TUESDAY, JANUARY 30, 2001
Fostoria's economic forecast: Partly cloudy early, clearing later
By Jefferson Wolfe
Staff Writer
FOSTORIA -- Economic forecasters say that while the economy is slowing now, it should pick up by the end of the year.
Four speakers talked about the economy Friday at the Fostoria Area Chamber of Commerce's "Economic Forecast: 2001" luncheon.
Alpha Coatings in Fostoria is going to make a larger capital investment in 2001 than in the last five years combined, said Terry White, the president and owner of the company.
Although a poor first half is forecast, the company plans to grow considerably.
"We think it's going to be the most exciting time in the company's history," he said.
The company employs about 105 people. But by the end of the year, White said, it could have 175-200 workers.
The company plans growth through the new jobs. They are planning a 40,000-square-foot expansion and is using a facility on East North Street.
Typically, Alpha Coatings has $5.5 million in annual sales, but by the end of 2001, it will have about $11 million, he said.
The addition is planned between the Port Clinton and Fostoria plants, but will not start in the first quarter of the year, White said.
"In Fostoria alone, we'll be one and a half times what we currently are," White said.
Increasing wages and reducing labor costs are among Alpha Coatings' goals, he said. The area has a shallow pool of available workers, he said. Labor costs can be reduced by using automation to a job and moving the worker somewhere else.
Electric deregulation has happened, but prices are fixed for five years, said another speaker, Ron Emer, from American Electric Power.
Deregulation means a customer can choose the supplier of electricity. There is a five-year market development period during which prices are frozen. After that, in 2006, the prices will raise and fall as supply and demand dictate, Emer said.
AEP will remain the default supplier, meaning if a customer chooses to buy power from a company that goes out of business, AEP will provide power so there is no interruption in service.
Now, Ohio is building peaking plants, used to help during the coldest days of winter and the warmest days of summer, he said. However, the baseline plants, which are those that generate the majority of the electricity, are aging. It will be important to find ways to replace these plants and add more, he said.
The future may be good for the nuclear power plants, Ehmer said. They are free of challenges like environmental regulations, pollution and rising natural gas prices. The nuclear plants also are newer than many of the baseline coal-burning plants.
In the past, the nuclear plants have been viewed skeptically, Ehmer said.
"It may prove out that their worst nightmare is their biggest blessing," he said.
The third speaker was Steve Kelley, the manager of the Office of Strategic Research which provides economic, industrial and demographic information on the people and businesses of Ohio. He agreed with the other that the first half of the year may be slow, but it will pick up.
"Buckle those seat belts, because the roller coaster is just beginning," Kelley said.
The 2000 Census showed that Ohio had 11,353,000 people, keeping it the seventh largest state in the union.
There was a 4.7-percent increase in population, he said. This was a large jump, Kelley said, because between 1970-1980 there was about a 1-percent increase, and from 1980-1990, there was less than a 0.5-percent increase.
The population growth in Northwest Ohio has slowed. Also, growth in the smaller communities in has slowed.
Cincinnati and Columbus have shown the most growth, along with suburban areas, Kelley said.
Manufacturing companies have been becoming part of larger and larger companies, and this will require greater cooperation between the local branches, he said. Economic officials will have to develop a regional perspective.
The final speaker was Donald P. Southwick, the executive vice president and chief investment officer of Sky Trust.
The Jan. 3 interest rate reduction was meant to calm the turmoil in the investment market.
Officials like the gross domestic product to be 2.5-3.5 percent. In 2001, it is projected to start at 1.5 percent and end at 2.8 percent.
"We do believe that production will increase," Southwick said. Unemployment will rise as well, he said.
While consumer confidence has declined, it is still pretty high, he said.