Signs of Improvement
For Many Locally, There Is Room for Cautious Optimism
Lym Tech Scientific will soon be moving into this building on Westover Road in Chicopee, an acquisition that is one of many positive signs for the local economy.
He told BusinessWest that the evidence comes in the form of remarks and unspoken thoughts that come with conversations he has with prospective clients, specifically couples looking at major home-renovation projects or new-home-building initiatives.
“You sit with a couple, and whether it’s a remodeling job — a kitchen, family room, bedroom, whatever — or a new house, she’s saying, ‘we need to get this done,’ and he’s saying, ‘I’m not sure this is the right time to do it,’” said Pecoy, owner of Kent Pecoy & Sons Construction. “And she starts kicking him under the table, saying, ‘we can’t put this off any longer — the kids will be out of the house by the time we get this done.’”
While acknowledging that there is some stereotyping going on with this anecdote, Pecoy said it serves to make his point — that, during recessions, and especially this past one, couples will put off things as long as they can. The fact that the under-the-table kicking is prompting more husbands to say ‘yes’ to such projects means that many people really can’t wait any longer, but they also have the confidence to move ahead.
This is especially true with remodeling, he continued, adding that this segment of his business now accounts for far more than 50% of revenues, not the breakdown he’d like — he’d much prefer to build new, high-end homes — but he’s happy that at least one aspect of his operation is seeing an uptick, and that he’s getting more of his time-honored evidence that times are getting better.
Others involved in business and economic development say they don’t have such a tell-tale sign that a recession is winding down. For them, things are somewhat murkier. Indeed, there is still considerable uncertainty about if, when, and to what extent things will improve. There is, however, general agreement that 2010 was a real struggle, and the year ahead should yield some improvement, but this will be, by and large, a mostly jobless recovery.
“We predicted 2010 to be this kind of year; we were hoping it wouldn’t be, but we predicted it would be, in terms of land sales in our development corporations and general absorption of real estate,” said Allan Blair, president and CEO of the Economic Development Council of Western Mass. “We thought there would be a slowdown in layoffs in 2010 and there was, but we also thought the job growth would be slow, and it was. So as disappointing as all this was, it wasn’t a surprise to us.
“It looks as though the layoff situation has bottomed out, so that jobs appear to be stable, but there are a lot of unemployed people out there who are going to be struggling to find employment equal to what they left,” he continued. “They’re going to have a hard time — it’s going to be a real struggle for a lot of people, which is going to create a lot of problems for our communities and our citizens. The government is spending what it can to retrain and reposition people, but the business environment isn’t responding fast enough to absorb them.”
Russell Denver, president of the Affiliated Chambers of Commerce of Greater Springfield, said some sectors have performed better than others in 2010, and that uneven performance will likely continue in the year ahead as players in different industries respond — or don’t — to the conditions.
“It’s been a mixed bag … there is not general economic growth spread evenly among the business community. It entirely depends on what sector you’re in,” said Denver. “I’ve heard that temporary employment agencies are having a good year, and some advertising agencies are having a good year, and some architectural firms are enjoying better times.”
“Companies are becoming much more efficient, much more productive, and, interestingly, the companies that are hiring are having a difficult time finding the right person,” he continued. “People attribute this to the fact that, even a few years ago, people were willing to leave one company to go to another; now, many of the people are hunkering down, afraid to leave for another position, because the grass is not always greener on the other side, and if there’s a layoff, they may not get employed again very quickly.”
Hire Ground
Looking back on 2010, Blair said that, while it came off as predicted — rather unremarkable in terms of real growth — there were some positive developments.
At the top of that list would be the groundbreaking for the high-performance computing center, a project that has many question marks in terms of overall impact, especially with jobs, but enormous potential to spark other economic development.
“The Holyoke high-performance computing center is something that we’re looking forward to understanding, as far as the economic impact is concerned,” said Blair. “But the fact that this is happening, and with those particular players, is encouraging to say the least, and we’re optimistic that we have something to rally around in terms of that digital technology cluster, and can see what we have here.”
Movement with regard to identifying clusters and facilitating their growth was another of the bright spots in 2010, Blair continued, noting the hiring of the EDC’s first ‘manager of cluster development,’ Michael Wright (see related story, page 6).
Still another was some signs of movement on absorption of some of the vast amounts of commercial and industrial inventory now on the market, a situation that is no doubt contributing to the lack of new building in the EDC industrial parks and similar facilities across the region.
Bill Wright, president of Lym Tech Scientific, a manufacturer of cleanroom wipes, is responsible for some of that absorption. His company, which has been based in several smaller buildings at the Cabotville Industrial Park complex in Chicopee, recently acquired the 78,000-square-foot building at 2245 Westover Road that was most recently home to Engineered Polymers, and is slated to move in next month.
