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Small Businesses Staying Lean, Wary Of Hiring

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Small Businesses Staying Lean, Wary Of Hiring

Business

Small Businesses Staying Lean, Wary Of Hiring

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MELISSA BLOCK, HOST:

As we mentioned, new jobs numbers come out tomorrow, and the last few monthly reports have fed a growing optimism about the job market. Last summer, NPR's Yuki Noguchi brought us a picture of hiring from several small businesses, and we asked her to check back in with them to see if things have changed.

YUKI NOGUCHI, BYLINE: The lion's share of new jobs are coming from small and medium-sized firms. But even if the economy comes roaring back, small businesses aren't likely to hire with wild abandon.

KATE O'SULLIVAN: It's a huge commitment when you're a very small firm to add someone. And I think that the outlook is still not completely firm.

NOGUCHI: Kate O'Sullivan is director of content for CFO magazine, which, along with Duke University, co-sponsors a quarterly survey of financial executives. The latest report out this week shows that a quarter of small businesses never expect to get back to their pre-recession staffing levels. O'Sullivan says partly, this is because businesses generally have already learned to do more with less.

O'SULLIVAN: They've really looked into a lot of creative ways to do more with fewer people, so they have invested in the technology. They have invested in the equipment. They've sort of re-jiggered work schedules so that they have people working overtime. But they're very hesitant to add people because they just very recently have gone through the experience of laying people off.

NOGUCHI: In Temecula, California, Rose Corona runs Big Horse Feed & Mercantile, a country general store that recently lost two employees who moved away. Corona doesn't intend to replace them. Instead, she installed a new software program to help her keep track of inventory.

ROSE CORONA: We may save a few labor hours here and there, but in essence, I will use fewer people to do more things.

NOGUCHI: One of those things is building up their online retail business.

CORONA: So that means a lot of these girls who know how to take photographs and know how to - you know, are going to be taking a lot of photographs, so we can slap those on the Web, which has gotten totally ignored because we just don't have the bodies to do it.

NOGUCHI: Gala Nettles is one of Corona's suppliers. Among other things, Nettles Country manufactures stirrups for horses. Nettles says she doesn't see hiring anywhere on the horizon for her Madisonville, Texas business.

GALA NETTLES: The recession is still alive and well for the small business owner.

NOGUCHI: Nettles says higher prices for everyday goods mean consumers have less money to spend on her products. The rising cost of gas has eaten into their budgets, she says, and other costs have gone up, too.

NETTLES: It's very hard, sometimes, for the normal person to relate to how that bag of chips really affects the bottom line, but it does.

NOGUCHI: Nettles says she has ideas for new products she'd like to launch, but they remain only concepts because they don't have the manpower to design or make them.

NETTLES: We could definitely use a couple more people, but we can't afford them. We cannot afford them.

NOGUCHI: But there are companies that are hiring, even though they've also become more efficient. I last spoke to Precision Machine Works in July. Since then, the Seattle-area airplane parts firm has added 11 people to its staff of 166 workers. Bill Helenberg is the company's chief financial officer. He says in anticipation of Boeing's production of its 787 Dreamliner, the company tripled capital investments to make its machines more efficient. Now they require less idle time.

BILL HELENBERG: An outgrowth of that is, sure, labor costs increase while all that volume increases. But we're doing so much more efficiently, so we sort of have a result of labor's not increasing at the same rate as our demand's increasing.

NOGUCHI: As a result, Helenberg says, Precision Machine will have to hire far fewer workers than they would have before. Yuki Noguchi, NPR News, Washington.

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