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Sector Description

  • Retail and service most uniformly struggling.
  • Education holding steady.
  • Industry experiencing mixed outcomes, though higher growth than other sectors.

In conducting field research with business organizations and owners, it became increasingly apparent that there is no one state of the Northfield economy. Certainly the quantitative overview of unemployment, gross sales, and number of businesses can provide some indication of how the economy is fairing as a whole, but further isolating sectors of business is crucial to understanding the impact of the recent economic downturn. Even in more prosperous times, the Northfield economy is diverse enough to mandate sector-specific consideration. As one business owner put it, “There are a lot of shared goals—making a living and adding to the community—but we have different needs” (12 February 2009). Most businesses included in this research could be categorized as belonging to the four general categories of retail, service, education, and industry.

In addition, we should be clear about our definition of success when assessing business. In the following review by sector, we considered measures of profit, number of customers, and number of employees. However, success means much more to this community. There are benefits to business beside profit. “Keeping the lights on in the downtown” makes the community safer and creates a social hub for citizens (12 February 2009). Owning a business in Northfield also works as a jumping-off point for political influence. “I’m a player in the community.” Clearly success has much deeper meaning than money, yet a base level of economic prosperity is necessary for survival, which is why a profits-based assessment by sector is an important piece of understanding business in Northfield.

Overall, the retail and service sectors seem to be the hardest hit by recession. With layoffs, reduced hours, and frozen salaries (though only the latter two are prevalent in Northfield), consumers have less disposable income so are buying only what they need. Even if consumers’ income has stayed constant, they are affected by the perception of a bad economy, which will be explored in further depth in a coming section. They do not want to spend money on goods or services until absolutely necessary because they are worried about the future.

Retail can be further divided into uptown and downtown, independent and chain stores. Again, we see different impacts. Small businesses (mostly the independents in downtown) have to take more risks to maintain a foothold; bigger businesses have the resources to wait out the downturn without making too many changes. And even in a bad economy, there are rapid ups and downs. On average the businesses in the downtown experienced a better-than-expected holiday season. Yet, some rely on making almost all of their sales during that time and will not survive if sales drop too steeply during the rest of the year.

The caution of consumers does not have a negative effect across the board. For example, the automotive industry—like Goodyear Tire and Rubber, Convenience Car Care, and Dokmo Ford—has been hit in conflicting ways. Very few people are buying new cars, either because they lack the expendable income or are worried and saving for the future. However, people want to take better care of the cars they already own to make them last longer. The first-year owner of Churchill Tire estimated a 10 to 15 percent increase in business this year. Childcare is another area seeing mixed effects. If parents are laid-off or have their hours reduced, they no longer need to send their children to a daycare provider for the same length of time. If they choose to take second jobs or send spouses back to work, though, the need for childcare increases. These two possibilities are both evident in the Northfield economy, with some childcare providers, like Kelly Radke, looking after record numbers and others, like Northfield Day Care, losing almost half their clients.

In other areas of the service industry the impacts are less varied. Most salons are seeing approximately the same number of clients, but people are choosing to wait longer between visits, which means a drop in profits. They are also less likely to purchase the more cosmetic offerings, like manicures and pedicures. Cleaning agencies, like Protech Carpet and Restoration, have had a similar experience, not necessarily losing clients but being hired less frequently by each one. Others, like Oh, Sheila Cleaning Services, have actually lost both residential and corporate customers.

The experience of construction-related businesses has been even more dramatic. Resembling the rest of the country, in Northfield all construction projects have come to a virtual halt. As one organization leader said, “Everyone knew the construction bubble couldn’t last, but it’s still too bad it happened the way it did. To fall so hard and so suddenly and in such bad times” (4 March 2009). Not only are construction workers basically out of the job, but related businesses are finding it hard to get by. For realtors, new homebuyers are few and far between. Demand for home repair and maintenance is dramatically reduced. Without new construction, the people that install heating and cooling systems or amenities like porches and swimming pools lose a significant portion of their livelihood. One business installed heating and cooling in 34 new homes in one year, and serviced only two the next year. “The slowdown happened very quickly” (5 February 2009). Even in existing buildings, homeowners are only doing the repairs that are absolutely necessary. Yet, by-and-large, businesses like these believe they can survive.

While the outlook in retail, service, and industry has been mixed at best, dire at worst, some Northfield businesses are stable or growing. Parts of the manufacturing industry—like Malt o’ Meal or College City Beverage—are doing quite well. Malt o’ Meal has actually expanded its operations because demand for cheap cereal is skyrocketing as families try to reduce grocery expenses. Education is another steady employer. While the two colleges in Northfield are not exactly prospering, neither Carleton nor St. Olaf has laid off staff. These three largest employers have been able to maintain a stable tax base in Northfield.

Finally, the position of banks in the local economy is difficult to grasp. Nationally, the banking industry is under fire, accused of issuing high-risk loans and practicing poor money management. In Northfield, however, banks still seem to be trusted institutions. The number of foreclosures is up, but First National Bank claims the rise is much less severe than in other cities. Several organization leaders cited the community banks as sources of stability for the town. In general, though many sectors of business are struggling—retail, service, and some industry—most are surviving. This may be a result of the large employers that are still profiting. They are able to keep their employees, who in turn are able to sustain the businesses that are harder hit.

 

[Any information not obtained from interviews was public in the Northfield News.]