So much for all the talk about the Buffalo Niagara region being a good place to ride out the recession. While it took about nine months longer to hit here than it did across the country, thanks to our stable but subdued housing market, the steep decline we've weathered since September proves that when the national economy turns sour, there's no place to hide.
"It took a long time for the recession to arrive in Western New York," says John Slenker, the state Labor Department's regional economist in Buffalo. And arrive it has. The region in December endured its biggest monthly job loss since March 2002, when Western New York still was mired in the last recession. The December job losses were so severe - 7,600 positions vanished from December 2007 to December 2008 - that the region now has fewer jobs than it's had in any December since 1995.
Even Slenker, whose job it is to put together the monthly employment data for the region, was surprised by the severity of the December decline. "This was a larger downturn than I was expecting," he says. But this is an economy that's being wracked by fear, in addition to the fallout from the housing bubble, the vice-like credit crunch and the overall economic malaise it's creating.
Consumers aren't buying, fearful that their jobs might be in jeopardy or their pay might be cut, if it hasn't been already. Companies aren't investing as much and looking to save money wherever they can.
Executives are thinking a lot like Timothy
T. Tevens, the president and chief executive officer at Columbus McKinnon Corp. The Amherst material handling equipment maker's sales have started to weaken, with revenues slipping by 5 percent, excluding an October acquisition. New-order bookings slowed at a "mid-to-high single-digit" pace, he said.
So Columbus McKinnon has been cutting back, trimming 200 jobs in the final three months of 2008. And Tevens is poised to pull the trigger on even deeper cuts this quarter if the slowdown continues. "That's what I consider to be an initial cut," he says.
Another 200 jobs could be slashed. Hiring and wages could be frozen. The company match on worker's 401(k) plans could be in jeopardy. Health benefits could be reduced. Several plants are being looked at for consolidation.
It's like that all over. "Most businesses are looking at their sales and they're also looking at the general economy," Slenker says. "They're saying 'Where can we tighten our belt? Even if we're doing well, we're going to cut back because we don't know what the future holds.' "
That's why Slenker expects the local job losses to worsen in January.
Canisius College professors George Palumbo and Mark Zaporowski expect the cost-cutting to spread to local governments, which so far have been reluctant to scale back even as the region's population keeps dropping.
That could mean reduced services, lower pay for government workers and possibly fewer agencies operating in the region, the professors say in a recent report on the local economy. And they continue to stress that economic development efforts need to focus on initiatives that make the region more productive and competitive, such as by reducing energy, regulatory and transportation costs.
Still, Slenker says workers shouldn't give up hope if they lose their jobs. More than 20 percent of the companies surveyed by the Labor Department last month said they hired new workers in December, often to replace employees who left their jobs.