Over the past year, many small businesses have cut expenses to the bone. Worker spirit has taken a beating.
Ron Smithfield, the chief executive officer of Smithfield Manufacturing, a metal cutting and machine servicing company in Clarksville, Tenn., is one of the executives who have been forced to deliver some bad news to employees during the recession.
Smithfield's business has dropped by more than 35 percent this year. One of its biggest customers is a company that makes parts for Caterpillar tractors. That account has been hit by the drop in construction.
Delivering Bad News
When he needs to deliver one of his painful announcements, Smithfield typically gathers everyone in the company break room, where there's a folding table, a dozen chairs and a giant notepad. On a recent weekday, during a reporter's visit to the company, he has written the number 32 on that pad in red permanent marker.
The number stands for 32 hours — or the length of the shorter workweek that Smithfield has to institute to cut costs.
Other pages on the notepad explain why the company suspended its retirement program and reduced its health benefits. Smithfield also cut his own pay by 20 percent.
"We can't expect other people to take a cut if we don't take a substantial cut, and we have done that," Smithfield says.
But it wasn't enough, and Smithfield also had to lay off six employees.
"We're like one big family, so that was a tough decision, and it was probably delayed longer than it should have been, but it was necessary," Smithfield says.
Norma Purviance, who has been at the company for 15 years, is one of 17 remaining employees. Currently she is a tool buyer, a safety coordinator and a customer service representative.
With so many layoffs, employees wear more hats. Purviance takes orders between running a punch press.
She says she's happy to multitask because that makes her harder to replace.
"My husband and I both work here," Purviance says. "So when layoffs come around, it can hit us from either direction." She says that her entire family's income comes from working for Smithfield Manufacturing.
The reduction in hours also hit the Purviance home twice as hard. That's why they planted a new vegetable garden and found other ways to feed the family.
"My husband hunts for all of our meat, so we don't have that in our grocery bill," Purviance says. "We've bought a grinder so we can grind our deer meat on our own, so I'm not going to go hungry."
While preparing for the worst, Purviance says the couple is thankful to be taking home two paychecks, even if the sums are considerably smaller.
Another employee, 22-year shop veteran Michael Davenport, works in a hazy room, turning raw metal into shiny nuts and bolts. A screw machine — the only one that's operating today out of a dozen at the company — is dropping specialized fasteners into a metal pan.
"I'm the only one that runs these machines now, but at one time we had three or four people running them all at once," Davenport says.
He says he knows exactly how slow business is when he grabs his orders for the day.
"I have a notebook that I keep all my work in and a lot of times it was pretty full and now it's just one or two, you know. That bothers you sometime," Davenport says. "You're afraid you're going to go to that notebook and it's going to be empty."
But orders have picked up slightly, and the company has called back two laid-off workers. There's also a possibility of supplying parts to a solar panel manufacturer that's building a plant nearby. Davenport also says other metal workers have gone out of business, so Smithfield Manufacturing just has to hold on.
"And when things pick back up, there's going to be a lot less competition for what we do," Davenport says, with the optimism that makes the recession's hardships bearable.