To catch up on a backlog of orders for wood stoves, Shenandoah Manufacturing Co. will work a 50-hour week this week, and for the first time in quite a while, general manager Lewis Strite has hung out his "help wanted" sign.
"We've had a nice little blip in orders that has necessitated our employing some additional people," says Strite. But he tells those applying for work that the jobs may be only temporary and they shouldn't give up another job to sign on at Shenandoah.
"We are convinced it is not going to be permanent employment," explains the Harrisonburg executive. "The labor market will continue to be soft until that recovery we keep hearing about occurs."
The economic upturn is coming reluctantly to the Shenandoah Valley, just as fall is slow in returning to western Virginia this year. The mountains are a patchwork of red and green trees, and conflicting stop and go signals color the economic outlook as well.
The Valley's farmers are suffering through the worst cost-price squeeze ever and will get back only 92 cents of every dollar they invested in producing this year's crop.
The growth of the tourist traffic has slowed dramatically. Farmland prices are falling; the backlog of unsold homes has built up to a two-and-a-half-year supply, and mountain properties aren't selling, either.
But barely one-half of one percent of Rockingham County's farmers have quit farming this year. Fifteen new businesses have opened in downtown Harrisonburg in the past year. High technology plants like the General Electric industrial controls division in Charlottesville are investing millions in expansion. The dozens of small factories like Shenandoah Manufacturing are surviving despite some difficulties.
"There are few industries in The Valley that do not seem to be experiencing a recession," Strite said last week at the annual Valley Executive Economic Outlook Seminar sponsored by Rockingham National Bank and James Madison University. "The manufacturers I know in The Valley are taking the appropriate action of hunkering down in the storm."
Shenandoah Manufacturing is like a lot of the little plants up and down the river. It makes wood stoves and fireplace inserts, small incinerators for veterinarians and medical laboratories, and equipment for chicken farmers.
Because of the recession, business is erratic and difficult to plan for, Strite explained. High interest rates and uncertain sales have caused retailers to sell off their inventory. When sales show signs of picking up, retailers place orders and insist on quick delivery, forcing the plant to work overtime to meet the demand.
But the advance orders that would allow the plant to gear up production for the long haul are not coming in yet, and even with the recent 45- and 50-hour weeks and a few new hires, Shenandoah Manufacturing's payroll is a couple of dozen people below its pre-recession peak of 150.
Employment is off, too, at most of the Virginia plants of General Electric Corp., said Guido DeGregorio, general manager of GE's Charlottesville factory. Since opening a plant at Waynesboro back in 1954, GE has become Virginia's second largest industrial employer, with facilities in 17 cities.
Many of the GE plants are suffering from cutbacks in capital spending by other industries, DeGregorio pointed out. The Waynesboro plant makes components for computer terminals and has cut its workforce by about 5 percent in the last year. The Lynchburg GE plant that makes mobile radios has pared its payroll 9 percent because sales have fallen off.
Among the hardest hit victims of the recession is DeGregorio's Charlottesville plant, which makes controls for industrial equipment. Sales are off 30 percent, but employment is steady because GE has invested $55 million in a new line of controls to compete with Japanese imports.
The company spent $20 million developing the new products and put another $35 million in a new plant and laboratory that will open this week.
GE won't be able to capitalize on that investment, however, until capital spending rebounds, and that is not likely to occur for some time, DeGegorio warned, forecasting that GE's Virginia workforce of 15,000 will be no bigger next year than it is now.
The Virginia agricultural economy also will remain stagnant for another year, predicts Douglas Flory, executive vice president of Rockingham National Bank.
Farmers are being badly squeezed between falling prices for their products and rising costs of production, said Flory, a member of the executive committee of the American Bankers Association agricultural division. Every dollar spent on seed, fertilizer, fuel and other production expenses this year will pay back only 92 cents in farm income, he said, the worst ratio ever.
"Even in the face of the worst year in history, our farmers are generally healthy from a balance-sheet standpoint," he noted. The typical Virginia farmer has debts amounting to about 13 percent of his assets. That's about 50 percent better than the nationwide average and only half the debt burden of cornbelt farmers.
Flory's bank bills itself as the state's biggest agricultural lender, and he says about one-half of one percent of Rockingham National's farm customers went out of business last year.
Farmland prices and most other real estate values in The Valley are falling because of the recession, agreed Flory and Paige K. Gordon, president of Home-Land Realty Co. of Harrisonburg.
Flory figures farm property prices in the Shenandoah fell about 7 percent last year and could slip another 5 to 7 percent next year.
Gordon said farm land prices have held up relatively well compared with other kinds of real estate. "Mountain land and recreational type property have probably suffered the most in volume and price in the last two years," he said.
Because of high interest rates, he added, "520 families that would have normally bought a new housing unit have not been able to do so in the past two years."
Those would-be buyers represent pent-up demand that he predicts will mean "an increasingly strong market in 1983."
But the turn-around has not yet begun and the real estate market Gordon describes is not much different than the wood stove or industrial controls businesses.
It will be at least next spring before business blooms again in The Valley.