The hiring window is finally cracking open. But the prevailing mood in the Philadelphia area on the economy is one of ambivalence and caution.
For each company with concrete plans to add to its staff, several others say they are only replacing departing employees or not hiring at all, interviews with 20 Philadelphia-area executives found.
Among the reasons for the caution: Rising health-care costs.
Fears of another stock-market decline, causing companies to retrench.
Pressure to send service jobs to lower-wage countries rather than hire workers in the United States.
The inability to raise prices of products because of the dominance of big-box retailers and soaring imports.
Higher productivity -- some of it the result of technology -- which allows individual employees to do more.
For these reasons, in part, the United States is experiencing the slowest job-market recovery in the post-Depression era. Since 2001, 2.2 million jobs have been lost -- a serious political problem for President Bush as he seeks reelection.
Cushioned by its huge recession-proof health-care industry, the Philadelphia region has bucked the trend somewhat. It added about 5,000 jobs since January 2001, to about 2.4 million jobs overall.
Last year, the region had the fourth-lowest unemployment rate -- 5.6 percent -- among the 10 largest metro areas, according to the consulting firm Economy.com.
"Employment growth both regionally and nationally has been disappointing," said Timothy Schiller, senior economic analyst with the Federal Reserve Bank of Philadelphia, though he adds that "things are getting better slowly."
"People are looking for the next act," he said, "and there has been no industry that has come to the fore like telecom in the 1990s."
Among those hiring are defense contractors, including Alloy Surfaces Co. Inc. in Aston, which makes an antimissile decoy used on military fighters and helicopters. The firm has 240 employees and plans to hire 60 to 80 people over the next year, executive vice president Larry D'Andrea said.
Also upbeat is Southco Inc., a Concordville maker of latches and fasteners, which laid off hundreds of workers in 2001. The company now plans to hire 20 to 30 full-time workers, vice president Michael McPhilmy said.
Barry Hale, whose Voorhees company Hale Trailer Brake & Wheel Inc. sells and rents thousands of truck trailers along the East Coast each year, believes 2004 will be a "big year." He recently placed a $10 million order for new trailers -- substantially larger than the order he placed a year ago -- and is looking to add to his staff of 250.
But Hale also has a Plan B. If the economy weakens and he can't sell the trailers, he'll rent them.
DMW Worldwide, a direct marketing company in Chesterbrook, is seeing a strengthening of advertising budgets -- although the budgets and staffing levels are not expected to return to those of the late 1990s.
"We just hope it's true," DMW president Warren Hunter said of the economic recovery. "My own belief is that if the stock market [drops by 15 percent], it's all up for grabs."
Hunter's skepticism is felt more keenly by other executives, pushed by new and old economic forces.
Thomas Coyne, president of Coyne Chemical in Croydon, said what ails his company and business is a "Wal-Mart mentality." While consumers like low prices, the hard-bargaining tactics of box retailers are forcing manufacturers and suppliers to cut costs.
"How many times do you go into a Wal-Mart and say: 'I want a price increase?' " said Coyne, whose specialty chemical company supplies other manufacturers. Coyne said this squeeze forces him to earn profits on higher volume and fewer employees.
With health-care costs having risen in the double digits for the last three years and family coverage costing $8,000 to $9,000 a year, all the companies said they were reconfiguring health benefits, pushing costs onto employees, or restraining hiring.
The cost of health care "makes you think about hiring full-time individuals and whether your need is really there. You don't make a careless hire," said David G. Landis, chief executive officer of Landis Supermarket Inc., which has stores in Telford and Sellersville, and has 450 employees.
David Kosloff, president of Roosevelt Paper Co. in Mount Laurel, said the company had been socked with an additional $700,000 in health-care costs this year, and its managers are meeting monthly to find ways to control them.
Paper prices, meanwhile, have declined 10 percent in three years, and are now at an inflation-adjusted level of the early 1980s, while the amount of paper used by customers has been flat or down slightly, Kosloff said.
"There is more paper than there is business. That's a huge generalization, but that is the way it is," he said. But he is hopeful that paper prices will increase later this year.
Roosevelt cut its workforce in Chicago last fall and is looking at ways to cut more costs, Kosloff said.
Health-care expenses have eaten into the margins of Sunset Mortgage Co., based in Media, said chief executive officer James Porter. The company's 1,600 employees nationwide, he said, have had to shoulder higher copays.
"It's one of the tragedies that come out of these huge increases.
The employees drop it or find less coverage and hope they don't get sick," Porter said.
A key factor in the weak job market, according to economists, has been the rise in productivity -- the amount of work an employee finishes in an hour.
Nationally, productivity rose by 9.4 percent in the third quarter last year, its fastest pace in 20 years, before slowing down in the fourth quarter.
Technology has helped make workers more efficient, experts have said. But at some point, companies have to hire to get the growing amount of work done.
Jeff Mullen, executive vice president of Atkinson & Mullen Travel Inc., which markets Apple Vacations, said vacation bookings have risen 20 percent this winter when compared with last year. But Internet bookings -- now 60 percent of the volume -- has reduced the need for new phone staff.
Apple Vacations, with 800 people working in Newtown Square and Chicago, has avoided cutbacks by having its phone staff answer customer questions rather than doing the time-consuming bookings, Mullen said.
At Landis, a new time-card system that tracks the time workers spend in different parts of the supermarket has helped move workers from areas where sales are slow to departments where sales are high. This increases the workers' productivity and reduces the need to hire.
Dismaying many Americans is the decision by growing numbers of companies to relocate jobs to low-wage countries -- instead of hiring here.
Craftmatic Organization Inc., in Bucks County, sells adjustable beds, mostly to older people. One of its largest expenses is sales calls, which have gone up by "hundreds of thousands of dollars" because of federal do-not-call legislation, said Eric Kraftsow, a vice president.
Instead of running automatically through phone numbers, the company now has to buy approved phone lists. To rein in the telemarketing budget, Craftmatic tried to outsource sales calls abroad, where labor costs are sometimes half what they are in the United States.
For cultural reasons, the tests haven't gone well, and Craftmatic, for now, still uses its own employees in telemarketing.
"We don't feel proud or happy [about going abroad], but we owe it to the majority of our employees" to find ways to make the company more profitable, Kraftsow said.
Kenexa Inc., a Wayne company that develops software that helps companies recruit, hire and train employees, also went abroad last year, growing its company with a 60-employee branch in India to develop software and operate a call center. "Programmers are cheaper over there," chief executive officer Rudy Karsan said. The company has 450 workers in the United States.
To its surprise, Alloy Surfaces has had difficulty finding new employees for its production lines. Many younger candidates are not trained or prepared for manufacturing work, D'Andrea, the company executive, said.
It also is having trouble persuading engineers to apply for jobs.
Because the company is small and not well-known -- and the economy is so fragile -- engineers don't want to leave a secure job with a larger firm.
"People are not budging," D'Andrea said. "They are not ready to take that leap of faith."
Email This Page!