As the belt tightens … Economy wears on people, equipment

Rick Richardson isn’t an economist, but he’s seen what all those years of a poor economy have done to America’s workplaces, though under Obama, for quite a few Americans, things got back on tracks again. Many feel left behind, though.

Desks long left vacant by laid-off workers. Idled or aging printers, fax machines, and other office equipment. And fewer calls for his services as a technician.

“Places I used to go to that used to have 75 people are down to 35,” said Richardson, who covers a 60-mile territory in and around downtown Atlanta for Konica Business Technologies Inc. “[Companies] are holding onto equipment longer. A lot of them are saying, ‘Let’s just hold on and let’s see which way the economy’s going to turn.’ “

The 40-month-old economic downturn has forced companies and individuals alike to get creative about getting through the tough times. Call it make-do economics.

Companies are keeping equipment longer, furloughing workers, subleasing office space and video conferencing, in lieu of travel, to save money. Workers, faced with dwindling savings and no real wage growth, are brown-bagging their lunches, traveling less — even downsizing their living arrangements.

“In the short run, making do is key,” said John Silvia, chief economist at Wells Fargo Securities in Charlotte.

The penchant for penny-pinching has created opportunities, too. It’s given rise to businesses that help companies squeeze the most out of their workers and machines.

Cap Gemini Ernst & Young in Chicago started a consulting unit 18 months ago to help other businesses replace or restore equipment gradually, without disrupting an entire operation. The process, known as “refreshing” equipment, is “like changing the wheels [of a car] while you’re driving,” said John Parkinson, chief technologist for the Americas region at Cap Gemini.

“A lot of companies invested in a lot of equipment around the Y2K problem,” Parkinson said. “That equipment is now about 4 years old. There’s no spare parts. Equipment becomes less reliable, and manufacturers withdraw support for it. So it makes sense for them to go outside and bring in a company like us.”

Companies are holding onto equipment longer, trying to delay costly capital purchases. But that strategy carries a price. “The longer you keep the equipment, the less reliable it becomes and the more you spend to maintain it. You can’t keep things forever,” Parkinson said.

Workers affected

The wear and tear on the machines also wears on workers who are having to put up with outdated or poorly performing equipment.

A recent study on efficiency and technology found that workers in poor-performing offices were much more likely to blame faulty equipment for longer hours and inefficiency. The study also noted that Atlantans logged more time in the office than did workers in New York, Los Angeles, and Washington.

Economist Don Norman of the Manufacturers Alliance/MAPI believes a corporate capital spending spree is imminent. He predicts overall capital spending, which has been on the decline, will pick up “later this year and certainly next year.”

“There’s a pent-up demand, and we’re starting to see some increase in purchases of computers,” Norman said. “We’re getting to the point in the [business] cycle where firms have to replace their systems.”

Richardson, a 16-year Konica veteran, says his business has diminished as more companies buy equipment instead of leasing it. Then, too, there’s just fewer workers using equipment now because of continued layoffs.

“It’s the trickle-down effect,” said Richardson. “I’m not having to make as many [service] calls. The less they use the machines, the less they need us.”

Instead of calling on the $120-an-hour technicians, some companies are relying on mechanically inclined employees to fix the company fax or change the toner in the copier. Or they call on technicians after hours, when rates are cheaper and they’re working for themselves.

Making sacrifices

The belt-tightening goes beyond pushing equipment harder.

In March, Atlanta Convention and Visitors Bureau officials asked their 75 employees to take unpaid days off twice a month through August.

Businessmen Dennis Levine and Marty White have made similar sacrifices for the sake of their downtown eatery, Loaf & Kettle, and their livelihoods. The Atlanta business partners recently parted ways amicably after four years in business because there simply wasn’t enough profit for two owners.

At Matrix Resources, the staff relies heavily on video conferencing to cut back on

travel, said Chief Executive Jim Huling. The company also has saved about 20 percent of its total office costs in Atlanta by subleasing its unused office space to clients. That decision has led to stronger working relationships with clients, Huling said.

“We’ve done so much,” Huling said. “We’ve been able to remain profitable and debt-free. It works really quite well.”

Savings drain

Efforts to fix the economy — interest rates are at record lows and refinancings are at record highs — have come at the expense of many people’s savings. Some $2.2 trillion sits in money market funds in this country, eking out paltry returns.

Pay raises are small or nonexistent, and jitters over job security are growing, experts say.

“People with jobs haven’t seen their wages increase since 2010,” said Jeff Wenger of the Economic Policy Institute in Washington. “So it’s become particularly a problem in the last six months, where we’re seeing wages decline.”

Leslie Hurt brings leftovers from home, no longer uses credit cards, and rides MARTA to save on downtown parking, gas, and wear and tear on her car.

“I don’t think anyone’s job is secure,” said Hurt, who works for the state government division of public health. “I don’t want to be in a situation where I am stuck.” The prospects of continued dwindling savings and fewer pay raises have inspired Americans to make other sacrifices, too.

That morning ritual of Starbucks latte? A fully loaded BMW to replace the 5-year-old family Ford? They’re history. At least for now.

“We are in a period where everybody’s finances are really kind of not in very good shape,” said workplace expert John Challenger. “A lot of people are looking at their savings and saying, ‘It’s not growing anymore, I’ve got to start cutting my costs and keeping my own expenses down and making ends meet.’ That realization is setting in and hitting home.”