LOCAL BUSINESS PULSE: Business Owners Deserve a Medal for Riding Out Still-Struggling Economy

January 31, 2013
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The phone has been ringing for John and Leeann Paddock, owners of La Verne Construction. The Commerce Department said that the economy contracted at an annual rate of 0.1 percent in the fourth quarter. That’s a sharp slowdown from the 3.1 percent growth rate in the July-September quarter. On the other hand, consumer spending rose 2.2 percent and savings grew to 4.7 percent from 2.6 percent in the previous quarter. Moreover, residential construction surged 15.3 percent, leading housing to be a plus for GDP for the first time in nearly eight years. The Dow Jones Industrial Average also has been knocking at the door of 14,000. So, which is it? Is the economy slipping back into recession or is it showing signs of life? For answers, we asked some of our local businesses and bellwethers of the economy for their gauge on the economy. Betty Kalousek, owner of Generations, an antiques store and fixture in downtown La Verne for the last 18 years, sees things picking up. “I’ve had more traffic through. When money is tight these are the first things that people don’t buy.” She’s not sure to what to attribute the increase in foot traffic. “Possibly it’s the economy,” she said. She said she knows that it’s not the Thursday farmer’s market. “That doesn’t help me at all,” she said. “It’s not my kind of promotion.” One promotion, however, that she feels will help her is the Wine Walk scheduled for downtown La Verne on April 6. “I think that will bring a classier clientele,” she said. Autumn Wilkins, vice president of WF Construction, which will celebrate its 25th year in business this March, said “things look promising.” The company that built Kohl’s and Outdoor Elegance here in La Verne is seeing its construction pipeline begin to swell. “Banks are willing to lend for commercial and residential projects,” Wilkins said. “Lease rates are going up. People are less hesitant and nervous about the economy. Everything, in general, is up and up.” At the same time, business isn’t just marching through the front door. “We have to be more proactive about finding projects and talking to cities and their planning departments,” she said. John Paddock, owner of La Verne Construction in downtown La Verne, said his phone also is ringing more often at the start of 2013. “It’s not ringing so much that I’m going to buy that house on the hill, but I’ve been getting a couple of up calls a day,” he said. “I’m keeping my crew busy.” Recently, he’s submitted a couple of winning bids while he was underbid on a pair of others. “You get what you pay for,” said Paddock who enjoys a sterling reputation in town for his work. As most sensible business people have done to ride out the recession, Paddock has adjusted his prices and squeezed profit margins to keep his doors open, but not so tight that he can’t meet payroll, pay office expenses and pay workers’ compensation. “If you don’t bob and weave in this economy, you’re going to get knocked out,” Paddock said. Expanding home construction and home remodeling is usually good economic news for suppliers of home furnishings. “January was our worst month ever,” said Paul Niederer, owner of Cost Plus Mattress in La Verne. “December, however, was a great month, way up from last year, but January has been slow. Sales were down about $15,000 from the previous January.” He attributes poor January sales to the hangover from the “fiscal cliff,” where Congress walked the nation to the bring before striking a last-second agreement on a number of contentious tax issues and revenue enhancements to address the nation’s growing fiscal debt. “I’m still very optimistic,” Niederer said. To create a little more bounce in his business, he’s expanding several promotions in February. “If you spend over $800, you get free sheets, pillows and a mattress protector,” Niederer said. He also is discounting nine of his floor models, all queen-sized mattresses. “Up to $500 off!” Niederer said, striking a promoitonal tone. Linda Jaramillo, owner of LLJ Interior Design, sees evidence of families loosening their purse strings. She knows what it’s like to walk in their shoes and defer home improvements until the economy improves. Four years ago, she lost her job in a corporate downsizing at a cookware company. In response, she fell back on her passion for interior design, went back to school, sharpened her skills and hung out her shingle. Two years ago, she did two projects. Last year, she did five. This year, she anticipates that number will continue to expand. Each project takes about a month to plan and source all the materials, so her calendar should be full of work. Barbara MacKirdy, owner of Noah’s Travel Agency in San Dimas, is taking a “wait-and-see” view of this year’s economy. “It’s a little too early to predict,” she said. “I’m slightly optimistic.” She’s cautious because she’s very much aware of the economic headwinds many of long-time customers still face, such as increasing payroll taxes. “That’s just enough to keep them home,” she noted. “And the cost of travel isn’t coming down.” Indeed, she’s right. On top of a pilot shortage, the price of oil is hovering near $100 a barrel. Interestingly, online travel searches on the internet are cutting into her sales. “People get on the internet and they don’t know where to search,” she said. “They get lost.” The terms her clients find on the internet are not always clear, either. “’Oceanfront’ is not the same as ‘beachfront,’” she explained. “Oceanfront might put you a mile away from the beach.” Because people have to pay for rent and food first, there’s less discretionary income for the finer things in life. As a result, more customers are choosing “stay-cations,” or shorter three- or four-day excursions closer to home.At the top of the list are three- and four-day cruises to Mexico and affordable trips to Hawaii. Besides vacation travel, another business sector feeling the pinch is the recognition business. In a previous era, when companies trimmed their budgets, they often restricted salary increases and instead recognized their deserving employees with plaques or trophies. But even that tradition is disappearing. In addition, Joe Franzen, owner of Awards by Champion in San Dimas, noted that many schools also have chopped recognition programs from their budgets. Because the purchase of trophies and awards are discretionary purchases, Franzen doesn’t see a return to flusher times until the economy fully recovers. “We’re sort of behind the eight ball,” he said. With fewer bread-and-butter accounts to keep his shop humming, Franzen has become more proactive, staying visible in the community through his active participation in business groups like the La Verne Chamber of Commerce. He also keeps his customers apprised of upcoming opportunities where a trophy, plaque of some other form of recognition would serve as the crowning piece to a signature event. The strategy has been working. Of the four trophy and awards shops that once did business in San Dimas, only Awards by Champion remains. That alone — Franzen’s instinct for survival in a bumpy economy — deserves some sort of award. “Quite honestly,” Franzen added, “I feel a little guilty over it.”

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