Is economy slowing or still growing?While some area business leaders are confident that the economy is firmly on the rebound, others are saying they’re not quite as sure.
By: Sarah Gorvin, The Republican Eagle
While some area business leaders are confident that the economy is firmly on the rebound, others are saying they’re not quite as sure.
“The bottom line is we felt the business has softened a bit in the second quarter,” said Dave Murphy, president of Red Wing Shoe Co.
Because the Shoe sells its products to the construction, oil and gas industries, it can be used as an informal indicator to gauge how the overall economy is doing.
Last year, the Shoe posted record sales. It was a pattern that continued during the first quarter of fiscal year 2012, Murphy said. But the company’s second-quarter results were slightly more lackluster.
“The overall economy I’m nervous is stalling,” Murphy said. “I’m not sure of that, but I’m not feeling quite the robustness today that I felt (the first part of the year).”
While sales are up in most of the Shoe’s 150 retail stores, Murphy said host sales — sales to big box and secondary retailers — are lagging.
“We’ve been hiring quite aggressively for the past year and a half,” he said. “Now we’re pausing, saying, ‘Wait a minute here, before we get too carried away, let’s be careful.’”
Still, Murphy was quick to point out that he’s not panicking, and he doesn’t see the economy slipping back into another full-blown recession. It’s just that he’s not sure the economy is bouncing back at the same rate that it was six months ago.
“Red Wing Shoe is still on solid footing,” Murphy said, adding that the company is currently ahead of its sales plan that it set in November.
A slight economic drop-off after a strong rebound isn’t uncommon, according to Tom Longlet, a retired Red Wing banker.
“It’s rare that there are only positive steps forward. I think it’s common to have two steps forward, one step back,” he said. “I think there is a recovery going on, but I do think it’s fragile.”
That recovery, Longlet added, is often influenced by current events and their effects on consumer confidence. He pointed to the turmoil in the European economy and uncertainty leading up to the U.S. presidential election as things that could have an impact.
Longlet said he has seen progress. Home and car sales are increasing, he said, adding that those are two industries that are indicators of the overall economy.
Another industry Longlet singled out as an economic gauge is transportation.
Rockland Flooring, which produces truck beds for semis at its Red Wing plant, has seen a sharp production increase in the last year.
“We’ll be producing double the amount of product in 2012 verses 2011,” said plant manager Joe Peters.
Rockland ships flooring throughout the United States, Canada and Mexico. Peters said the increase is due simply to demand.
“We’re ramping up to try to satisfy our customers,” he said.
The company anticipates growth through 2015. Peters said Rockland may be seeing the effects of the recovery faster than other manufacturers. Still he’s confident that other industries will see improvement, too. Though they may need to wait until the third or fourth quarter.
“I think the economy is slowly turning to the positive side,” Peters said. “I see it going in the right direction.”
It’s a statement, it seems, that most business leaders can agree on.
“It’s certainly not as dismal and dark as it was two years ago,” Longlet said.