This month’s interview is a round-table discussion of a variety of issues affecting business in central Illinois. Participants in the discussion include: Becky Auer, owner of Interior Plants & Designs and Floral Expressions; Lee O’Connell, president of River City Athletic Club; and Tom Spurgeon, president and CEO of Lincoln Office Designs.
Over the next five years, what do you see as key to the continued success and growth of your business?
Tom: “At Lincoln Office, success is often defined as growth, and we are looking to grow. To do that, we will have to expand our services. I don’t look for growth to come primarily from existing business, or the things that we do today. As an analogy, just down the street we have a business that changes oil and lubricates cars. If we were in that business, we would have to do something else to grow, like tire rotation or another service. We are examining additional services that we can provide to grow our business.”
Becky: “In our business, which encompasses the floral industry and interior landscaping, we know that we are going to have to be versatile. We have to keep up with national and local trends, and we have to focus on service rather than product. I foresee that we will have to work more closely with our local educational institutions. We are having a definite problem getting trained personnel, and that is going to become critical.”
Lee: “We have to keep up with the changing fads and moods of both the fitness and the tennis industries. We try to project three to five years in advance and constantly change our business in accordance with community demographics. Right now we are concentrating on families and kids. We are building a new Kid’s Center with an indoor pool, gymnastics, basketball, volleyball, weight training and childcare services.”
What the major potential problems for the Peoria area business community over the next five years?
Becky: “It’s important that businesses establish good communication with governmental bodies. Interacting and networking with other businesses will also be key. It’s critical that smaller and medium-sized businesses utilize organizations which will help build and solidify their businesses. We won’t be able to sit back and wait for big industry to solve our problems for us or open doors to us.”
Lee: “We need more people in the city government who can make the right decisions for business and help some businesses that are already located here. They often do a great deal in trying to bring people and businesses into Peoria, but they don’t do too much, in my experience, for those who are already here. Too often it’s ‘Well, we’ve got you here. So we’re going to go out and get someone else.’ That’s the way I’ve been treated, and I think that is a detriment to the city of Peoria. City government should be saying: How can we help you? How can we help advance your business? All of our businesses operate that way – How can we help our customers? Our customers are the reason that our businesses are here, and we are here to serve them. Government needs to realize the same thing.”
Tom: “I advocate that not to grow is to die. Lee has mentioned the importance of helping existing businesses. At the same time, I’m looking to additional businesses; What new businesses can come into our community? We are witnessing some companies going out of business. It’s particularly hitting the retailers right now. As we see a decline in business worldwide, we are seeing companies reduce their size. What is going to replace that? We have to out looking for new businesses all of the time, while growing existing businesses. I’m particularly concerned about that, because I do not see the Peoria area being overly successful in attracting business.”
A national trend of fewer high-paying manufacturing jobs being replaced by more lower-paying service jobs has many businesses worried that there will be less expendable income to buy their products and services. How do you view this potential problem?
Tom: “We are already witnessing it. If I can use an analogy from the auto industry, I think some individuals who have always bought Oldsmobiles are now thinking they should buy a Chevrolet. Rather than status, they are concerned with transportation. We will see that more and more in the 1990s across the board. Our company sells office products, and we are looking at that very carefully. In the very near future, we are going to make a big push for a much broader price range to attract additional clients. As corporations encounter more and more competition, their margins are reduced and they are looking at such things are keeping their furniture a little longer, refurbishing it, or making a short-term decision in their new buying.”
Becky: “We are definitely keeping an eye on our reports that tell us what our average purchase is. We have noticed that, while it hasn’t dropped, it has stabilized. We are having to adjust our marketing accordingly. In our industry, we could be considered an ‘extra’ – not something that you have to have. Retailers now have to compete with mass marketing and the big chains that are carrying products that people used to get almost exclusively from the ‘mom and pop’ stores. We certainly have to keep an eye on how people’s salary levels will affect our business in the future.”
Lee: “Our members do not consist mainly of blue collar workers, so we haven’t seen a loss because of less industrial jobs; but it is definitely true that this trend is affecting business.”
Is there a particular obstacle or recurring frustration that you face as a business manager?
Lee: “We’ve been fortunate in hiring many good people in our business. We train them well and don’t have a lot of problems. One frustration I sometimes feel is that employees many times seem to always be asking ‘What can you do for me?’ instead of ‘What can I do for you?’ We don’t have very many of those kind of employees, but I know they’re out there. We often lean toward hiring young people from rural areas and small towns, because they have a better work ethic.”
Tom: “One recurring frustration has to do with finding good employees. In our business we seek good, consultative salespeople, and those people are just few and far between – extremely hard to find. We work diligently on acquiring the kind of people who have that potential, and then spend megadollars training them. I don’t know what the resources are for good, consultative sales people, but we have scoured Peoria, Bloomington, Champaign, and Springfield, and we do not do well at all.”
