ECONOMY Area businesses suffering from Sept. 11 fallout

THE VINDICATOR, YOUNGSTOWN
Store and restaurant sales haven't returned to normal since the Sept. 11 attacks but are getting better.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- Tina Thomas of Struthers is just what the doctor ordered to revive a weakened Mahoning Valley economy -- a determined shopper.
The 44-year-old mother has placed some Christmas gifts on layaway in spite of the Sept. 11 terrorist attacks that have shaken the country and slowed customer traffic at local stores and restaurants.
Thomas said she's worried about the business trips her husband has planned but is secure enough in the family's finances to continue her normal spending habits at home.
Local retailers, who saw few customers immediately after the attacks, are glad customers such as Thomas are shopping. The long-term effect of attacks doesn't appear as bad as first feared, they say.
Those who watch the local economy also are keeping a close eye on retailing because manufacturing, construction and other parts of the economy have been shaky for some time.
Significance: "Consumers were keeping the economy from a recession," said Reid Dulberger, senior vice president at the Youngstown/Warren Regional Chamber of Commerce.
Local retailing has been "extremely soft" since the Sept. 11 attacks, said Bill Ogden, principal at the Hill, Barth & amp; King accounting firm, which has offices in Boardman and Youngstown.
"My clients now are starting to get worried about the holidays," he said.
Dale Sheely, president of Sheely's Furniture and Appliance in North Lima, said customer traffic dried up immediately after the attacks.
"It took the wind out of our sails for the first several days," he said.
Sales have slowly picked up since then, and the last week of September was an excellent sales week, he said. Overall, sales were down 6 percent in September, he said.
What happened: The sales drop hurt because consumers were just beginning to spend money again, he said. Sales had been off about 10 percent since fuel prices and interest rates rose a year ago, he said.
When both came down this summer, traffic at the store picked up and sales for August were 5 percent higher than August 2000, making it one of the best Augusts ever, he said.
Tom Compton, co-owner of Sofas Plus in Boardman, said his store had a similar experience after the attacks. Hardly any customers came out for three or four days after the attacks, leading him to think it would be a devastating month. Shoppers have returned, however, and the crowds are back on U.S. Route 224.
Sales at Sofas Plus haven't yet returned to normal but they are better than expected in mid-September, he said.
Shoppers still are talking about the attacks, he said.
"People are really dwelling on it. It's not going away," he said.
Mary Ann Logan, president of the Mahoning Valley Restaurant Association, said she has seen a difference in diners' moods.
"People aren't going out as much, and when they do, they're not as jovial. They're worried," said Logan, who owns Nicolino's Restaurant in Niles.
She said younger people are still going out, but older people and families seem to be staying home more. She thinks much of that has to do with lower stock prices.
What's behind this: "People have lost a lot of money. They didn't know that was going to happen and they were depending on that money," she said.
She said weekend crowds are only about three-quarters of normal size, while weekday crowds have been cut in half.
Ogden said people's fear about the future can hurt the economy if they are afraid to spend.
"Negativism hurts," he said.
Consumers should realize that some good things, such as falling interest rates and lower tax rates, are occurring, he said.
Ogden thinks the economy may pick up in the first quarter of next year as companies take advantage of lower interest rates to finance expansions.
Dulberger said the start of economic declines is hard on the Mahoning Valley. Big-ticket items such as cars and appliances generally are the first purchases trimmed when money gets tight, which is bad for the Valley because it has many jobs in the auto and steel industries, he said.
Jobs situation: The local economy has felt the pinch already. The Valley has about 245,000 people working, which is about 3,000 to 4,000 fewer than it had last year, Dulberger said.
The big hit was the closing of the CSC steel mill in Warren, which eliminated 1,300 jobs and hurt other companies that supplied the mill, Dulberger said.
People have been laid off in the past year at other plants and offices, such as Phar-Mor in Youngstown and General Electric in Warren. Major employers such as General Motors in Lordstown and Delphi Packard Electric Systems in Warren have cut hundreds of jobs through attrition.
Even though there are fewer jobs in the Valley, some companies are investing here. Dulberger said the chamber was involved in providing assistance for $183 million worth of business expansion projects through mid-September of this year, which would make this the best year since the chamber has been handling economic development for Mahoning and Trumbull counties.
Packard is putting up a new $58 million plant in Vienna. Co-Steel built a new $26 million plant in North Jackson, and Warren Fabricating is adding a $19 million expansion to its Hubbard plant.
Construction down: Overall construction has been down in the past year, said John Logue, executive vice president of the Builders Association of Eastern Ohio and Western Pennsylvania.
The agency's fiscal year just ended in September, so figures aren't available yet, but he said the number of hours worked in the past year is off at least 10 percent and the value of projects will be down as well.
He said next year should be a good year because of a number of school and highway projects that are slated.
Ogden said his clients who are contractors haven't had the strong years that they've enjoyed of late but he said their businesses aren't slow, either. They just don't have the backlog of projects they normally have, he said.
Ogden said he thinks the worst problems are in the past for area manufacturers. Lower interest rates should help them decide to replace aging equipment, which will in turn help the overall economy, he said.
The trucking industry already has seen improvements, he said. It was hit hard a year ago by higher interest rates and fuel prices, but is doing better now that prices for both have fallen.
shilling@vindy.com