Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 24, 1993 TAG: 9301260092
SECTION: ECONOMY PAGE: EC-15 EDITION: METRO
SOURCE: GEORGE KEGLEY STAFF WRITER
DATELINE: LENGTH: Medium
SURVEY RESPONDENTS UPBEAT, BUT CAUTIOUS
Burdened by worries over slow sales, layoffs and competition, many Western Virginia businesses are starting 1993 cautiously.Yet almost half of those responding to a survey expect this year to bring better business conditions and more than a third have higher levels of confidence than they had a year ago. The results are to the annual survey on the Western Virginia economy conducted by the Roanoke Times & World-News.
Many reported signs of recovery from the economic recession but said they still have a bagful of problems resulting from cuts in national defense spending, a sluggish business climate and other lingering problems.
Leaders and owners of 163 companies were polled in early December for summary comments about their businesses in 1992 and their outlooks for 1993. Respondents were allowed to remain anonymous to encourage candor.
Of the companies surveyed, 90 firms, or 55 percent, responded. They represented a variety of business segments with slightly more than half of the returns from manufacturers.
Improvement in their own business is expected by a much greater number than those who see better conditions in the overall economy of the region. Slightly more than half said their own business was better in 1992 than in 1991.
Nearly one-third expect to hire employees this year while only one out of five plan job cuts. And the range of hiring is greater than the number of layoffs, company executives said.
Factors that will spur hiring, they said, include greater consumer confidence and sales, expansion into new markets, the level of investment activity, more overseas sales and new products.
However, some company officials said they plan employment reductions to reduce costs and improve efficiency.
"If the economy remains stagnant, layoffs will probably become necessary to adjust to work changes," the owner of a metal processing company commented. An increase in the work force will occur only if necessitated by higher volume, he added.
A banker said layoffs "are finally hitting this area in a bigger way which will hurt consumer demand."
But a supplier of bank equipment expects stepped-up bank mergers will require an increase of 25 percent to 50 percent in his work force.
A construction company executive asked if new development initiatives are needed. "The failure of our economic development efforts to attract new business to the area is having a definite impact on our business and work force," he said. His company will lay off 10 percent of its employees "unless we can find new projects."
An insurance executive said his company had a reduced volume of profitable business caused by stiff price competition. This led to reduced budgets and negative growth, he said.
A manufactured housing executive said lower mortgage rates, better consumer confidence and a larger share of the market enabled his company to increase its work force by 15 percent last year. If business increases more than 10 percent, he said, more employees will be added.
Businesses reporting plans to hire employees included 17 factories, two financial services companies, trade and consumer service firms, three insurance firms and one transportation company.
Those expecting to layoff workers include 10 factories, two mining companies and one each in the consumer service, finance, insurance, professional, trade and utility segments.
Those expecting no change are 22 factories, six retail firms, four financial companies, two each in consumer service, real estate and transportation and a hospital, mining company, professional firm and a utility.
Almost two-thirds of the company officials responding said they anticipate no change in capital spending this year; one out of five plan to increase spending and one of six expect a decrease.
Higher prices - ranging from 2 percent to 8 percent - are expected by fewer than half of the firms; no change is in sight for almost one-third and lower prices are forecast by one in six.
Major factors that affected the companies surveyed last year were the economy, the prospect of a new administration in Washington, unemployment levels, consumer confidence, the Dominion Bankshares acquisition by First Union Corp., interest rates, inflation, health care costs and housing starts.
Other factors cited affecting the level of operations at the companies were: the global recession, fear of increased regulation, cost of complying with environmental laws, tighter bank lending policies, competitive price pressures, reduced investment yields, contract negotiations, processing time for local government permits, computerization, weather limiting construction, new products, taxes, inflation, raw material prices, mortgage rates, export sales, real estate business and continued pressure on profit margins.