One of my colleagues in the steel business has closed his business. Like our business his was started by his father in 1955. Ours was started in 1956. He had about the same number of employees (70) a year ago as we did. As he stated in his press release he was “unable to get small enough fast enough”.
They had a good reputation and were smart and experienced. He was unable to get financing to stay open. The decision was difficult and painful and unfortunately inevitable.
There are other examples of strong reputable companies that had to sell under arduously similar circumstances. There will be more to come.
This is why I see unemployment climbing. During the first wave of unemployment the large publicly traded companies reacted quickly to the market turndown. But those of us who are not responsive to a publicly traded share price reacted slower; we took a wait and see attitude. A year later this is what we see:
There is no private construction on the market. Bids and backlogs are lower than ever. Those few who are left are bidding without a profit; just to keep from further layoffs. No profits mean no taxes which means bigger deficits.
Everyone is waiting to see what will be the results of Cap and Trade, Card Check and Health Care Reform, and how it will affect them. Capital purchases and new hiring are dead. At a time when the economy needs certainty more than anything this administration has sought the most untested , radical and massive changes we have ever seen. And now he wishes to hold public hearing on how to stimulate job creation. This president is clueless and the fact that his cabinet has fewer members from the private sector than any in history only makes him even more clueless.
Those of us who took a wait and see approach will generate another wave of layoffs. It will not be the thousands from a single large plant that makes national headlines. It will be a dozen here and a few there as the small businesses across America face the reality. Some will throw in the towel and just close; some will be forced to close or sell at bargain prices because of a lack of credit, others will finally get small enough to survive.
Either way private wealth (and the taxes it generated) will be destroyed and unemployment will continue to climb.