Employers Review Hiring Plans as Economy Slumps

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MICHELE NORRIS, host:

As we just heard from Adam Davidson, the jobs cuts were pretty broad-based last month. Now, we're going to hear from some people who actually do hiring and firing around the country. The hope is that moves by the Federal Reserve and politicians in Washington will be able to entice them to spend more money and hire more people.

But as NPR's Chris Arnold reports, many business owners and executives are hesitant to do that, if they fear the economy is sliding into a recession.

CHRIS ARNOLD: In an old brick mill building in Worcester, Massachusetts, Ted Jasiewicz is walking past the machines he makes here. Other companies buy the machines for about $100,000 a piece and use them to make lithium ion batteries.

Mr. TED JASIEWICZ (Business Owner, Micro Tech): To be used in, I'd expect, defibrillators and/or pacemakers, certainly in the medical industry.

ARNOLD: These so-called battery-winders here also make batteries for cell phones, laptops, all kinds of electronics. Gusevich runs this small family-owned high-tech company called Micro Tech, which in recent years has been hurt by foreign competition. More customers are turning to Asia for this kind of gear. And Jasiewicz says the slowing economy is making things worse. He says with so much uncertainty, many customers don't want to buy new equipment right now.

Mr. JASIEWICZ: That's the difficulty that we're facing here. People are concerned about their paychecks, companies are concerned about where will they sell it if people aren't buying. And in those circumstances, people in my business, building machines, we are at the bottom of the pole.

ARNOLD: The stimulus from Washington and the Fed might help generate some orders for Jasiewicz, but until that happens, he's not going to spend more money. His revenue has fallen sharply. He's too worried to overextend himself borrowing, and he's just trying to avoid layoffs.

Mr. JASIEWICZ: I'm looking at what we'll have to do to keep the people on that I do have. And I am calling everyone that I know and don't know to try to drum up business.

ARNOLD: Micro Tech is just one company and it's probably worse off than some others when it comes to competition from Asia, but many companies are clearly struggling. Overall, the U.S. manufacturing sector lost 28,000 jobs in January.

Mr. BILL CHENEY (Chief Economist, John Hancock Company): Manufacturing is disappointing.

ARNOLD: Bill Cheney is chief economist at John Hancock.

Mr. CHENEY: I think everybody is assuming that U.S. manufacturers should be becoming more competitive globally as the dollar gets weaker. But that doesn't seem to translate into a lot of jobs. I think those manufacturers who are most competitive are those who are most successful about not hiring a lot of people.

ARNOLD: But Cheney is still optimistic that the economic stimulus efforts will be enough to avoid a recession, and there are some bright spots - education and health care services continue to add jobs. A smaller but growing sector is alternative energy.

Jon Hill is the CEO of Sierra Solar Systems in Grass Valley, California.

Mr. JON HILL (CEO, Sierra Solar Systems): I'm optimistic because solar is very popular. And with all the concern about the environment and about global warming, solar is certainly a way to fight that.

ARNOLD: Soaring fuel prices don't hurt either. Sierra Solar is a small company with about 10 employees that offers wind and solar systems for homes, businesses and farms. It does about $3 million a year in business, and Hill says he's looking to hire more people. But not too many. Hill has one eye on the faltering economy and the turmoil in the stock market.

Mr. HILL: Things are doing well because of people wanting to be green. But on the other hand, when peoples' 401(k)s go to hell and they don't have as much money to spend, they are, you know, obviously, going to think a little more about making a major investment like that. And maybe they're not going to put in as big a system. Maybe they'll put in a smaller system. So that's a concern for sure.

ARNOLD: So even the companies that are doing pretty well, people are nervous about where the economy is headed.

Chris Arnold, NPR News, Boston.

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