Connecting The Dots Of The Recession

CBS Evening News: How Falling Boat Sales In Florida Leads To A Drop At A Wisconsin Restaurant

(CBS)  As marine industry sales are drying up, it isn't just the boat owner in Tampa and the boat builder and cushion makers in Homosassa that are running aground. The business supplying the fiberglass found on boat hulls, Chicago-based Composites One, is also being left high and dry, reports CBS News correspondent Cynthia Bowers.

"I think it's a very scary time for a lot of people," said Leon Garoufalis, the president of Composites One. "It's a very challenging time, without question."

For the first time in the company's 70 year history it has been forced to lay off employees, 100 over the last 6 months. It's not just about slumping boat sales. Manufacturers of RVs, big rigs and automobiles are all buying less fiberglass these days. The suburban Chicago headquarters expects to see its 2009 sales total at least $150 million less than last year.

That means beleaguered salesmen like Rick Hess of Burlington, Wis. are spending their days dialing for dollars and coming up empty.

Hess works on commission. He and wife Gerri wonder how they hang on to the life they've built with Rick earning 40 percent less than he did last year. They won't tell us how much that is, but imagine suddenly losing 40 cents on every dollar of pay.

"How in the heck do you deal with that?" Bowers asked.

"It's tough," Hess said. "Every day you just try to look for new opportunities in sales and try to grow your sales the best you can. A lot of arguing at home at night and it doesn't make it easy."

"Now we really have to sit down and discuss it," Gerri Hess said. "I don’t just go and buy something like I used to."

And when the Hess' scale back, other businesses get scaled back too.

This summer they will learn to maintain their own pool - and they've had to drop their longtime landscaper Steve Peters.

"Everybody got spoiled," Peters said. "It was so busy."

Not anymore. Peters has seen sales of 1.8 million in a good year drop to less than a million now - which means he's making commission on $800,000 fewer dollars.

"My wife always yells at me every spring, 'Don't worry, the calls will come in,'" Peters said. "But this year they are not coming in like they used to."

Which means his family's not going out like they used to.

"We're cutting back on going out to dinner and stuff like that," Peters said.

When the Peters family doesn't eat out, it cuts into profits at his family's favorite restaurant - Twin Oaks Country Inn in nearby Wilmot, Wis.

"I think that slowly we've gotten squeezed out of what is available in the discretionary spending," said Richard Knox, the restaurant owner.

Knox and his wife Gina know they fall near the bottom of the discretionary income waterfall. They used to serve 160 folks on a busy night, but now they are lucky if they get 100 - even on the weekend. They say this is the scariest time in their restaurant's 18 years. They've resorted to offering coupons and even Friday fish fries in attempt to entice new customers. Still the dining room is largely empty.

"People are drinking less, they're eating less, they are ordering less, they are going out less," Knox said. "Everyone has less."

Knox uses fresh basil but is cutting back on other fresh herbs, he's not ordering as many steaks, and not nearly as much wine.

"Instead of a case, two cases, three cases of something, it's a bottle, two bottles," Gina Knox said.

It is leaving a lot of empty space on his wine cellar shelves, and fewer bottles of wine sold ... means California wineries profits are dying on the vine.

[plasticsman34996]

I sold pavers in South Florida when the housing was booming, then the bottom fell out.
Sales dropped by over 60%. I did not lose 60 % of my pay but rather all my pay. The
company fired me after 4 years, no income, no co. car and no Health Insurance.
We have no plans to buy anything least of all a new boat or new car and nights out
to Outback Steakhouse are history. If things don't improve the house gets sold and we
will have to rent and live off the equity until that runs out. God Bless America.

[sjc_1]

Yes, it is all connected, which is reason why we can not let a few greedy selfish people ruin it for everyone else. We need to make sure these idiots are never in power again so that we can have a good life for everyone.

[quapawsix]

well just another example that the jobs that were being created by Washington and the privet sector hint corporate America were food service jobs and now we have no real industrial base.
Then excessive consumerism was pushed and now we have come to this point in our country.More layoffs major Car institutions going bankrupt corporate bail outs and more trouble in sight.. We are broke and the only thing left is the crying You got to admit this is all very entertaining has all the qualities of a really cheesy suspense novel. How can educated people be so stupid.

[ducky1213]

Having just watched your segment on the financial tree (of doom) I must say I find myself extremely upset.