Becky: “A recurring problem is that people who are looking for jobs come to you somewhat with their hand out. Many are so concerned about what benefits they can get, yet their work ethic just doesn’t seem to measure up. Somewhere we are missing the boat in training the generation coming out of college and high school. They often don’t seem to get the sense of self-accomplishment that comes with putting in a good day’s work. When I interview people, the pride in performing a task is just not there. You go through the whole process of investing in training, and then experience high absenteeism.”
To what extent does the cost of healthcare affect your business? Has your company been able to utilize any particular strategies to help reduce the financial burden that healthcare costs place on employers?
Tom: “There is no question that healthcare is a major problem. It’s a problem in that employees expect your company to have a healthcare program. Our healthcare expenses for just employees – not dependents – in 1991 totaled over a quarter of a million dollars. For a company our size, that’s significant. So we’ve done several things. After experiencing what we consider to be unbelievable cost increases from insurance companies, we went to self-insurance. We are just eight months into the year, but so far it is working very well. We have attempted to educate our team and make them aware of the costs. We tell them their help is needed or the cost is going to continue to escalate, and the company cannot make up all of the cost increase. We have started some health awareness through exercise programs. We have an exercise facility here in this building, but at the same time, through Lee’s company, we have a company program that supplements the employee’s expense of fitness, based on the use of the program.”
Becky: “Our company is a small company and we have not had a group health plan until the last couple of years. The cost, when factored into a small business, is more than I anticipated. I foresee our employees having to make more of a contribution to offset costs, or having to raise deductibles. There is only a certain amount of dollars available. You hate to see the cost shift more to the individual employee, but there is only so much that a small company can do. If you can’t control healthcare costs, the jobs eventually won’t be there for the employees.”
Lee: “In our company, most of the employees are not the breadwinners for the family. Often it’s the husband’s employer that assumes most of the healthcare problem. We do have a health plan with a fairly large deductible. We want to protect them from a catastrophic illness that could completely wipe them out. We see that some employers are trying to reduce their healthcare costs by sponsoring employee wellness programs at River City. It has been proven by many corporations that healthy employees are more productive, happier, and have lower health costs than the ‘couch potatoes.’”
What business-related issues concern you as we approach the fall elections, on either the state or national level?
Lee: “The national debt and deficit is a big thing we must face. Our debt has gone from $1 trillion to $4 trillion in ten years. If we don’t get somebody who is going to face it, we are in long-term trouble. It may take limits on terms for Congress, but we have to change the thinking in Washington, D.C.”
Tom: “The economy is the big issue, of course. I can’t understand why we can’t get a balanced budget. It’s a matter of biting the bullet and getting it done. Yes, I do think term limits on Congress is the direction we have to go. In addition, I am concerned about government mandates on business. We have ADA facing us now. Many analysts say that ADA is a boondoggle which will primarily benefit attorneys. It’s going to be very interesting to see how ADA is interpreted, because in the present law, there is a great deal of conflict. ADA will be a significant expense to many businesses. I’m also concerned about the potential of anti-strike legislation and mandated healthcare. I don’t understand why, in today’s age, there is such a feeling that the government has to tell business how to do things. We should be able, through education, to obtain positive results without mandates.”
Becky: “At both the state and national level, I am concerned about how all of the new regulations and potential mandates are going to be funded. I get this sneaking suspicion that businesses are going to be tapped to fund most of these things. Where is the state and federal government going to get the money to fund these mandates while also trying to eliminate deficits? I’ve read that a potential federal healthcare program could be financed by a tax which would be a percentage right off the top of gross revenues. Things like that scare the heck out of me because I wonder how business can support such a system.”
Lee: “You have all of these people in Washington who have never had a real job. They’re mostly attorneys and they have never had to make a payroll. They don’t even know what it’s like. They just say, ‘Well, let’s do this’ and they just get it from the big pot in the sky. If it doesn’t fit within the budget, they get it somewhere else. Expenses that don’t show up in the national budget are huge.”
Becky: “A somewhat humorous story came up in our small business advisory board meeting, when we were talking about how ADA is affecting our facilities. One of the board members said that ADA required him to have handicapped accessible restrooms, and he wanted to comply. He began to implement that, which necessitated taking out a standard-sized stall to free up additional square footage. The local government then came in and said that he could not put in a handicapped stall because that would eliminate a standard-sized stall which would make him under the required amount of facilities for the number of people in his building. So what rules should he be following?”
Lee: “We’re building a new kid’s gym and we have to put an elevator in because we have a mezzanine. We will probably spend $20,000 for an elevator that will seldom be used.”
How would a state or national family leave bill affect your business?
Becky: “As it is written now, it would not affect our business, since we employ less than 50 people.”
Lee: “Mandated family leave could cause us to really scurry around and change a lot of jobs. When you start changing a lot of jobs, making adjustments for someone leaving, all of a sudden you sometimes realize, ‘Hey we really don’t need that person after all. We got by without them, and they forced us to make our business more efficient.’ I don’t think that Uncle Sam is trying to make that happen. If a person has a problem and needs some time off work, I think most employers will do all they can to help them. But, Uncle Sam, don’t shove it down our throats.”
