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Tampa Bay economic snapshot: Some businesses fear double-dip recession; others optimistic

Consumer spending has fallen for the first time in two years. Job creation has pulled back dramatically from earlier this year. Layoffs are up; stock markets are way down. And one of the few brights spots in the economy this year — increased manufacturing — has hit the brakes. ¶ Let the debate rage whether this is a "soft patch" in our already-creeping economic recovery or the onset of a double-dip recession. ¶ Bottom line: The economy is in a precarious place. ¶ "I think people have lost confidence in the economy," said George Lawton, controller of H&S Swansons' Tool Co. in Pinellas Park. "The economy is all perception, and if people's perception is that things are not going well, then the economy is bad.¶ Here's a snapshot of concern — and optimism — about the local economy offered by area businesses. Are they hiring, firing or just standing pat and worrying about the Great Recession, Part II? (Note: Assessments were made before S&P downgraded U.S. credit rating Friday.)

George Lawton

Controller, H&S Swansons' Tool Co., Pinellas Park

Lawton considers himself fortunate to be in an industry that's growing.

The manufacturer of aircraft and missile parts has seen a slight increase in sales, enough to justify adding up to five more people this year to its 85-employee operation.

Like some other manufacturers, though, Lawton said he has trouble finding qualified workers locally.

"Engineers are very difficult to find, especially American engineers," he said. "With the decline of manufacturing in the U.S., the need for engineers had declined. The problem is that we're going to need them (in the future), and I don't know where we're going to get them from."

Reflecting on the broader bay area economy, Lawton worries that the country will suffer protracted pain because politicians have been refusing to deal with our biggest problems like enhancing education, cutting entitlements like Medicare and helping Main Street instead of Wall Street.

"There's absolute gridlock," he said. "It's all based on getting re-elected and not what's good for the country, which kind of devoids the country from any leadership at all. Sometimes leaders have to do things that aren't popular."

Stan Tangalakis

Owner and CEO, Mercury Medical, Clearwater

A 48-year-old maker of anesthesia and respiratory products, Mercury Medical has seen demand grow as it recently entered the national market for critical care products used in emergency response.

Tangalakis, however, describes his business approach as "conservatively aggressive" given an economy with its own respiratory problems.

"We're excited about what we're doing apart from what the economy is doing," Tangalakis said. "Does that mean we're going to go out and hire a bunch of people? No."

Over the year, Mercury has selectively added five workers to its 150-employee operation, but Tangalakis said he's very cautious in evaluating the need for each new job. Rather, he looks first at "expanding the utility" of current workers to make them more productive. "We're doing a lot of that," he said.

Does he predict a net increase in jobs through the rest of the year? "I doubt it," Tangalakis said. "We're pretty well set right now."

Steve Meitzen

President of the Bay Area Manufacturers Association, head of corporate sales, Southern Manufacturing Technologies, Tampa

At monthly meetings of the manufacturers association, economic feedback from members runs the gamut. "Some are busier than hell; others are barely hanging on," Meitzen said.

At Southern Manufacturing Technologies (SMT), business is strong thanks to its niche in the machining industry. SMT primarily makes components for the airline industry on a design-build basis, from parts that ended up on the solar panels of the Mars Rover to components in jet motors.

The company recently hired a half-dozen workers, bringing its work force up to 105. Meitzen said he would hire more, even up to 30 more people, to put on a third shift, if he could find qualified candidates.

"We're doing everything we can to hire locally," he said, "(but) we've even placed ads in the Rust Belt trying to find people."

Ann Paxton

PDR Certified Public Accountants, Clearwater and Tampa

Based on clients reaching out for accounting advice, the bay area is a mixed bag of recovering companies and some that are getting worse.

"Some manufacturers are really hurting and concerned about their future," Paxton said. "They see their costs rising. They're concerned about health care insurance in the future under Obamacare."

The restaurant and hotel industries face the worst-case scenarios. "Some say they'll just have to go out of business because they'll have to cover so many more employees. (One) said they'd have an extra $300,000 in health care costs they'd have to cover."

Paxton cited anecdotes of scattered hiring, but she's simultaneously fielding more calls from clients wondering what to do if they've received an IRS Form 1099-C, which is shipped out to recoup taxes when a creditor agrees to settle a debt for less than the balance owed.

"We get a lot more calls about what to do if your company is going bankrupt," Paxton said. "You're answering more of those kinds of questions — and that's not a good feeling."

Bob Ritchie

President and CEO, American Integrity Insurance Group, Tampa

A recession can hit sellers of discretionary items hard.

American Integrity's advantage, Ritchie said, is that it sells home­owners insurance, a must-have item for anyone with a mortgage.

"It's largely an obligatory purchase, but what we are seeing is more lapsed rates, installment billings that don't get paid on time, and we have to reinstate and be a little more generous in giving them time to get payments in," Ritchie said.

