Flip side | Maine businesses from discount retailers to motorcycle shops find the downturn is kicking their companies into high gear
Photo/David A. Rodgers
John Reny of Renys department stores
Photo/David A. Rodgers
Clean transport: Eddie Quinn, left, and David Brink, co-owners of Cycle Mania in Portland, say sales are steady despite the economy
Photo/David A. Rodgers
Relaxation at a premium: Peggy York, site director of Spa Tech, directs a massage student in a class popular among people looking for extra income
John Reny is building a sizable addition to the discount department store in Belfast he owns with his brother Robert, despite widespread warning signs the economy is distressed.
“We just decided to bite the bullet and expand our store,” John Reny says. Construction on the 14,000-square-foot addition originally was slated to start last spring, but the Renys, whose 14 stores from Damariscotta to Bridgton generated about $56 million in revenue last year, held off for a few months as they watched stock markets dip, national foreclosure rates climb and gas prices soar. “Finally a couple months ago, we said, ‘Either you’re in or out,’” Reny recalls. “It’s better to do something than nothing.”
But don’t let Reny fool you — this down market expansion isn’t a gamble as much as sound business. While plenty of Maine companies, from boat builders to building contractors to oil dealers, lately struggle to maintain sales and control spiraling costs, the 59-year-old chain store known for its budget-friendly, practical goods these days is still growing, albeit slower than usual. Discount retailers, especially smaller ones like Renys and Marden’s Surplus and Salvage, based in Lewiston, can snag deals in production over-runs, close-outs, bankruptcies and liquidations and pass those savings along to consumers hungry for a bargain. Over the past year, the Renys posted two percent growth in sales, which is down from the three to five percent growth the company had been achieving over the previous few years. But that’s still decent, according to Reny.
“I think talking to people in business across the country, that sounds pretty good,” Reny says. “We’ve always done very well in hard economic times because we do have good low prices and we like to sell quality products.” This time around, Reny’s seeing more customers eschew knick-knacks for essential items like clothes, boots and shovels.
While many businesses are slowing down, growth is indeed happening in Maine sectors like higher education, alternative transportation and discount retail. These lucky few share the security of being able to observe the economic carnage at a safe distance.
“We’re doing quite well, thanks for asking,” Harold Marden says from his office in Lewiston, where he oversees 14 Marden’s stores around Maine. “Sales are good. There’s no downsizing or layoffs here.”
Our unique slump
You don’t need an MBA to know economic downturns force consumers to change their buying habits. Dr. James Leiby, an economist at the University of Maine in Orono, says that during recessions (and, no, we’re not officially in one yet) “people are experiencing reduced income, and other people are worried about their income” — both of which can depress people’s willingness to spend, or cause them to spend differently.
But figuring out how to bank on a downturn’s silver lining can be tricky. “One of the great difficulties is that recessions are all very different, and may affect different industries differently from the last recession,” Leiby writes in an e-mail. “This means that what worked the last time might not work this time, and the academic research will generally only tell you about the last time.”
During the last U.S. recession in the early 2000s, consumers and producers were hampered by the collapse of dot-com start-ups and by deflating stock markets, but they didn’t have to worry about high energy prices like we do today. Energy prices, which along with the housing crisis are one of the current slump’s unique influences, are prompting people to seek out alternative energy sources and rethink transportation habits — two shifts that weren’t a factor during the last downturn. These days, companies specializing in renewable energy, like solar panel company Ascendant Energy in Rockland, or public transportation, like rail, are seeing their business increase. The Amtrak Downeaster is reporting record ridership, with passenger numbers in July, the most recent data available, up 33.6% over the same month last year. Over the year, rail ridership was 28% higher than in 2007, bringing in a little more than $6 million, about $800,000 more than what was expected, according to Patricia Quinn, executive director of the Northern New England Passenger Rail Authority.
National newspapers like the New York Times and other media recently reported that debt-collection agencies, equipment leasing companies, fast-food restaurants and consultants that specialize in restructuring troubled firms are faring well. Temporary staffing companies are also going strong, though they aren’t flourishing because the drop in employment is so far lower than it was in 2001, according to the American Staffing Association, based in Virginia. “Members across the country are not losing business but they are not gaining business,” says ASA spokeswoman Michelle Snyder.