Tom: “I really agree with Lee. If the employee is responsible to begin with, he or she is only going to come to you when it’s really necessary; and because they are a valued employee, you are going to find a means to give them the time they need. But to have someone force you to do it is different. The people who will take advantage of an employer are marginal employees, and that may just be the straw that breaks the camel’s back in terms of their employment.”
How do you stay on top of all the new government mandates and regulations from a management standpoint?
Tom: “The way all of the government mandates are affecting us is by forcing us to add staff. Personally, I just can’t be up to date on ADA, the Civil Rights Act and everything else. We have to hire people who become specialists in these areas. Their hiring and training then adds to the total expense of employment.”
Lee: “We have one person in our company who handles a lot of these issues. You have to read, and discuss the issues among your friends and business associates. You learn more from talking to associates about it than anything else.”
Becky: “When you’re a small business owner, ignorance is not bliss. But a small business can’t afford to hire someone just to handle regulations. So it requires some reading by your nightstand at home, and doing whatever you must to keep on top of things. I’ve received a great deal of help from trade organizations and the Chamber of Commerce. Networking with other people who have the resources, and are willing to them, is important.”
How was your business affected by the labor strife at Caterpillar earlier this year, and how does the Caterpillar-UAW scenario continue to impact your business and the business community?
Lee: “Our business wasn’t hurt too much by it. I think we only had one request to put a membership on hold. I’m sure that if it had gone longer, it would have really started hurting us. The long-term ramifications of this labor problem could be less people in Peoria, which in turn means our market gets smaller. The uncertainty of Caterpillar and the UAW not having a contact is hanging over everybody’s head. When you come into Peoria, you’re coming into a tough union town. The UAW strike is over, but now the union is saying ‘We are going to ‘slow down’ our work; we’re going to bust the people who pay us.’ It doesn’t make much sense. Everyone will be hurt.”
Tom: “Caterpillar is a significant customer of our’s, so it did affect us. We felt it. The situation at Caterpillar caused concern and questions for others within central Illinois, and many businesses simply took a ‘wait and see’ attitude about buying our products and services; so that had a bigger effect. Now that they have gone back to work, I have noted an easing of concern and a reasonable feeling of optimism that it’s going to be resolved. Long-term, the Cat-UAW strife affects business in establishing expectations for wage and benefit levels. What I get out of the whole thing is the reflection of the ‘me’ attitude. The laborer is saying ‘What’s in it for me?’ There is little reflection on how the company and the laborer can work together to retain jobs, retain business in central Illinois and make Caterpillar a strong company. There doesn’t seem to be enough of that.”
Becky: “Caterpillar is also a customer of our’s. If the strike would have gone on longer, we would have felt more of an impact. It concerns me, in the long run, that Peoria may become the proving grounds for national labor problems. Caterpillar has made a stand and the UAW has made a stand. Everyone else around here is kind of caught in the middle. How it plays out will affect us all. Customers are starting to feel a bit more comfortable about spending money, but they are still a little tentative. It’s unfortunate that Peoria has received such bad press about not being a good labor environment, because there are so many positive things about Peoria business and the community. It’s taken many years to build that negative reputation and it will probably take a lot of years to turn it around.”
Numerous plans to improve the Peoria area’s economy have been proposed, from building an interstate link to Chicago to implementing a master plan for downtown Peoria. What is the most important consideration for a healthy economic future?
Tom: “To attract more business to the area, the highway link between Peoria and Chicago is tremendously important. Being relatively new to the area, one of the things that has always perplexed me about Peoria is the lack of transportation routes. I look a Champaign and Bloomington and wonder what happened. Peoria is a larger metropolitan area than either one. Transportation is one of the main things that businesses seek. We need to do as much as we can to get that highway here. Perhaps the downtown development isn’t as meaningful if we don’t have the transportation to attract the businesses here in the first place. There’s a priority to it. We have a good example now in the improvements to highway 121. Although it’s not complete, what has been done is sufficient to truly enhance the opportunity between Peoria and Springfield, let alone to open up the door to St. Louis. I think we can use that as an example of what a similar dual-lane highway to Chicago would do for us.”
Becky: “I agree with Tom. Without a doubt, the lack of a good Peoria to Chicago highway link is the biggest stumbling block to getting companies to establish business in Peoria. As far as downtown is concerned, I walk through downtown now and think it’s wonderful, with all of the new buildings and everything. The emphasis doesn’t have to be just downtown, although the downtown is very important. I think Peoria is a wonderful place to live, work and raise a family. It has so much to offer; and I think it’s sad that we have to work so hard to sell ourselves as we do.”
Lee: “I agree with Tom and Becky. The link to Chicago would be a big shot in the arm. Also, selling Peoria to others is a big priority. The advantages of Peoria far outweigh the bad perception that Peoria is a tough union town. Hopefully, in the future, we can overcome this perception.” IBI