Here?s a look at my life, I live in a camper, an older camper, in a trailer park where my rent is 325.00/month plus utilities. Some months I struggle to come up with that. I am on disability, but trying to finish a college degree. My husband works as a third shift janitor for a base bay 12.00/hour. Several years ago, he was overpaid by CA. unemployment. They are now taking a wage garnishment for nearly two thousand dollars, 25% of his pay per pay period. This leaves him with very little money to pay for his bills which include car payment, insurance and food for both of us. Added to that is a credit card company (there are actually a couple of them) that are chasing him for bills that are nearly 10 years old. It?s not that he doesn?t want to pay his bills, but since they were accumulated, his standard of living has decreased significantly and he was unable to pay them. Now, his bank accounts are getting seized, court action threatening wage garnishment, and an inability to keep up even with the cost of fuel for the car to get to work is making it nearly impossible for him to remain employed! Why don?t they go after those who have an income that would enable them to pay? And in a more timely fashion?.ten years is a long time to let this slide and then go after it with a vengeance!

My point is this: although I feel for the laborers who are losing their jobs do to the economic downturn that is causing the boating (and other industries) to downsize or fail completely, it?s hard to feel bad for people sitting on leather couches whining about how they had to let go of their long time landscapers and pool boy! I feel much worse for they laid off employees, I wish them well.

If you want to do a piece on the effect of the economy?s downturn, go talk to the average working person. Talk to the people who work FOR the people who own the boat companies, the fiberglass companies, etc. Have a sit down talk with the vineyard workers who are being let go because nobody is buying the wines that are sitting on the shelves. Talk to the people who have had hours reduced. Go talk to that landscaper and pool boy who lost their job! It seems to me that whenever I see a piece on how the recession is affecting people, it is people who are far wealthier than the average working guy. You?re not giving or getting a clear picture how bad it really is out here.

Mind you, I?m not complaining. A few short years ago, I was living in a tent. At least these days I have hard sides and my tires aren?t flat. I have more than some. But if you want to do a commentary on the failing economy, try talking to people who are really suffering. Imagine being one paycheck away from losing the trailer space for your old, broken down camper. Then where do we go? Back in the tent, I guess!

[kevsan1]

Unfortunately, there are too many people in this country who don't understand how interconnected we all are. Many are happy to see the auto companies go under, when that will actually put millions more working in related industries out of work and companies and people who benefit from the spending/investing of those people eventually lose their jobs, and so on. The biggest problems in this country that are not helping matters right now - ignorance, intolerance and lack of compassion/empathy.

[oreo1412]

Teddy Roosevelt said that trickle down economics did not work because those at the bottom were at the mercy of those at the top who would stop trickling down anything during hard times. That would be what this is. Plus the stagnation of wages squeezed the middle class into lower class. No boats in the lower classes and without the middle class, no aspirations toward owning boats. And rich people actually don't buy as much as everybody thinks they do. They are often the biggest penny-pinchers of all of us! It is just the wanna-be's that buy luxury items!

[rhs648]

Amazing. Now it's called the Ripple Effect? When Reagan called it "trickle down economics" he was ridiculed by the liberals.
Are we now saying he was right? Why am I not surprised?
Posted by srf272

Good point. No matter what it is called, it works the same way, Another term for it might be the funnel effect. For most of us, the top of the funnel is much larger than the bottom of the funnel. You may work for a multi-million dollar company. By time the gross sales of that company filter down (ripple or trickle) most of us see a tiny fraction of what flows through the funnel. It is all the same.

[rhs648]

The point of the article isn't to feel sorry that this guy gave up his landscaper or pool company, The point is to show how economic good times and economic bad times ripple throughout the economy. Whether you pass on buying a new Lexus or a new Chevrolet, lower sales have an economic impact on other people. We own a small business. Every expense lowers our profit. Instead of having much of our product delivered to us, we now pick it up at the warehouse. This means that fewer employees are needed where we have our product made. Look beyond the product (pool, boat, car, landscaping, restaurant) to understand the effect of a sagging economy on other people.

[BBenamara]

It is a dangerous Time But lot of coutries went through recession I think the Usa will come up with some plans

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[felipe1961]

Its difficult to feel compassionate for a composite salesperson losing his pool boy and his gardener. He earned 40% then he did last year? Commissioned sales people have up years and down years, feast or famine. In the feasting years you are suppose to live below your means and save for the famine years. The individual who wrote this story does not understand commissions nor financial planning. A basic problem we are dealing with today.

[srf272]

Amazing. Now it's called the Ripple Effect? When Reagan called it "trickle down economics" he was ridiculed by the liberals.
Are we now saying he was right? Why am I not surprised?