Laura Thibodeau recently purchased Springborn Staffing in Portland earlier this year partly because her data showed temp agencies tend to be recession proof. “Five percent unemployment is usually a sweet spot for a staffing agency,” she explains. In a smoking economy, temporary staffing agencies can’t supply enough qualified people because they all have jobs. And in what Thibodeau refers to as a “horrible recession,” staffing agencies may have impressive candidates but no positions to place them in, Thibodeau says.
Thibodeau says her company plans to add a fourth full-time employee to its temporary staffing department within the month and that Springborn, despite national temp agency trends, is “busier than ever,” though she would not reveal revenue figures to detail that growth.
Live and learn
It’s boom time for Maine’s community colleges: Enrollment has grown 55% over the last five years and applications jumped eight percent this year. John Fitzsimmons, the community college system’s president, says enrollment, after the numbers are tallied, will likely have increased five to eight percent over last year, adding upwards of 1,000 new students across the seven campuses. If each student pays the full $2,400 tuition, the college will reap an additional $2.4 million in revenue this year.
“The minute the economy slows down, and I’ve been president for 20 years, we absolutely see a spike in applications,” Fitzsimmons says. He says the interest in education comes in part from working people who may have been just scraping by in their job. Once the economy sours and these workers lose hours, wages or their job altogether, they might seek retraining.
James Ortiz, president of Southern Maine Community College in South Portland, says he’s also seeing more recent high school graduates on campus. “They looked around and said, ‘I better get a degree and prepare for the job market,’” he says.
Not to be outdone by the community colleges or even the University of Maine system — which has seen a 4.5% increase in applications this year — a beauty school in Portland is also recording record enrollment. Spa Tech Institute had a 15% increase in students this year over last year, pushing up enrollment to more than 500 students, according to owner Kris Stecker. The school, which has more than 75 employees, was founded in 1976 in Massachusetts and has five campuses offering cosmetology, aesthetics, massage and polarity therapy. Two of the campuses are in Westbrook and Portland with a combined current enrollment of 250.
“People seem to use this time to make a career change they’ve been wanting to do for a long time,” Stecker says. But he’s not only seeing traditional college students aged 18 to 22 years old, but also baby boomers. “They might live another 30 to 40 years after retirement, and they’re thinking about a second part-time job that will keep them healthy.”
Peggy Sensecqua York, the site director of Spa Tech’s Portland and Westbrook campuses, has noticed that, while Spa Tech’s cosmetology program is filled with younger students, the massage school has attracted older students spooked by the slump. “I think when the economy is in a compromised position, people are looking for a better way to make a living, pay those great oil bills, those great food bills,” she says.
In the quest to pay these big bills and find savings, people spend money on their own fix-it jobs, for example, rather than hiring carpenters or plumbers — to the benefit of hardware stores.
At Aubuchon Hardware in Portland, manager Gary Whitmore is seeing this theory come to life. “We’re seeing people putting off bigger projects and doing more simple solutions, fix-its,” he says. “Overall sales have been steady, on par with last year. We expected with the way the economy was going, it would be a tougher year, but there have been offsets,” with sales of weather stripping and pellet stoves in particular compensating for declines in other goods, like power lawn motors.
Bicycle shops also claim they’re doing well in today’s gloom. David Brink, one of the owners of Cycle Mania in Portland, says sales are even with last year because southern Maine has been and continues to be what Brink calls “health conscious,” though he declined to reveal sales figures. Larry Jobe, co-owner of A & J Motorcycle Safety School in Bucksport, says his two-year-old business increased from 297 students in 2007 to almost 400 this year, driving up revenues from $88,500 to a projected $120,000 by the end of 2008. He says some students admitted they were converting to motorcycles because of high gas prices. But that might be just a good excuse.
“We see a lot of baby boomers who rode when they were kids. Then they got married, had kids, the motorcycle wasn’t practical and they had to sell it,” Jobe says. “Now the kids are gone and they want to save money for gas. And it’s a good way to get back and forth from work and get groceries.”
Rebecca Goldfine, Mainebiz staff writer, can be reached at rgoldfine@mainebiz.biz.
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