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Executives believe that business is looking up

Stephanie Patrick Staff Writer

Like many Dallas-Fort Worth companies, technology firm Atrana is no stranger to client indecision in the face of an economic slowdown.

"We felt the first signs of that just prior to 9/11 and then, after 9/11, there were a lot of companies that just didn't know what to do or where to turn," said Salah Boukadoum, chief executive. "They chose not to do anything for a while."

Now, though, orders for Atrana's point-of-sale software are up, and the 8-year-old Dallas company is increasing its sales and marketing efforts.

"Our plans are to hire 18 people this quarter," Boukadoum said. "We are almost doubling the size of the business."

Boukadoum isn't alone in his optimism. Nearly three-fourths of executives, including those at some of the nation's largest companies, believe economic conditions will improve in the last half of the year, according to a just-released survey by Dallas-based executive consulting firm Randall James Monroe Inc. That's up from 61% in a January report.

Professional services executives were the most optimistic, with 88% responding that business conditions will improve. Health care and software/IT also showed signs of significant optimism.

"Improving stock market conditions and the end of the war were among the reasons cited for the positive outlook," said Randall Neal, RJM's chief executive, whose clients have included General Motors and Burlington Northern Santa Fe Railroad. Executives are positive, but cautious.

Bernard DiFiore only recently acknowledged that the increase in business he saw as early as February is a trend. As CEO of privately held BenefitMall, a leading provider of products and services for brokers selling small-group employee benefits, he watched business drop significantly last year as the small businesses his company caters to cut both employees and their health care benefits.

In response, Dallas-based BenefitMall shrunk its own work force by 10%, laying off executives, sales personnel and customer service employees.
After spending more than a year focusing on its IT offerings and reorganizing its staff, the company is preparing to unveil new products in the next few months, and sales are up 15% over expectations. BenefitMall also is considering adding three or four markets to its roster of 21.

"There does seem to be more happening, although it is a slow process," said DiFiore, who recently hired a few salespeople and corporate support personnel. "I would suspect that we, as well as other companies, will begin building back our senior teams by the end of the first quarter (of 2004).
"If this pace continues, we should have a very good year and continue to be strong next year."

'Bloodletting has stopped'

Even so, the economy remains shaky, and hiring tends to be a lagging indicator of recovery.

National figures released Aug. 1 show the unemployment rate was down two-tenths of a percent in July from 6.4% the month before. However, much of the drop has been attributed to a contraction of the labor force by 556,000 people.
Goods production and manufacturing jobs took the greatest hit, cutting a total of 138,000 jobs.

To jump-start the economy, the U.S. Treasury last month started mailing 25 million child-tax-credit checks as part of a tax-cut bill recently signed by President Bush.

"Strong businesses need to hire workers, but businesses don't get strong because they hire workers," said Don Hicks, an economist at the University of Texas at Dallas. "It's going to take a while to metabolize all that has happened to the economy."

Hicks expects more consolidation to occur, particularly in the technology sector, because companies and investors are less likely to take chances, but they will spend for capital investment. The expenditure will increase business in the short term, he said, but will not lead a recovery.

The RJM survey found that only 28% of the 205 executives surveyed expected hiring to increase in the next six months. That's a 4% increase over the previous period.

"It's probably going to be either this fall or early 2004 before we are going to see significant increases in hiring," Neal said.

Others say it could be longer.

"The bloodletting has stopped, but people in jobs today are part of the critical job-based hiring and aren't likely to be laid off," said Jeff Kaye, president and CEO of the Plano-based recruiting firm Kaye/Bassman International. "Companies will always do that hiring, but what we are now beginning to see are companies going outside the critical-only hiring. There's a slight uptick in hiring when an organization gets back into expansion mode, not just cost-cutting."

Kaye said it's likely to be 2005 before there will be a "candidate-driven" market that job seekers enjoyed just a few years ago. However, Kaye is noticing more executives being hired by consulting firms, as well as more interest in professionals with backgrounds in insurance marketing and construction.

Even those that flourished in the down economy have noticed a change and are responding.

Privately held Interstate Batteries plans to hire 10 to 15 people for sales, marketing and operations positions regionally. The Dallas-based company, which has 1,100 employees nationwide, including 450 at its corporate headquarters in the Park Central area, also will hire for accounting positions and IT.

"Six months ago all the discussions companies had were about what could be cut. Now it's, 'How can we grow and expand?' " said Walt Holmes, Interstate Batteries' vice president of human resources.

Contact DBJ writer Stephanie Patrick at spatrick@bizjournals.com or (214) 706-7121. 

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