slides: How 2012’s Biggest Layoffs Will Affect Central MA
Friday, January 25, 2013
Kennedy said that some major companies with local influence have suffered in the last year, but there are other issues that may cause Central Mass to falter in 2013 – most recently, Governor Patrick’s tax plan.
2012 saw big losses at some major companies from retail to electronics to the financial sector. When asked how much these heavy losses would impact the area, Kennedy said it depends on the concentration.
“If you take a look at the financial sector we aren’t a dominant player in that area. There are some people who represent those firms locally, but the employment by those are modest compared to some of the financial centers in Boston and New York,” he said, adding that the area will indeed see some impact this year.
Kennedy said that the Worcester area has seen some shrinking lately of the local financial sector in terms of large firms, but the area’s strength comes from its smaller regional and mid-sized banks, which have seen some growth recently.
“Companies like JC Penney, BestBuy, and Citi… With JC Penney, they’re really struggling with their overall marketing and their strategy. BestBuy is seeing some of these difficulties as well with regard to brand presence,” Kennedy said.
Kennedy said that the region has maintained some of its strongest assets through the recession and changing workforce.
According to the state’s monthly job report, Education and Health Services gained 3,800 (+0.6%) jobs in December. Health Care and Social Assistance added 1,900 (+0.4%) jobs, and over the year, Education and Health Services gained 7,300 (+1.1%) jobs.
Kennedy said that Central Mass casts a wide net in terms of the kinds of businesses that have invested in the region, so when the bigger companies fall, they don’t hurt quite so much.
“We have our bigger firms here: Hanover Insurance, Unum, Fallon, Saint Gobain… They’re healthy in their own sectors, and the breadth in what we’re involved in here, changing from an area of heavy manufacturing to one with more diverse options, is having a positive impact.”
Kennedy said that the low cost of housing has also been a positive influence on companies, causing businesses to relocate, bringing residents and an increase in the service industry with them.
Cleaning Up Their Act
Many economists are hesitant to give the green light coming out of the recession. Though Kennedy has faith in the area’s strong sectors, he says there may be other hindrances for businesses in the coming year.
When asked whether more layoffs would come in 2013, Kennedy said, “It depends on the companies,” adding that companies will likely be very cautions heading into the new year.
“One overarching concern that I have, is that with the cost of doing business being quite significant and the impact of some of the yet to be felt increases in cost – to have it somewhat speculative to the cost of the healthcare, taxes, all of those areas that are going to influence companies’ profitability are causing people to make very informed decisions about hiring.”
Kennedy’s biggest reservations in predicting the financial state of 2013 lie in Governor Deval Patrick’s recent budget proposal – something Kennedy says is going to be a “drag on the economy.”
“Even though we see in general some healthy signs, people are not going to make decisions about hiring with full benefits with so many questions left unanswered. We’re also seeing significant increases in taxes coming from Washington and Boston,” he said.
The proposed budget for the coming fiscal year cites a 6.9 percent increase in spending, with an increase in the state income tax to 6.25 percent on the revenue side.
“It’s going to be a drag on the economy,” Kennedy said. “People hesitate to make long-term decisions with such a question mark on the horizon.”
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