Survey: Profits take back seat to hiring
Neither a consumer spending slowdown nor the threat of the fiscal cliff stopped R.C. Bigelow Inc. from selling more than 1.6 billion cups of tea in 2012.
It now falls on companies like the family-owned, Fairfield-based tea manufacturer to make up for the economic slack, says Cindi Bigelow, president of R.C. Bigelow, which does business as Bigelow Tea.
“We’re very committed to our employees,” she said. “There are areas where we do have more employees than we need. But I always say if we see that that employee is really dedicated to this organization and to making a difference … they have a lot of leeway in our company.”
Bigelow said the company is currently hiring, after adding employees last year.
“We’re having a very good year — luckily, we’re up about 10 percent. But we always try to emphasize that in good times and bad times, you always need to run your business the same; you always need to be fiscally strong,” Bigelow said. “We would be hiring in bad times as well, if we see there’s a need we need to be filling to help drive this company.”
By and large, business owners share Bigelow Tea’s commitment to the employees, but the economy has slowed down the pace of new hires in Fairfield County, said Andrew McGrade, managing director and market investment director of U.S. Trust.
“As it relates to the Fairfield County business owner, I think they have been holding back somewhat,” said McGrade, who works out of the Greenwich, Stamford and Westport offices of U.S. Trust, part of the Global Wealth and Investment Management unit of Bank of America Corp. “But we think they’re really getting ready to turn the corner.”
A survey of hundreds of high-net earners from across the country conducted by U.S. Trust last year shows a majority of employers feel a responsibility to increase hiring and to keep people employed, even at the expense of profits.
Among the business owners who responded to the survey, 72 percent said they feel a responsibility to create jobs and 76 percent said they feel an obligation to keep people employed even if it means lower profits.
Slightly more than half of the business owners who responded said they have started, acquired and/or made substantial investments to expand their business since 2008.
“Some of the caution over the recent period has probably been driven by the fact that they’re wanting to do very well by and have a paternal attitude almost toward existing employees,” McGrade said.
Hiring a new worker, he said, “is like adding someone to the family.”
McGrade said he feels business conditions are improving and that the pace of growth in the region will likely be dictated by the markets’ impressions of “how we’re doing on fiscal policy reform.”
Addressing the debt ceiling and government spending in a constructive manner “might add a percent to a percent and a half to U.S. (gross domestic product) growth,” McGrade said. He added that a failure to do so could represent a 1 to 2 percent drag on GDP growth.
Morgan Stanley is “cautiously optimistic” that equities markets will continue to be bullish in 2013, said Peter Chieco, senior vice president of Morgan Stanley Private Wealth Management in Greenwich.
“Morgan Stanley feels that you’ll see a slowdown in the first-quarter gross domestic product because of the (2 percent) payroll tax increase … which we think could bring GDP down in the first quarter closer to the 1 percent area,” Chieco said. “We are still expecting a 2 to 2.5 percent GDP increase for the year.”
A version of this article appeared in the print edition of the Business Journal for the week of Jan. 21, 2013.