MAHONING VALLEY Local spending takes a plunge

Some say residents and businesses are afraid to spend money out of concern for the future.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Fewer Mahoning Valley residents have been building homes and buying cars, and area businesses are spending less on expansion projects.
Some see these as signals that residents and businesses are concerned that their finances are worsening.
"People are afraid to spend," said Mary Ann Logan, president of the Mahoning Valley Restaurant Association.
On other hand: Others say they haven't seen a slowdown or they think the economy is just about to pick up.
"Every time I go to a restaurant in the Valley, it's packed with people. What economic slowdown?" said Mike Wilson, executive director of the Home Builders Association of Mahoning Valley.
Figures do show, however, that at least a few parts of the local economy have been slow so far this year:
UMahoning Valley car sales were off 33 percent in the first three months of the year.
UHome construction in Mahoning County was off 20 percent in the same period.
UConstruction on commercial buildings in the region was down 4 percent last year and is expected to be off more this year.
UThe number of companies that have completed financial assistance deals for local building projects through the Youngstown/Warren Regional Chamber of Commerce is down by about a third this year.
Out of work: Layoffs also are hurting the local economy as some of the area's larger employers are struggling.
CSC Ltd. in Warren has shut down its steel mill and laid off more than 1,000 workers. Delphi Packard Electric Systems laid off 230 hourly workers in February, plans to eliminate at least 250 other hourly positions and cut an unspecified number of salaried jobs.
They haven't been the only ones cutting back, however. State statistics show the number of nonfarm jobs in the Mahoning Valley dropped to 243,000 in February, 3,000 fewer than a year earlier. The biggest hit came in manufacturing, which tends to have higher paying jobs. The number of workers dropped to 50,000, 4,000 fewer than a year ago.
Not all bad: The good news is the loss of manufacturing jobs hasn't caused cutbacks in other industries, such as service and finance, said Reid Dulberger, executive vice president of the Youngstown/Warren Regional Chamber of Commerce.
"If this trend continues, we will lose some jobs. It will be a drag on some of the service sector," he said.
Local officials are divided on whether these job losses and other factors have taken a toll on consumer spending.
Car buying: Steve Chos, executive vice president of the Automobile Dealers Association of Eastern Ohio, said car buying was strong early last year but dropped at the same time the stock market fell from record highs. Local layoffs also have made people less likely to buy, he said.
The slowdown has continued with Mahoning Valley dealers selling 6,877 new cars and trucks in the first three months of this year, compared with 10,231 during the same period a year ago. Chos is hopeful that car sales will pick up.
"We're pleased that March was a strong month. Hopefully, April will continue that," he said.
Logan, who owns Nicolino's Restaurant in Niles, has seen smaller crowds at area restaurants. She also thinks low stock prices have area residents watching how they spend their money.
Although some people may think restaurants are doing very well, it's mostly on the weekends, she said. Business is down considerably on weeknights, she said.
Building slowdown: Home construction in Mahoning County has slowed, too. The county had 89 housing starts in the first quarter of this year, compared with 111 in the same period last year, the HBA said. Trumbull County figures were not available.
Wilson attributed the slowdown to cold and snowy weather, not the economy.
Builders advantage: Wilson said he expects a strong year for home builders, especially with lower mortgage rates this year. The HBA is holding two Parades of Homes this year instead of one, and its Showcase of Homes is featuring 50 homes, which is a record number. Home builders build these homes in anticipation of finding a buyer, so they must think the market is strong, Wilson said.
"The Realtors and contractors are very confident that there are buyers out there," he said.
He said many people also are remodeling their homes. Contractors are so busy that they are having trouble finding enough workers, he said.
Area agencies that work with businesses also have a split opinion on the local economy.
"Commercial construction is slow," said John Logue, executive vice president of the Builders Association of Eastern Ohio and Western Pennsylvania.
The value of commercial construction projects in the association's five-county region fell about 4 percent last year to $95.2 million and it probably will be lower this year, he said.
Although businesses are spending less on construction, overall spending should run about even with last year because of a large number of school buildings scheduled for construction this year, he said.
Total increase: Construction of health-related facilities and public buildings last year helped the total value of construction projects to go up to $679 million, a $3 million increase.
Dulberger said companies have been reluctant to build or expand because they are concerned about the national economy.
"Companies aren't pulling the trigger. They're not going forward. They're in a holding pattern," he said.
The chamber handles businesses assistance programs for Mahoning and Trumbull counties and development groups in Youngstown and Warren.
The level of inquiries remains strong, but companies say they want to see if recent interest rate cuts will boost the economy, Dulberger said. They don't expect to see those results until summer.
The chamber is working with 26 companies that either are considering expanding here or moving into the area. Those projects represent $200 million in new investment and more than 1,000 new jobs.
Dulberger said that is a large list for this time of year. Only 10 projects have been completed so far this year, however, he said. Normally, the chamber would have completed 15 to 18 projects by now, he said.
No signs: Another economic development group, the Mahoning Valley Economic Development Corp., hasn't seen signs of a slowdown.
"I'm still seeing deals coming through the door," said Don French, MVEDC executive director.
Although it's too early to make comparisons with last year, it appears activity has been steady and has taken place across all sectors of the economy, he said.
Hotels either are going up or are planned in Liberty, Austintown and North Lima. A steel processing plant is being built in North Jackson, and a roller-skating rink is being built in Calcutta.