An article in the Sunday Business section about industries that make money during economic downturns incorrectly depicted a business relationship involving Senator Theatre co-owner Tom Kiefaber. Mr. Kiefaber formerly was an associate with Durkee Theatres.
Retail sales are down. Consumer confidence is low. Everyone from autoworkers to real estate agents is being laid off. Is there anyone out there making any money?
In a word, yes. Despite a recession, and because of one for some, there are ways to make a profit. The winners in a recession -- and the one most economists agree we're in is no different in this sense from its predecessors -- tend to fall into three broad categories:
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* Recession-resistant companies. They typically offer goods people can't forgo, such as groceries, electricity, medical care and some categories of clothing.
* Counter-cyclical industries. They benefit when people turn to less-expensive alternatives, such as going to the movies rather than plays.
* Those who profit because of others' misfortunes. Don't look in the unemployment lines for bankruptcy lawyers, auctioneers or outplacement advisers -- they're all at the office working late.
"We are doing well," said John A. Stevens, managing director in Baltimore of Drake Beam Morin Inc., a national outplacement business. His company gets hired when conscientious employers resort to layoffs.
Mr. Stevens' company provides a spectrum of services for terminated employees, from psychological counseling to secretarial assistance and interview training.
Drake Beam Morin is paid based on a percentage of a fired executive's salary, typically 10 percent to 20 percent, Mr. Stevens said. Lately the financial-services industry has provided the most new clients, he said.
For bankruptcy lawyers and auctioneers, the most new business is coming from the real estate industry. The dramatic downturn in real estate that struck banks and developers in New England a few years ago has swept into Maryland with hurricane force.
"It is true that bankruptcy attorneys, especially those who handle major business cases, have a lot more work these days than in the past," said Lawrence D. Coppel, head of the bankruptcy and creditors' rights group at the Baltimore law firm Gordon, Feinblatt, Rothman, Hoffberger & Hollander.
"And that's a result of the economic downturn that we're in, especially in the real estate area," said Mr. Coppel, who represented developer Lawrence Rachuba in his recent bankruptcy case.
Mr. Coppel was the founder of the Bankruptcy Bar Association about two years ago, and he said the group now has more than 200 lawyers statewide.
At Gordon, Feinblatt, "we've added attorneys, we're looking for more attorneys," he said. "We've always been busy. But what we're going through is extraordinary."
And when real estate developers go bankrupt, their creditors often turn to appraisers to value the properties. Likewise for federal regulators trying to clean up the offal from banks and thrifts gone wild on speculative real estate deals.
"It wouldn't surprise me if bankruptcies aren't doubling and tripling, or maybe quadrupling," said M. Ronald Lipman, a partner in the appraisal firm of Lipman, Frizzell and Mitchell. "And bankruptcies often require the services of a real estate appraiser."
It's a curious dynamic, though, this business of making money in a recession. "I'm not smiling," Mr. Lipman said, "because I've got a heart and I care what's happening to many of my clients, and many of them are struggling or worse.
"A lot of our friends are getting hurt while this is happening," he said.
More difficult to determine is whether savvy, and cash-laden, developers are capitalizing on the drop in real estate values. "There are so many bottom-feeders out there who want to buy [properties] at 50, 60 cents on the dollar," said Ray Nichols, a principal in Financial Conservators Inc. and Banking Services Corp., which provide real estate receivership services.
"But the banks can't afford to sell at that level," he said. "We're getting calls every day from major businessmen and investors who have money and want to spend it, but at bargain levels."
Developer Jack H. Pechter, co-owner of JHPC Development Inc., agreed that "the opportunities are there. But even though the opportunities are there, there's no lenders to provide" the financing, he said.
On the retail side, don't believe everything you read about declining sales.
Some companies are defying the conventional wisdom about consumer spending and managing to do well, particularly those that sell non-durable goods, such as apparel and accessories -- everything but big-ticket items like cars and home appliances.
"Over the last 30 years the greatest decline in consumer non-durable expenditures was 2.5 percent in any one year," said retail analyst Christopher E. Vroom of Alex. Brown & Sons Inc.