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As economy stalls, N.J. businesses keep brakes on hiringPrint Email >Susan Todd/The Star-Ledger By Susan Todd/The Star-Ledger The Star-Ledger
on September 04, 2011 at 7:00 AM, updated September 04, 2011 at 10:03 AM
NORTH BRUNSWICK — Ed Miller’s specialty duct tape-making company took a beating in late 2008 as the effects of the nation’s recession set in and dramatically dried up sales.
ProTapes and Specialties, which had seemed resistant to the economic downturn for months, quickly went into survival mode, Miller said. Forty people lost their jobs.
Two years later, the North Brunswick-based company has not restored any of the jobs, and Miller said until the economy stabilizes, it isn’t clear when, or if, it will.
"Be leaner and meaner was the lesson we learned coming out of the 2009 downturn,’’ Miller said. "When you have upticks in business that aren’t necessarily sustainable, you manage the growth with overtime.’’
In companies across New Jersey, executives like Miller are already looking ahead to next year and trying to predict how they will grow in an economy that remains stuck in slow gear. The threat of inflation, slowing sales and an overall uncertainty are influencing their strategies as well as their hiring plans.
From small manufacturing companies to major medical centers, executives are trying to navigate a bumpy, uneasy time by holding the line on employment, chasing opportunities in new markets and bracing for the possibility that their best guesses might be undone by the instability of the economy.
Mark Price, a labor economist with Keystone Research Center in Harrisburg, Pa., said two of the most important considerations influencing an employer’s decision to hire workers are the outlook for sales and the ability to accommodate an increase in business.
"If demand for goods and services doesn’t look like it’s going to grow, companies might be more cautious about adding to employment,’’ Price said. "If a company can meet demand with its existing work force, it’s going to do that.’’
In August, a group of economists surveyed by the Federal Reserve Bank of Philadelphia offered a more dreary prognosis for the nation’s economic recovery.
In the quarterly forecast, the group of 37 economists made downward revisions to their projections about GDP — gross domestic product is a key barometer of the nation’s economic health. GDP is likely to grow by a slim 2.6 percent rather than the previous forecast of 3.4 percent.
The economists predicted slower-than-anticipated job growth in 2012 and an unemployment rate of 8.6 percent — worse than the group’s previous forecast. On Friday, there was even more reason for such pessimism: According to the government’s latest data, employers stopped adding jobs in August, and the unemployment rate remained stuck at 9.1 percent.
"The economy is limping along,’’ Price said. "It’s kind of grim.’’
That’s what worries Miller at the specialty duct tape business in North Brunswick. Until the growth in sales appears to be sustainable, he said, he plans to wait to make any new hires.
"We’re literally looking at this month-to-month,’’ he said. "For as long as this uncertainty exists, we’re going to try to manage with the same head count we have now.’’
Alan Lieber, president of Overlook Medical Center, is wrestling with his own set of uncertainties as he puts together a spending plan for next year.
As it stands now, Lieber expects the hospital to experience moderate job growth next year, possibly adding as many as 50 positions. The jobs, he said, would be a combination of nurses and technicians, who would be hired to operate new brain-mapping equipment for the hospital’s neurosurgery unit.
"The truth is we’ve been very stable,’’ said Lieber, who oversees a workforce of 3,400 people "The reality is, it’s very uncertain right now.’’
The Summit-based hospital faces the possibility of a "very large decrease’’ in Medicare reimbursements depending on the outcome of discussions in Washington on how to reduce the federal budget deficit. In February, Congress is expected to discuss proposals to decrease the reimbursements paid to hospitals and other health care providers. Some lawmakers have argued that hospitals would remain profitable with reduced reimbursements.
If the proposed reductions go through, Lieber said, his hiring plan for 2012 would likely drop — to zero.
"The deficit-reduction discussion has the potential for serious reductions to hospitals,’’ he said. "It’s creating a level of turmoil that we don’t usually have.’’
Price, the labor economist from Keystone Research, said although the general jobs outlook looks bleak, there are exceptions. Some small businesses will be more willing to take risks than their larger, less nimble counterparts and other businesses will aggressively manage their growth in order to stay competitive despite the tough times.
"The risk of not growing is that someone else will take your business,’’ he said.
The days when partners at Sills, Cummis and Gross would hire attorneys just because the 300-employee firm was prospering are long gone. They are still hiring, but they’re more strategic about it.
Max Crane, a managing partner, said the firm focuses on areas of the practice that are busy with litigation, including health care, which ranges from product liability cases against medical device makers to hospital acquisitions. The firm’s recent hiring has focused on lawyers who can take on more of that lucrative business.
"I just hired someone yesterday,’’ Crane said, "and two more are coming in September.’’
At NRG Energy, a wholesale power generation company based in Princeton, executives are just beginning the budget-making process for next year. Yet it is almost certain the company will add employees in its fast-growing solar and expanding retail businesses, according to Thomas Lynch, the company’s vice president of human resources.
"Even in a shrinking economy, with the country committed to alternative power, there will still be opportunities to grow,’’ Lynch said.
As its subsidiary Green Mountain Energy expands outside Texas, Lynch said, there will be a need to add employees in sales, billing and accounting. The growing solar business requires additional employees to fill sales and regulatory positions. The growth will also create a need for new attorneys and real estate people.
But projections of how many workers could be added are difficult to make, Lynch said.
"It depends on how much you want to grow,’’ he said. "When you’re expanding a product into new markets, do you want to grow faster or do you want to grow more slowly? That’s what we’re going through.’’>
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