Baltimore-based insurance giant USF&G Corp. is selling its jet, paring its advertising budget and cutting jobs. Black & Decker Inc., the huge Hunt Valley-based tool maker, is concentrating on paying its debt. MNC Financial Inc., the state's largest bank holding company, has sold assets to raise cash.
Has the once-robust Maryland economy slid into a recession?
An informal survey of local companies shows that most business leaders think so.
"I think we are already in at least a psychological recession and the Mid-Atlantic and Baltimore areas are very affected," said Dr. Gilbert Levin, president of Biospherics Inc., which offers environmental and laboratory services.
"Unfortunately, the Mid-Atlantic region and Baltimore will not be spared in the declining economy," said David D. Wolf, president of HealthCare Corp. of America, parent company of CareFirst Inc., a health insurance provider. "Given our dependence on the federal employment and defense industries, we may be hit worse than other regions of the country."
But the economic downturn is far from universal. Some businesses actually are thriving.
"We're having a good year and we're hopeful this performance is going to continue," said Jim Harrison, chief financial officer of McCormick & Co. the Hunt Valley-based spice producer, which completed its best fiscal year ever.
"We tend to be bucking the trend, we're in a growth mode," said John Lally, director of investor relations for Environmental Elements, a designer and supplier of air pollution control devices. That company is hiring workers, expanding its research and development budget and plans to expand its office space.
And Merry-Go-Round Enterprises Inc., a retail apparel store, said it too is recruiting workers, planning to expand its office, retail and warehouse space, and will be pursuing acquisitions in the coming year.
The companies apparently having the most trouble are those involved in various aspects of the real estate business, such as banking, land development, homebuilding and building supplies.
Commercial real estate loans that went bad resulted in losses for MNC Financial Inc., parent company of Maryland National Bank. In its efforts to raise cash to pay debts, MNC has sold $670 million of assets. But it still must pay about $653 million in debt coming due. It will have to repay $271 million to its own banks on Feb. 4, $275 million to note holders on Feb. 5, and $107 million in other debt on or after March 19.
To meet these debts, the bank-holding company is pinning its hopes on an initial public offering of stock in its profitable credit-card unit. It also is trying to sell three other subsidiaries.
Despite the problems, MNC has kept capital in its subsidiary banks at adequate levels and recently boosted the levels by adding $450 million worth of leases and loans from non-bank subsidiaries.
The Ryland Group, a Columbia homebuilding and mortgage financing company, saw its third-quarter earnings drop nearly 50 percent this year compared with last year and orders for new homes declined 35 percent compared with the same period in 1989.
Vaike Talts, a company spokeswoman, said people are walking through the model homes, but "they just seem to be afraid to make a commitment at this time."
As a result, Ryland is taking a conservative approach. "We do not own or develop land and we only build a home after a contract has been signed," Talts said.
Genstar Stone Products Co. in Hunt Valley expects to lay off 300 of its 1,200 Baltimore-area workers this winter. "We are in a recession and are responding by curtailing expenditures and reducing costs," said Thomas O. Nuttle, company president. "We do not believe growth is available in 1991."
RTKL Associates Inc., the Baltimore-based architecture firm, said expects to reduce its 678-member work force slightly during the next year through attrition and layoffs. "We are doubling our efforts to provide outstanding service to our existing clients and are stepping up our business development activities," said Harold Adams, chairman.
Even the phone company is affected by the decline in home building activity. C&P Telephone said that a decline in homebuilding trims the number of new phones that are needed. At the end of 1989, the company offered early retirement and voluntary leave incentives, reducing its 10,686 work force by more than 200.
Other industries, ranging from securities to trucking and shipping, also are experiencing a slowdown.
Alex. Brown Inc., the oldest stock brokerage firm in the country, recently terminated 34 workers, or about 2 percent of its 1,750-employee national work force. The layoffs were primarily among analysts, investment banking employees and their support personnel.
"It's a difficult world out there now," said M. Sigmund Shapiro, president of Samuel Shapiro & Co., freight forwarders and customhouse brokers. Although exports are up slightly, imports are down, he said.