Business Watch, January 1993

The economy is sending mixed signals to pest control operators in the Midwest.

While some PCOs in the region report depressed sales, others are reporting better-than-average business.

Val Smitter, owner of Smitter Pest Control, Grand Rapids, Mich., says his state has been hit hard by the recession. "This past year, business in this whole area has been down. People don't seem to be spending money." That shouldn't be too surprising considering the sorry state of the automobile industry in Michigan, where job security seems to be on everyone's mind.

The economic downturn has resulted in an increase in price cutting among PCAs throughout the region, according to Smitter. "Pest control prices are very depressed," he says. "And termite control is being done below cost in my area, which is something I can't understand.

Smitter says economic conditions improved slightly after the election of Bill Clinton, but sales remain sluggish. Nevertheless, he expects to "do better" in 1993.

One PCO who is already doing better is Dr. Mark Wisniewski of Burr Chemical Co., Rockford, Ill. "Last year was the best year we ever had," he says. "If there was a recession, we certainly didn't participate in it." Wisniewski attributes the company's good fortune to a growing customer base, relatively stable economic conditions in his market area, and a growing reliance on IPM. "We want to be thought of as the customer conscious, environmentally aware pest control company," he says, "so we've begun marketing those aspects of our program." The strategy seems to be working. The company grew at 15 to 20 percent annual rate last year.

Between these two extremes you'll find Ron Scheufler, a one-man operator from Vickery, Ohio. The owner of Bay Exterminating Co. says 1992 was a solid, if not spectacular year. "I haven't noticed any downturn," he says. Scheufler weathered the recent recession by staying close to customers. "I'm almost married to my customers," he says. "I think I have a good track record." Apparently so. Scheufler says he turns over less than 1 percent of his customer base annually. How does he feel about the future? "I think next year will be as good as ever."

Schefuler's optimism, however, is not shared by other small businessmen in the region. According to a survey from Society National Bank, 40 percent of Midwest businesses expect economic conditions to improve in 1993 while 10 percent expect conditions to worsen. That sounds good until you realize that last May, 62 percent of respondents expected economic conditions to improve, while only 4 percent predicted conditions to worsen.