Wright said the move was necessitated by the need for more space and also better space — the multiple floors at Cabotville are not conducive to efficient operations — but also by confidence that the company would continue its recent growth pattern.
“I hope the economy stays on track,” said Wright. “It appears to be a jobless recovery, but we seem to have found some pockets of business that work OK for us. It’s tough to make predictions about the local economy and employment, though.”
Indeed, it is, said Jim Barrett, manager partner for the Holyoke-based accounting firm Meyers Brothers Kalicka, who hears from clients every day about the economy and how it is impacting business.
‘Cautious optimism’ was a phrase Barrett used repeatedly as he talked about 2011 and his clients’ prospects for stability, growth, and additional hiring.
“Some people are up this year, but most all business owners are thinking hard about whether they should bring back people,” he told BusinessWest. “They’re paying people overtime, things are looking up, but credit is still tight, and there are outside factors impacting specific industries, like health care reform and medical practices; there are a lot of question marks.
“With certain sectors, like manufacturers and retailers, things are looking better, but they’re not yet ready to commit a lot of capital to expansion, because they’re just not sure,” he continued, hitting on one of the variables that will certainly define progress in the year ahead: business confidence. “Some of them are, but most people are still very cautious about spending, and that includes hiring.”
Elaborating, he said many of the staffing agencies the firm represents are reporting growth in 2010, which is a good sign for the overall economy. This uptick means that, while companies might be reluctant to bring people on full-time, they are adding temporary help or paying overtime, which are big steps in the right direction (see related story, page 22).
“Some employers have people working overtime, which is always a good sign,” he said. “They’re paying OT and using temps, which is one step before actually hiring someone. Instead of hiring the staff in anticipation of the work coming, people are waiting for the work to come in, and then they’re hiring staff and they’re augmenting with temporary help or overtime.”
Watch Words
Denver said he’s also observed some improvement in various sectors. Like Barrett, he’s buoyed by the improved health of staffing agencies, but also sees rays of optimism in the growth of some marketing agencies and even architectural firms.
The former indicates that companies that have cut back on their marketing — one of the first areas to be trimmed when times are tough — are putting some dollars back in that area. As for the latter, it provides some glimmers of hope for the construction sector, one of the hardest-hit industries in the region.
Overall, Denver said 2010 was not a year of big, positive headlines in the business community, but of many important success stories. He listed the high-performance computing center, construction of Baystate Medical Center’s $251 million Hospital of the Future, more progress on the State Street corridor in Springfield and also in the South End and downtown, and the start of construction of the new data center in the old Technical High School on Elliot Street.
Many of the positive developments in 2010 were funded, or assisted, with federal stimulus money, said Denver, adding that as this pipeline dries up, which it is expected to do in the months ahead, there may be a negative impact on recovery and the rate of same.
“Government propping up the economy was the story of 2010,” he said. “And now those funds are running out. What happens without federal stimulus, or far less stimulus money, may well be the most significant story of 2011.”
Evan Plotkin knows what he would like the biggest story of the year ahead to be — more visible evidence of progress in Springfield’s central business district, a goal that has become somewhat of a passion for the president of NAI Plotkin.
While noting that the commercial real-estate market remains sluggish amid some signs of improvement, Plotkin said 2010 was a year in which downtown revitalization efforts took steps forward, through everything from the retenanting of the old federal building to the popular Art & Soles program that brought dozens of colorful, five-foot-high sneakers — and some additional vibrancy — to the downtown.
And 2011 may yield more positive developments with projects ranging from revitalization of long-dormant Union Station to ongoing efforts to bring more market-rate housing in locations such as Court Square, the Bowles Building, and others.
“I’m excited that developments like Union Station are getting to a point where people are developing those properties,” said Plotkin. “There’s been a lot of talk, and it’s been very frustrating for many years, but we’re at the end of the discussion phase, and I think we’re at the point where we’re ready to pull the trigger and get started on some of these projects.
“If we convert some of the buildings downtown into market-rate housing, and if we start to do some of these other cultural things that people have been talking about for some time,” he continued, “we’re going to start to see a whole new Springfield emerge.”
The Finish Line
If Pecoy is right, and the recession is not just technically over but really behind us, then more wives will be kicking their husbands under the table in the months ahead, urging them to move ahead with major renovation plans.
Area business owners and economic-development leaders will be looking for these and other signs — real and metaphorical — over the course of a year that seems destined to be defined by more uncertainty.
But it will be one that should, by most accounts, anyway, bring some much- anticipated improvement for a region that is still, in many ways, digging out from the Great Recession.
George O’Brien can be reached at
[email protected]
