As businesses approach the budgeting process for the coming year, the stagnant economy and rising health care costs have company owners and executives weighing cuts while trying to maintain productivity.
In Valhalla, Cappelli Enterprises Inc. is looking to cut overhead costs for both the development and construction sides of its business in order to stay competitive.
“We”™re tightening our belts like everyone else,” said Joseph Apicella, executive vice president of Cappelli Enterprises. “But we don”™t want to compromise ourselves so that we”™re not ready to take advantage of an uptick in the market.”
Cappelli Enterprises is not alone in its cutbacks.
Ted Miller is president of DataKey Consulting L.L.C. in Mount Kisco, which compiles a quarterly business confidence index together with The Business Council of Westchester. Following an informal meeting last week of 10 CEOs of mid-sized companies in Westchester, Miller noted there was a general tempering of the enthusiasm that has boosted business growth and job creation in Westchester as of late.
“You can”™t really turn anywhere right now without hearing longer-term projected slow growth conversations,” Miller said, adding that there is more concern over the slow pace of U.S. gross domestic product growth for the first half of 2011 than over the recent volatility of global stock indexes.
Miller reported that many of the executives he spoke with said they were not planning on pay raises for employees in the near term as a result of the continued economic uncertainty and of the slow housing market, both locally and nationally.
“They feel bad about that, because it has been some time since employees have received salary increases,” he said. “They”™re all rethinking and re-examining what their game plans are going to be if (slow growth projections) hold to be true.”
This means companies will continue to invest in those areas that are critical to growth, but that they will do it “with a microscope eye on their budgets,” Miller said.
At Cappelli Enterprises, some of the adjustments for the coming fiscal year may include keeping salaries constant and asking employees to contribute a portion of their health care costs. He said the company has cut its construction workforce by roughly 30 percent and it has budgeted to reduce overhead for its development sector by between 20 and 30 percent.
“Other companies in the region are going through the exact same process,” Apicella said. “(They are) looking at creative ways to keep their ships afloat. All across the board it”™s happening.”
On the county government level, the budget is not required to be submitted until Nov. 15, but Donna Greene, spokeswoman for County Executive Rob Astorino, said the county is “constantly monitoring” the budget planning process and revenues in order to ensure the county”™s revenue shortfall is kept as minimal as possible.
She said the county”™s concerns were similar to business owners, and that the county would work to rein in health care spending and pension costs as it prepared its budget for its next fiscal year, which begins Jan. 1.
Wiley Harrison, president and founder of Business of Your Business, L.L.C. in White Plains, said his clients are largely standing pat and are not looking to expand in the coming year.
“The businesses that I do work for are taking a wait-and-see approach,” said Harrison, who is serving as one of the region”™s representatives on Gov. Andrew Cuomo”™s Mid-Hudson Regional Economic Development Council. “I don”™t see them as expanding; I see them as holding the line and staying with what they have.”
He said that in particular, Westchester businesses with 50 or fewer employees have been hammered by rising health care costs.
“Small businesses are not able to afford health insurance,” he said. “It is astronomically expensive.”
However, Harrison said he was optimistic that the work of the region”™s economic development council would bring needed capital and attention to the cause of struggling small businesses.
“We have our challenges but I”™m very optimistic because some of these issues are starting to be recognized and they”™re on the table for discussion.”
