Throughout Maryland, companies are holding on desperately, hoping that the worst of the recession is over.


April 22, 1991|By Kim Clark

In the 39 years he has run his Jessup stair-building company, Bernard Poley has never seen business so unsettled.

Drastic reductions in new home construction forced him to cut his work staff from 48 last summer to 32 this winter.

Then, after the end of the Persian Gulf war, he saw signs that orders had picked up. "A month ago I thought we had started to come out of the recession," Mr. Poley said.

Now, the owner of Eastern Stair Builders of Maryland is not so sure.

He believes the upward blip in construction isn't strong or consistent across the state. "I think that was just postwar euphoria." His company is doing about 60 percent of the business it did last year at this time.

"We're looking for a turnaround," he said.

He is not alone.

After months of layoffs, red ink and dramatic management changes, even at many of Maryland's most prestigious corporations, business people around the state are desperately feeling for the bottom of the recession.

Executives of big and small companies alike are scrutinizing sales, inventory, consumer confidence -- even the weather -- searching for signs of a turnaround.

But as yet, there is no clear answer. While some business people are beginning to report optimistic signs, others say they don't yet see any indication that the much-hoped-for 1991 recovery has begun.

There is little doubt about what has happened up until now, though.

"At best you could call 1990 rough. At worst, it was a disaster," said W. Talbot Daly, a stock analyst for Alex. Brown & Sons.

Indeed, the litany of bad news that marked 1990 would have been unimaginable the previous January.

Maryland, once touted as a recession-proof state, has seen the number of local businesses filing for bankruptcy nearly triple and its low unemployment rate rise to nearly match the national average. Last month, Maryland's unemployment rate rose to 6.5 percent, close to the national rate of 6.8 percent.

Even the rich got poorer during this recession. Maryland's biggest bank and its biggest insurance company lost hundreds of millions of dollars last year. Overall, the 50 biggest Maryland-based public companies earned a combined total of $690 million in 1990 -- less than half of the $1.8 billion the state's corporate elite earned in 1989.

There have been problems in every economic sector except for one: the providers of necessities to consumers.

Giant Food Inc., the Landover-based grocery store chain, and McCormick & Co., the Hunt Valley-based spice company, have both seen excellent profits and company-wide expansions in the last 18 months.

But manufacturers, many of whom had been hurting even during the boom years of the 1980s, continued to suffer. The only difference was that the pain started spreading to formerly healthy firms. Westinghouse Electric Corp., the state's biggest manufacturer, laid off 1,200 workers early this year. And several other area defense contractors laid off hundreds more workers because of cuts in military spending.

Transportation companies were socked by soaring oil prices, frightened travelers and slowing shipments. The Preston Corp., an Eastern Shore-based trucking company, lost $18.7 million and shut down several divisions last year as it tried to stem losses. And Arlington, Va.-based USAir Group Inc., which lost $454 million in 1990, has laid off thousands of workers nationwide, including dozens at its Baltimore-Washington International Airport hub.

Construction has always been a cyclical industry, but its 1990 crash took some of the best-known developers down. Mark Vogel, a high-flying Washington-area developer who pleaded guilty to cocaine possession late last year, had his two Maryland harness horse racing tracks file for bankruptcy in January. And the David Kornblatt Co., a 30-year-old development and brokerage company that handles several downtown Baltimore buildings, filed for bankruptcy early this month.

The trouble in real estate rippled out to financial institutions, hitting the state's biggest bank hardest. Suffering from about $1.5 billion in problem real estate loans, MNC Financial Inc., owner of Maryland National Bank, lost nearly $440 million in 1990 -- a year that saw its well-known CEO, Alan Hoblitzell, retire suddenly.

Even finance companies less dependent on real estate suffered. After losing $569 million last year, USF&G opted out of sponsoring the Orioles spring training camp, sold its corporate jet, started laying off thousands of workers and changed management.

Many retailers, too, foundered as worried consumers pulled back. Longtime Baltimore-area retailers L. Epstein and Sons Inc. and W. Bell & Co. have both filed for bankruptcy in the last several months.

Nor have the area's high-technology companies been spared. Comsat Video Enterprises, a Clarksburg-based subsidiary of the Communications Satellite Corp., lost $125 million last year and had to lay off more than 60 of its 200 employees last year.

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