components improved, and profit trends remained relatively stable after a sharp gain in April.
Martin said consumer confidence, or the lack thereof, is the biggest impediment to improving the economy for businesses across all industries.
“That’s going to come from the lending institutions freeing up money so you can borrow money if you want to buy a house, expand your business or move into a new facility,” Martin said. “If you’ve got $10 million in the bank and you want to borrow $5 million, they’ll talk to you, otherwise they’ve just knee-jerked so much the other way that they’re risk-averse.”
Ohio and the nation won’t “turn the corner” on the economy until the home building industry and the job market start to perk up, Hall said.
The job market hasn’t fared well as of late because many business remain hesitant to hire new staffers until they know the status of President Obama’s health care law, currently under review by the U.S. Supreme Court.
“That health care bill has been a disincentive to hire because businesses don’t know how these health care costs are going to play out,” Hall said. “If you’re an employer, you’re kind of trepidatious about hiring somebody when it’s not clear what health coverage is going to be and how it’s going to cost you,” he said.
While things may continue to look uncertain and even downright bad for some struggling business, Hall said he does see anecdotal signs the economy is doing better, with businesses taking over once-abandoned storefronts and restaurants.
“There are signs of improvement,” Hall said. “Not major improvement, though. That’s the thing.”
Martin Excavating, which went from “a reasonable profit to nothing over the past four or five years,” has seen some of that improvement, Martin said. “Last year, we made some money. This year we expect to make a little bit of money, but it’s just wiped out the profits,” he said. “We planned on a two-year downturn but it turned into four or five years.”
“Some of our customers were not able to pay us after they finished a job ... and they’re out of business, so we’re out of pocket on what we did on those jobs. It’s really been hard.”
Martin said 12 competitors in southwest Ohio have gone out of business as a result of the recession, taking about 1,000 to 1,200 jobs with them. “It’s painful to see that go away because we’re just a part of the fabric of the country and the region,” he said. “I’m just thankful that we’re still here.”
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