Wednesday, Oct. 08, 2008

Business as usual in Tri-Cities

Ingrid Stegemoeller, Herald staff writer

The fingers of the national credit crisis don't appear to be squeezing too tightly around local businesses, as many owners say their daily operations are moving forward as usual.

But higher gas and food prices continue to affect consumers' disposable incomes, and many shop owners say they're preparing for a slower-than-normal holiday season.

"We're trying to keep a positive outlook," said Steve Poire, manager for Northwest Marine & Sport in Pasco. "We're just plugging along and trying to be smart about everything we do. I'm not replacing inventory as much as I normally would."

The store hasn't had any difficulty with its operations because of a tight credit market, he said.

"I haven't felt it in that sense," Poire said. "It doesn't mean it won't change tomorrow."

This year has been slower than last for 3 Rivers Furniture Gallery in Richland, said Dale Sumsion, husband of owner Ilene Sumsion.

Dale Sumsion said even though the store hasn't needed any loans lately, they're concerned about the plummeting stock market's effect on their customers.

"If they lose their disposable income, that will really affect our clientele," he said, adding that he's most concerned about where the economy will end up.

A similar worry bothers Pete Carroll, owner of Richland Bell Furniture.

"It's a concern in that consumers don't have the confidence that they had in the past and they're not willing to go out and make any purchases," he said. "They're just doing the essentials."

The store has been through ups and downs in the past, but this one is "completely different," Carroll said.

And while the store isn't in major debt and owns its inventory, Carroll said he's still working to cut expenses.

"Everyone's in the same boat," he said.

Darin and Jennifer Warnick recently bought Greenies, a store in Richland, and plan to run the shop for now without the help of employees.

"There's not exactly money to pay somebody right now," Darin Warnick said.

The couple were unable to get a loan to buy the business, Darin Warnick said.

"They told us things were really tight," he said.

Instead, they used equity from their home and credit cards.

But Darin Warnick is optimistic about the future of his eco-friendly, health-oriented shop.

"Whenever there's chaos there's opportunity," he said. "I can see this as being a good thing. People are going to run their businesses tighter, they're going to run their inventory smarter. The savvy retailer is going to survive."

Local bankers say the Tri-Cities hasn't experienced the squeeze the way other areas of the country have.

"I think it's safe to say everyone's being more conservative than they were before," said John Neill, regional manager of commercial banking for Bank of the West.

"But I don't see major effects in the Tri-Cities. We're peculiar in that we have a strong economy."

Many local banks depend greatly on relationships with clients, enabling them to continuing making loans even amid this time of tighter credit, said Megan Clubb, president and CEO of Baker Boyer Bank.

"When you're dealing with local banks and bankers who know your business, people are finding that the banks have the resources to lend the money safely," she said.

While many large banks are feeling the need to hold onto as much cash as possible to ensure the ability to pay their bills and depositors who want their money, that's not as much of an issue for local banks, Clubb said.

The area may feel more of a squeeze if the national problem sticks around, Neill said.

At Community First Bank, small businesses that were getting loans before the credit markets tightened are still able to get them now, said Eric Pearson, president and chief operations officer.

The bank's loans are funded entirely by its depositors, so Community First isn't borrowing from national sources, Pearson said.

"We haven't varied our policies to any great degree," he said.

Getting credit hasn't been a problem at Ag Engineering & Development Co., in Kennewick, said general manager Neil Cornia.

That's because the company has avoided using credit for its operations for years, he said.

And so far, customers of the farm equipment manufacturer don't seem to be having trouble accessing credit, either.

"The lenders they're working with are not the big Wall Street markets," Cornia said. "They're dealing more with local farm credit organizations and banks."

But if farmers find themselves without credit, "it'll be ugly," Cornia said.

While big-ticket purchases seem to be slowing, the owners of Lonardo's Gourmet Bakerie in Kennewick are hoping people will turn to pastries for a little comfort.

Ty Bates and Karen Lonardo have avoided small-business loans, Bates said, but only because they didn't think their credit scores would be high enough.

But that means their personal credit cards and house payments have taken a hit, Bates said.

"We figure we'll be one of the things people will cut, if they're cutting luxuries," he said. "But there's a small chance that people are seeking some comfort in our pastry."