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'Knock on Wood'

BusinessWest, Apr 14, 2008 by O'Brien, George

'Survival mode.'

That's a term being seen and heard with increasing frequency these days as the media covers the ongoing economic downturn and how individuals, families, businesses, and municipalities are responding to life within it.

This phrase and others like it may accurately depict the current picture within some areas of the country, and even some parts of the Bay State, said Ken Albano - putting the accent on 'may' - but they're a bit overblown for the Pioneer Valley, where, it seems, most companies seem intent on doing more than merely surviving.

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"A lot of people are saying, 'knock on wood, I'm doing OK,' " said Albano, a business law specialist with the Springfield-based firm Bacon and Wilson, who spoke about life for his clients, as well as for his law firm. "They're just not saying it very loud because they'd prefer to fly under the radar screen and not say they're doing OK, in case something happens."

Others used different words and phrases to convey essentially the same thing - that the economic downturn (there still appears to be some debate over whether this is officially a recession) has business owners cautious and wary about what might happen. But no one is yet drawing up comparisons to 1991, the height of the last deep recession, when the phones simply stopped ringing at many companies.

It's not exactly business as usual in this region, by most accounts, and there are some definite signs that times are tough. Indeed, the demise of low-cost carrier Skybus earlier this month brought the downturn home to the Valley and, specifically, to Westover Metropolitan Airport in Chicopee, with an exclamation point. Meanwhile, there are real concerns about the residential real-estate market and its fate. There is talk of large-scale cutbacks across the Commonwealth as state and municipal officials grapple with budget deficits and declining tax revenues, and most all businesses have been touched in some way by high gas prices and sky-high diesel fuel prices.

But many of those asked to give a quarter-pole analysis of 2008 and the state of the local economy were sounding mostly optimistic tones. Here are some observations:

* Laura Stevens, president of the regional offices of Keller Williams Realty, said that, contrary to popular opinion, houses are moving if they're priced right, that is. "The problem we have is that a lot of people simply don't want to believe that their house has lost 10% of its value since last year, and they're stubborn," she said, referring to the average drop in the Valley, by most estimates, that she believes represents a market correction that was overdue. Stevens remains optimistic that sellers will come to grips with reality and that, likewise, buyers will realize that there is no real advantage to waiting, two prerequisites for reducing a bloated inventory that is keeping prices lower. The question is, when?

* Arlene Putnam, general manager of the Eastfield Mall in Springfield, said most retailers there enjoyed a fairly strong February - "why, no one is really sure."

Despite mostly gloom-and-doom headlines and sound bites locally and nationally, she expects this sector to hold its own amid a general decline in consumer confidence and capitalize on those economic-stimulus checks that people will be getting later this year.

* Kenneth Boutin, senior vice president and senior credit officer at Holyoke-based PeoplesBank, wasn't projecting a strong first quarter for commercial lending activity last fall, but to his surprise the numbers are solid, with business owners in many sectors making investments in new equipment and facilities. Some industry groups are doing better than others, he acknowledged - hospitality is struggling somewhat, for example - but most are exercising caution, not hunkering down.

* Joe Ascioti, president of Reliable Temps in Agawam, said that, thus far, he's seeing little evidence of companies cutting back or delaying planned hiring. He admits, though, that the picture is seriously clouded by the much-bigger story - ongoing struggles in many sectors to find enough good help. This is evidence, he said, that shortages in labor that many have projected for years down the road - when smaller generations are going to be asked, unrealistically, to fill the huge void left by retiring Baby Boomers - are already here.

In this issue, BusinessWest takes an indepth look at the economy as the second quarter of '08 begins, and the issues that will determine what happens short- and long-term.

House Money

Stevens told BusinessWest that, in response to one reporter's question a few months ago, she said that "if there was a recession, her company was choosing not to participate in it."

That was her way of saying that Keller Williams is having a solid start to '08 and that, overall, the local housing market is not as depressed as many other areas of the country, nor is the picture as bad as most would believe.

She used the word "stable," and went so far as to say that a long, bleak winter may have as much to do with the current conditions as any downturn in the economy, and that the picture will improve when the weather does.

'Knock on Wood'

BusinessWest, Apr 14, 2008 by O'Brien, George

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