Another troubling trend: Credit cards are being used more frequently to pay insurance, a possible sign of a cash crunch.

His operation, with 56 employees and $140 million in revenues, is looking to add about five people, he said. In a sign of the times, the company recently put an ad on seeking a human resources manager, and promptly received 350 resumes.

"I don't see signs of a double-dip," Ritchie said. " I just see this economy going in a seesaw."

Vince Cassidy

Owner and CEO, Majesty Title Services, Tampa

Business at the Tampa title agency was up 28 percent in the first five months of 2011, but Cassidy has definitely experienced a summer slump.

"I felt great in February, March and April. Then May and June came," he said.

"Like any entrepreneur, you want to be just a little bit paranoid. But I don't like the lasting paranoia I'm having the last couple months. I'm not as optimistic about the end of the year as I was feeling at the beginning of the year."

Majesty Title typically handles about 100 transactions a month. July's activity level was about 20 percent lower than expected. Cassidy said the problem isn't finding willing buyers and sellers, but sales and refinancings falling through because lenders dispute the agreed-upon values of homes.

Foreclosures and short sales of homes valued less than their mortgage continue to constrict home prices.

"It's not all bad. … I believe banks are letting out their inventory in a much more controlled fashion so as to not completely devastate market values," Cassidy said.

"I don't think this is a double-dip (recession), but I think it will be softer in the second half of the year than the first."

George Lewis

Co-owner, Leverock's Seafood, South Pasadena

Lewis speaks of the great shakeout in the local restaurant industry in past terms.

When the recession struck, he said, he and his partner, John Stross, got very involved in daily management of Leverock's, in boosting Internet marketing and in expanding menu options.

Leverock's had a strong rebound by the summer of 2010 and sales continue to grow, he said, dismissing concerns of another recessionary shakeout.

"I feel for the people who didn't make it, (but) I think a lot of that washout has happened already," he said.

Looking ahead, Lewis thinks the combination of diminished competition and Leverock's value-oriented approach will both help business as customers look for an economical way to enjoy themselves.

"We're not an upper-tier, $30-a-plate restaurant," he said, "and these days, people are looking for a deal, no doubt."

Abdul Lateef

CEO, Plasma-Therm, St. Petersburg

As a maker of etching equipment that's used to make semiconductor chips, Plasma-Therm plays on a global stage.

As such, it doesn't feel the impact of Florida's ongoing slump as much because its customers are based largely in other U.S. markets and China, which is still growing strongly.

Customer demands may not be slowing down, but Lateef has noticed a strategic shift, with buyers more reluctant to pull the trigger on purchasing expensive equipment.

"Because of the uncertainty surrounding the overall macroeconomics, what seems to be very consistent is that the final decision to actually place (an order) is being held until the very last minute," Lateef said. Customers used to buy new equipment when their manufacturing was at 80 or 85 percent capacity, he said. Now, they wait until they're at 90 or 95 percent capacity.

Still, that slower process has been trumped by a growing customer base.

As a result, Plasma-Therm has hired 30 more employees in Tampa Bay alone in the past six months. It has a dozen available positions now.

Kevin Hourigan

CEO, Bayshore Solutions, Tampa

Double-dip? Forget that. Bayshore Solutions hasn't even hit a slow patch.

To the contrary, June was the Web development firm's best sales month of 2011 and July was second best.

"We've had a good last 60 days. … People we talk to are confident about investing in their businesses," Hourigan said.

Particularly strong is the high-end auto industry and some other luxury retailers. Some industries are still suffering (he cited yacht building as an example), but that's been offset by clients who are much more willing to invest in upgrading their website than they were a couple of years ago.

Hourigan, speaking after finishing up several interviews with prospective hires, said he has added 15 people so far this year and could add up to 10 more by year-end. That would bring Bayshore Solutions to 60 employees.

Jeff Harrington can be reached at (727) 893-8242 or [email protected]

Signs of concern

• A dramatic market sell-off — capped by the biggest one-day slide in three years — erased all the gains made this year.

• Manufacturing growth has slowed to the lowest level since the official end of the recession in 2009.

• After hitting a year high 9.2 percent, the national unemployment rate slipped a notch to 9.1 percent in July, but only because more people gave up looking for work.

• An unexpected burst in private-sector downsizing pushed the number of announced job cuts to a 16-month high of 66,414 in July, according global outplacement consultancy Challenger, Gray & Christmas Inc.

• Gold futures have risen to record levels approaching $1,700 an ounce as investors seek a safe haven.

• Optimism among small business owners plummeted from 67 percent in June to 47 percent in July, according to SurePayroll's Small Business Scorecard.

• Factory orders fell almost 1 percent in June, pulled down by a 1.9 percent decline in durable goods orders.

Tampa Bay economic snapshot: Some businesses fear double-dip recession; others optimistic 08/05/11 [Last modified: Tuesday, August 9, 2011 10:33am]
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