A shadow of a doubt

They're working overtime at Lozier.

Pinnacle Bank's new headquarters is rising from the dirt.

Neapco's auto parts plant in Beatrice, Neb., has hired 70 new workers and 80 more are coming.

But the byword for many businesses still is “uncertain.”

Uncertain about taxes, energy and health care costs. Uncertain that consumers will spend this fall. Uncertain that the recovery will lead to sustained economic progress — that it might instead falter into a second slump or, worse yet, a Great Recession Part II.

Tax legislation, tougher financial and energy regulation, foreign credit problems, federal spending, health care, consumer confidence — all those economic factors are in a state of flux, making business decision makers, well, uncertain.

“That's an understatement,” said Sheri Andrews, president of Lozier Corp. of Omaha, a nationwide manufacturer of store shelving, fixtures and other store equipment.

“We go as the retailers go, and they go as the consumer goes, and they're a little nervous that the economy's queasy, and therefore the consumers will pull their horns back in,” she said.

Lozier's recent spurt of business is a turnaround from January 2009, when it laid off its first workers in 40 years. It cut 43 Omaha production jobs, closed an 85-employee plant in Utah, trimmed remaining workers' weekly hours from 40 to 32 and let 15 percent of its managers go. Top executives volunteered for pay cuts.

Now, to meet demand from retailers preparing for the fall and winter shopping seasons, Lozier hired 90 temporary workers in Omaha and authorized overtime of up to eight hours a week for many employees in Omaha, Pennsylvania, Missouri and Alabama.

“They're coming in on Saturdays,” Andrews said.

Retailers are mostly remodeling stores, not building or expanding, she said. “When the consumer stops spending, they'll stop, too.”

That's why Lozier is using temporary workers and overtime instead of hiring additional full-time employees. It doesn't want to be caught with too much capacity or too many workers.

“We're being very careful, because we can't see much beyond September,” Andrews said. “We're doing some guessing.”

Lozier's retail customers just aren't convinced there won't be another economic dip, she said.

Many other Omaha-area employers are using overtime instead of hiring permanent workers, said David Brown, CEO of the Greater Omaha Chamber of Commerce.

That's partly because so many government policies are up in the air: Income taxes could rise; tax incentives could disappear; and costs could increase because of new regulations on energy, banks and health care.

“Our clients are all wondering what Washington's going to do,” Brown said.

The Omaha chamber announced 168 business expansion or new location plans through the first half of this year, with 2,832 jobs and investments totaling $121 million if it all comes to fruition.

Those are more projects and potential jobs than the chamber announced in the first half of 2009 — 104 projects and 1,859 jobs — but less than the period's $288 million in investments.

“They're waiting to find out whether the economic turnaround is for real,” said John Flor, vice president of F & B Constructors Inc. of Omaha, a commercial builder.

F & B recently converted a vacant Hollywood Video store at 31st Street and Ames Avenues into an office of SAC Federal Credit Union. F & B has about 32 people on jobs, down from a peak of about 40.

There's more remodeling and less new construction, Flor said, and less government work because of tax shortfalls. One commercial job in Lincoln has been on hold for two months.

“It's the first time I've felt so much uncertainty about the future,” said John Schlifske, CEO of Northwestern Mutual Life Insurance Co. He has been in the insurance business since 1983.

The company, based in Milwaukee, has about $150 billion in investments.

Federal spending usually rises during a recession, Schlifske said, but revenue growth and spending by the private sector eventually pick up, producing greater tax revenues for the government.

But this time, the deficits seem to be too large and with no end in sight, Schlifske said.

Gail DeBoer, president of SAC Federal Credit Union, said it went ahead with the Ames Avenue project because it needed a larger, better facility for customers.

SAC added two employees, keeping its smaller office at 50th and Ames for drive-in traffic.

Now is actually a good time to expand, said DeBoer, who estimated the credit union saved 10 percent on the new office because of favorable bids on labor and materials.

Pinnacle Bank, which delayed construction of its new headquarters for two years because of the economy, also is saving money thanks to lower bids on constructing its building, at 180th Street and West Dodge Road.

“Where are we in the economic recovery cycle?” asked Mark Hesser, bank president. “Currently, I'd say we're bouncing around on the bottom.”

The bank went ahead in part because many economic factors have stabilized, Hesser said, including commercial property occupancy, residential housing starts and the farm economy.

Some employers are adding a few jobs, including Pinnacle, which plans to hire 10 additional workers when its new facility opens next year, he said.

“Now is when Omaha needs the jobs, to help in that rebound,” Hesser said. “We just said ‘Let's do it.' ”

Neapco Holdings' Beatrice plant captured some business from a competitor in Mexico, said Keith Sanford, executive vice president. It will gain more jobs as it shuts a production facility near its corporate headquarters in Pottstown, Pa., and the work shifts to Beatrice.

The company got a $1 million low-interest loan, state income tax incentives and money for training from government agencies. Neapco invested $2.5 million of its own money as well, and broke ground July 1 on a 100,000-square-foot addition to the Beatrice plant.

The Neapco division sells drivetrains, U-joints and other vehicle parts for cars, trucks, all-terrain vehicles and farm and industrial vehicles.

Though a recession might cut into sales of new-vehicle equipment, he said, it also prompted people to make repairs with Neapco parts.

“We've seen an uptick in the business,” Sanford said, including new-vehicle parts it supplies to Ford Motor Co. “But a lot of people I've talked to are saying ‘Is it going to be sustained? Is it going to continue at this higher level?' ”

Creighton University economist Ernie Goss said uncertainty is keeping unemployment higher than normal in Nebraska and other Midwestern and Plains states. Even the oil spill in the Gulf of Mexico and economic troubles in Greece, Spain and other countries have many businesses nervous about adding jobs.

The ultimate problem is that government can't continue its current spending without raising taxes, he said.

Goss said some of the public discussion — about deficits, government spending, sovereign debt — is detrimental because it makes people believe things are worse than they really are.

“The level of fear and uncertainty is much higher today than it was a year ago,” he said. “Economically, we're much better off than a year ago. But the consumer hasn't pitched in yet and bought.”

Contact the writer:

444-1080, steve.jordon@owh.com

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