Sunday, October 03, 1999
GREATER CINCINNATI 100
Execs bullish on outlook for area's economy
BY JOHN ECKBERG
The Cincinnati Enquirer
The car dealers, manufacturers, retailers and distributors on the 1998-99 Greater Cincinnati 100 can agree on one thing: No recession is in store for Greater Cincinnati.
A slowdown? Perhaps. But two consecutive quarters of a decline in the nation's gross national product?
A dip in the standard-of-living and ever-rising prices?
No way, executives told Arthur Andersen during the compilation of the 16th annual Greater Cincinnati 100 by the professional services firm. The survey, compiled annually, is based on sales reported by locally owned private companies.
“My strong feeling is we will see continued growth on all horizons for the foreseeable future,” said Keith P. McCluskey, chief executive officer of McCluskey Chevrolet/Auto Nation USA, which is 27th on the list.
“Cincinnati is a stable area that does not see the fluctuations that other areas of the country will experience. We should see moderate to good growth over the next 12 months.”
Most Greater Cincinnati 100 executives see a growing economy through 2000 — more than double the number who see a flat future — with 70 percent of the 100 executives surveyed thinking that the economy will grow and 23 percent expecting a soft economy. Seven did not answer the question.
The next economic trend should not cause a lot of worry for local executives, said Melanie Blackwell, associate professor of economics at Xavier University. “The economy has been growing gangbusters at an unsustainable rate. Even if we have a growth rate of 3.5 percent or 3 percent, that is nothing to turn your nose up at.”
While economic gut checks can be gloomy, that is probably not going to be the case next year, said William J. Boehm, president and chief executive officer of the Connector Manufacturing Co., which employs 485 and is based in Hamilton.
“I look for 1999 to end in the same way as the rest of the year,” Mr. Boehm said. “When you maintain what you have, you have a good economy.
“We've looked at some really wonderful economic growth, but we're not going to see that strong growth in the future. Sometimes, it's going to have to be flat. The end of this year will be flat, and the beginning of next year will be flat. I don't look for next year to be strong.”
Softening of the economy? Try quicksand.
“We are going to have a slowdown with some inflation and some interest rates rising,” predicted William J. Rumpke, president and chief executive officer of Rumpke Consolidated Cos. “I see big cutbacks within the next year, and it will happen, believe me.
“We're not going to have fuel lines or anything like that, but interest rates will go up and not by a quarter of a percent but up appreciably. I just feel it in my gut.”
Not so, rebutted Robert Brown, chief executive officer of CBS Personnel Services. Mr. Brown, whose personnel staffing service employs 18,000 contract employees and 800 staff associates, gets an early glimpse of the economic outlook.
“A recession is caused when consumers quit spending for six months,” he said. “I don't see the consumer not spending. Wages are going up. There's a shortage of workers, and 40 percent of all workers are invested in something: Roth IRA, 401(K), stocks or bonds.
“There's a positive attitude with manufacturers hiring and consumer spending. I usually know 12 months early if a slowdown is coming. I believe we are in a long-term positive cycle.”
While the list offers a look at the local economy, it is not necessarily an accurate view of how the region stacks up because members are only the companies willing to share sensitive information with Arthur Andersen.
Still, the makeup of the list, particularly when considered on a year-to-year basis, can provide a snapshot of broad economic trends.
Last year was a time of consolidation in many industries and that, too, is reflected by a number of companies that are not included.
Eight companies dropped
Of 11 private companies included on the list in 1997 but not on it in 1998, eight were dropped this year because the firms were bought by an out-of-state or publicly traded company. Only local privately held companies are eligible for inclusion on the list.
Paul C. Kjelstrom, president and chief executive officer of Hickman, Williams & Co., which ranked fifth on the list, said it has been a heady couple of quarters for the company, which provides sales and service to the metals industry, primarily foundries and steel mills.
He sees a slight downturn in his industry. “Our industry to a great extent is driven by the automobile industry, and I do not see a big downturn in the automotive sector,” he said.
A bright light for Hickman, Williams & Co., based downtown, has been the growing number of buyers of sport-utility vehicles and trucks. “They have cast-iron engine blocks, more so in trucks, and we like that trend,” he said.
Housing, too, is likely to continue its upward revenue curve, said Bill Borek, chief financial officer for Sibcy Cline, Inc., a full-service real estate company that is 71st on the list and employs 142.
“Even though interest rates picked up a bit and the stock market cooled off, I see that as a healthy correction,” he said. “Despite the upticks in interest rates, rates are still low by historic standards. It's not enough to put on the brakes.”
He said technology is changing the real estate picture, as is the case with most industries. “The Internet is redefining everybody's business, and nobody can predict the implications five to 10 years out,” Mr. Borek said. “That does involve a tremendous amount of capital expenditure.”
Investing in human capital — the workers — will pay off in the long run for companies on the list, predicted Robert L. Brown, chief executive officer of CBS Personnel Services. Raising wages is the best way to cut down on employee turnover, he said.
“I'm in the worst possible business when it comes to worrying about employees,” he said. Mr. Brown's company finds executives and employees for hundreds of firms annually.
“My employees see every job in the country and what it pays,” Mr. Brown said. “If I don't pay the market or above, I lose people.”
He said that perspective has given him some insight into a couple of suggestions that could save the small-business owner plenty of work-force worry. “Treat your employees with respect,” he said. “Treat them as you like to be treated and pay them more than anyone else can pay them. It's simple.”
Some companies are looking to stretch their wings into other markets. Mr. Boehm sees his company reaching out to other nations as the millennium unfolds. The firm makes circuit breakers, power transmission and distribution lines and aluminum and copper connectors.
“You get to a point where you reach a plateau, and my thoughts are you have to then move forward,” he said. “We will look to international markets: mainly South America and Europe. People who want electricity eventually must put in lines and equipment.”
Top private firms show the will to grow
List of Greater Cincinnati 100
Execs bullish on outlook for area's economy
Notable locals investing in R&D and technology
Signs of softening economy showing
Skilled, loyal employees are precious commodities
Traffic woes creep into gripes
How the list is put together
Ris Paper Co. No. 1 for 3rd year in row
List has room for 11 newcomers
10 companies come close to mark, but lag in revenue pace
Privately owned businesses face Y2K challenges
New device keeps mileage for IRS
Employers can guard against suits
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