|Veteran UPS driver Emory Spears (in his truck) chatted with TSC staff writer Ted Reed (foreground, in uniform, too) about how business in the Charlotte, N.C. region has fared during the economic downturn.|
CHARLOTTE, N.C. -- Of course the economy has slowed to a crawl. Just don't tell UPS ( UPS) driver Emory Spears, who still delivers 300 to 400 packages each day. "Every morning, when you put on that brown uniform, you're like a football player or a basketball player: It's time to go into battle," says Spears, 53. He has been a UPS driver for 31 years, the last 28 on the same route in Charlotte's upscale Dilworth neighborhood, full of small businesses, medical officers and small, neat single-family residences. UPS was once viewed as a leading indicator, in the days when consumers shopped at malls and businesses ordered supplies months in advance. But in today's just-in-time, click-to-order world, the biggest package shipper has become a proxy for the economy in real time, with 6% of the U.S. GDP and 2% of the world's GDP in its system at any given moment.
Interviews with Dilworth businesses, conducted as Spears dropped off packages, indicated that a few have been badly hurt. But for many, life goes on, with the impact of local events far more compelling than the macro trends of the world economy. In fact, "this year is better than last year," for Dan Jacks, owner of Berrybrook Farm natural foods store. A local event explains this phenomenon: a block away, a locally owned health food supermarket shut down this summer, the victim of increasing competition from national health food chain stores in Charlotte. Before the shutdown, Jacks said, his sales were down slightly.
Next door, at the Fast Frame picture-framing shop, where it must be said that nearly every purchase is discretionary, sales collapsed in October and November. But they were "decent" in December, says owner Edwin Castro. "This is a good neighborhood -- lawyers, doctors, professional people," Castro says. By and large, Bank of America ( BA) and Wachovia ( WB), which have their headquarters a mile away, have not yet had major layoffs. But major layoffs are coming, with both companies in the early stages of implementing already-approved mergers. Life and death go on at two nearby businesses -- literally. At a store geared toward babies, the good news is that babies are still being born. The bad news is "they don't need the designer crib," an employee says. The sales decline is double digit. At the funeral home next door, "Our business is going in the hole, just like it always is," says one employee. On the bright side, says another, "Nobody complains." At Dilworth Packing Co., a package-shipping shop, December business is "a teeny bit off," says owner Tom Hinton, with 463 customers as opposed to 485 last year. Why such a slight decline? "Hopefully, good customer service," Hinton says. "That, and Emory -- I've never seen him not smile." The reliance on Spears is not entirely overstated. For small Dilworth businesses, Spears is in fact a primary connection to the world's economy. He trots in and out of each business, a kind word or joke for everyone he sees, "a hello darling" or a "lucky you, getting off at 4 p.m.," showing patience while an owner is reached on the phone to authorize acceptance of a COD package, and truly slowing down just once -- to try to convince an employee at a medical business to shift the office account from Fed Ex ( FDX).
"I'm trying to steal the account," he says. "I'm making progress on it, being who I am." At Bright Yellow Jacket, a small design and marketing firm that sells services to other small companies, "We're struggling," owner Stephen Oster acknowledges. "We're taking a hit." The revenue decline is double digit. Nevertheless, as Spears left, Oster's partner handed him a small, wrapped gift: a plastic water bottle. As a proxy for the economy, UPS is of course susceptible to the recession. In the third quarter, net income fell nearly 10% as U.S. package volume declined, particularly toward the end of the quarter. Meanwhile, FedEx last week sharply cut its fiscal 2009 earnings guidance, citing "significantly weaker macroeconomic conditions (as) demand for our services weakened sequentially throughout the quarter and global economic trends continue to worsen." FedEx reports earnings for its fiscal second quarter on Thursday. For the full year, with the S&P 500 down about 40%, UPS shares are down about 26%. After hitting an all-time low of $43.32 in October, they have recovered some, due to falling oil prices. Shares were trading at $52.38 in recent trading Monday, down 3 cents. Still, it seems that many investors are pricing in the possibility of a depression, even though -- from the vantage point of the jump seat in Emory Spears' brown truck -- a depression is not near.