Weathering fluctuations in the economy is a bit like big-wave surfing. In order to manage the ascent to the crest of a massive wall of water, a little extra power (or a jet ski tow) is needed. In order to stay standing as the water rapidly slides out from beneath our metaphorical surfer, a complex series of balancing motions and compensating maneuvers is required. If all of these steps are taken in the right way, there might be a few glorious moments spent in the tube before the water crumbles and it's time to spot the next perfect wave and start paddling all over again.
Or, to use another watery metaphor for the sometimes overwhelming shifts in financial currents, "it's like trying to take a drink of water from a fire hydrant," said Kelly McCarthy, president of systems integration firm Genesis Communication, which has offices in Edmonton and Calgary, and recently opened a new outpost in Vancouver. "That's what it feels like most days. The economy here is beyond on fire."
The Oil Boom
Describing Alberta's normally modest back woods roads as now populated with Ferraris and Porches, McCarthy has seen massive changes to his business as a result of the sharp rise in the price of the oil that permeates the region. This year, Alberta will break the record for the most economic growth in a single year for any province in Canada. That would normally be a good thing, except that during these times of extreme "oil patch envy," finding and retaining personnel is a challenge. Subsequently, Genesis Communication's wage costs went up 37 percent last year.
While the company has certainly seen a spike in business to support this increase in overhead, the situation is slightly problematic, as today's labor estimates will hardly cover tomorrow's costs. Fortunately, Genesis Communication's customer base isn't just regional-the company works on house of worship projects throughout the U.S., and additionally has just inked a deal with Generation Entertainment, the film production division of the Trinity Broadcast Network. This will put McCarthy and his team in charge of integrating AV and video editing systems in houses of worship that are looking to produce more visual content.
Clearly, finding work isn't the issue. It's finding the extra manpower to get to the crest of the wave. "We really can't do more work than we're doing because we can't get the manpower," McCarthy said. "So now our business strategy is very different. It's not about market saturation, it's about being very picky about the work we're going to do and selecting jobs that have a good hourly gross dollar per hour."
The oil boom is also fueling growth for York Electronic Systems in Broken Arrow, OK. "That can be short-lived, but at this point it doesn't appear to be, because we've got record reserves in gas," observed Steve York, president of York Electronic Systems. He then added that even if the nation shifts its focus to bio fuels, Oklahoma will still profit, as saw grass and corn are an important part of the alternative fuels equation.
For more than 20 years, the team at York has been carefully making note of how these and other types of possibilities will influence the future of their business. They managed to ride many of the waves that have wiped out regional competitors who were unable to diversify and stay afloat.
Feeling that theirs is a business definitely worth preserving, company founders Steve and Judi York have devoted much time to developing a succession plan that involves their daughter, Jennifer Jezek, who will one day take over for her parents. That means making certain maneuvers today in order to catch the next wave. "The goal now is to drive revenues sufficient so that our daughter will be able to hire a management team to help her run the business while her mother and I are still working in the business," Steve York explained.
Driving revenues shouldn't be too troublesome, as other areas of growth in Oklahoma today include the aeronautical industry's growing presence, population growth that is creating the need for more hospitals and the expansion and renovation of schools, and perhaps most notably, new legislation that allows for Vegas-style gaming on Indian reservations.
The good economy isn't the only thing driving business. "I've got at least 50 businesses in my hometown that do some of what we do-security, fire, access control, intercom, nurse call, background music, school intercom, clocks, bells, and buzzers," Steve York said. "When the economy goes flat and the business shrinks, everybody lives on less and a few people don't have enough to survive and they go away. Then there's a few that flourish because they pick up everything that those that went away did. If you're aggressive and progressive, even in a down market you can grow, but you have to be committed to do that."
York Electronic Systems...www.yorkes.com