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Archive for Thursday, April 8, 2010

To upswing or not to upswing: Lawrence business owners cautiously anticipate economic recovery

Marcia Butell is the owner of Rejuvene Day Spa, 13 E. Eighth St. The spa moved downtown last month, citing the affordability of downtown real estate in a down economy.

Marcia Butell is the owner of Rejuvene Day Spa, 13 E. Eighth St. The spa moved downtown last month, citing the affordability of downtown real estate in a down economy.

April 8, 2010

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Kevin Fredrickson is the owner of Eagle Trailer Company, 920 E. 30th St. Fredrickson says he’s scaled back production in the struggling economy and is keeping an eye out for signs of economic recovery.

Kevin Fredrickson is the owner of Eagle Trailer Company, 920 E. 30th St. Fredrickson says he’s scaled back production in the struggling economy and is keeping an eye out for signs of economic recovery.

Davison Joe welds steel for a flatbed trailer at Eagle Trailer Co., 920 E. 30th St. The company is hoping for a rebound in 2010 on the heels of two years of declining sales in its industry.

Davison Joe welds steel for a flatbed trailer at Eagle Trailer Co., 920 E. 30th St. The company is hoping for a rebound in 2010 on the heels of two years of declining sales in its industry.

For 27 years, Kevin Fredrickson of Lawrence’s Eagle Trailer Co. has been manufacturing the trailers that keep Midwest contractors rolling.

Now, he’s hoping economic recovery will keep his business rolling.

“Last year was the toughest I’ve ever seen,” Fredrickson says. “It’s one thing to have customers that aren’t buying and another thing to have customers that are near bankruptcy, which is what we saw with contractors.”

Like many Wall Street pundits, Fredrickson is optimistic that 2010 offers hope for an economic turnaround. He’s looking for his industry to rebound from the 50 percent dropoff that rattled its coffers in 2009 — hopefully as soon as the weather warms up.

“I’m optimistic in that the rate of people’s savings has increased,” he says. “It’s been a hard winter, and I think that people have an insatiable desire for goods. When the weather gets nice, they’ll want to get out and improve their homes and make their lives easier.”

Fredrickson says that he’s cautiously increasing his inventory in anticipation of an economic rebound. He keeps a close eye on retail sales trends in his industry, though he admits the data can be perplexing.

“I have one dealer that’s frantic to get trailers to his lot, and other dealers that haven’t sold any trailers in a month or two,” he says. “We’ve worked on our shop equipment to increase the efficiency, and I always have my eye on the recovery and what we’re going to do differently when it comes to ramp up production and get new people trained.”

For all of his optimism, Fredrickson still shares the prevailing attitude of most local business owners toward economic recovery: he’ll believe it when he sees it.

“Three years ago I was saying that there’s all the money out there that anyone wants to make,” he says. “Now I would say you don’t want to lose out on any opportunity to bring in a sale.”

Cautious optimism

According to Lawrence Chamber of Commerce President Tom Kern, local businesses aren’t yet going all-in in anticipation of economic recovery.

“I think businesses as a whole are being pretty cautious,” Kern says. “Although there appear to be some indications at the national level that home starts are picking up and the economy has bottomed out, I don’t think that there are any indications locally that show that there’s anything driving an economic recovery.”

Kern cites the recent drop in sales tax revenues — 0.3 percent at the city and county level in 2009 — as proof that it would be premature for local businesses to expect a quick turnaround.

“Retail is so dependent upon consumer spending patterns, and I think the consumer right now is pretty cautious,” he says. “You’re not seeing people making large discretionary purchases at the levels that they were prior to 2008.”

Kern says that he’s “cautiously optimistic” that the U.S. will see some economic recovery in 2010, but he anticipates that it will happen a lot more slowly than people are hoping.

“After the Gulf War you could point to the dot-com boom and say, ‘That’s what’s driving this economic recovery,’” Kern says. “It’s pretty difficult to look out on the horizon and say, ‘I can see green energy as the next dot-com boom.’”

Upswinging for the fences

Murky forecasts haven’t prevented businesses like Discovery Furniture from taking a big leap in a shaky business climate. The Kansas furniture retailer with stores in Topeka and Salina will move into the former Food-4-Less location at 2525 Iowa in June.

Discovery Furniture co-owner Jamie Winter says that he expects the economy to improve this year and thinks it’s a good time to expand his business.

“We’ve seen our numbers start to stabilize, which is different than what was happening during the past two years,” Winter says. “But there hasn’t been a long enough trend and enough data points to say that it’s a significant improvement.”

Winter says that he keeps an eye on national retail sales numbers in hopes of seeing some positive indicators. For now, Discovery Furniture is banking its investment on the dearth of furniture-buying options in Lawrence.

“It’s difficult for customers in Lawrence to buy (furniture) locally, and lots of people tell us that,” Winter says.

Another local business expanding in the midst of a contracting economy is Rejuvene Day Spa, which recently moved from the Bella Sera retail development at 4500 Bob Billings Parkway to a downtown location at 13 E. Eighth St.

Owner Marcia Butell says that she was able to obtain a downtown lease at a reduced rate due to the down economy. After experiencing roughly a 50 percent decline in business in 2009, Butell jumped at the opportunity to cut her overhead and build new clientele.

“Even when the economy is down, we’ve always focused on customer service,” Butell says. “We have to be optimistic, because the alternative is not good for any of us.”

Frank Salb of Lawrence’s Salb Construction Inc. has also become adept at making adjustments to his business plan with an eye on economic trends. Salb says that he had to lay off two of his five employees in 2009, but he’s hoping to hire them back if he can bid enough work in 2010. To that end, he’s adjusted his business plan to target home improvements rather than new construction.

“It seems like a lot of people — since they’re not moving — are finishing up part of their basement or remodeling their kitchens and doing other things to upgrade their houses,” Salb says. “Even though (the housing market) isn’t as good in Lawrence as it used to be, we’re still not hurting the way people are in Florida and Las Vegas.”

When business starts to improve in those places, a whole lot of Lawrence business owners will be adjusting their plans accordingly.

Comments

buteaa 4 years, 8 months ago

This comment was removed by the site staff for violation of the usage agreement.

buteaa 4 years, 8 months ago

Way to go Rejuvene Day Spa for changing with the times and staying ahead of the pack. Though I might be bias since its a business owned by my family.

Though I think Marcia's quote was seasoned by the author however after talking to her. The tone of the article was almost negative when in reality business is showing to be turning around.

More correct would be: Marcia Butell the owner of Rejuvene Day Spa remains dedicated to the customer experience, “Even when the economy is down, we’ve always focused on customer service”

Consumers are emerging from a 2 year hibernation to play a more active role in the U.S. recovery. Consumer spending, which accounts for about 70 percent of the world’s largest economy, is projected to grow 2.3 percent this year, the most since 2007, according to the survey median. This is following the first year-to-year decline since the 1930s.

http://www.bloomberg.com/apps/news?pid=20601068&sid=a11nb8FGI8.U

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