October 30, 2008 in Business

Economy’s woes hit local dry cleaner

Don Schelling shutting down all five Spokane shops
By The Spokesman-Review
 
Colin Mulvany photo

“It’s just so sad,” said Don Schelling, who had to shut down his five Spokane dry cleaners, eliminating jobs for 30 workers. “Dry cleaning is an optional service. People are not choosing this service right now.”
(Full-size photo)

Don Schelling hoped to survive the economic downturn and keep some of his Spokane dry cleaning shops open. But with consumers holding on to their dollars longer, Schelling said he was facing a 20 percent drop in revenue this year compared with 2007.

“It wasn’t my decision. It was forced on me,” he said of his move to close all five of his stores.

After the last store, in Lincoln Heights, closes this week, Schelling will have laid off all 30 of his workers.

Schelling isn’t the only business owner laying off workers. Global Credit Union, based in Spokane, laid off 20 workers last week. Kaiser Aluminum’s Trentwood plant cut 36 jobs earlier this month.

A state labor economist predicted more job losses in the service sector in the next several months, although she said some segments will be more vulnerable to recession than others.

Health care, for one, is an area where people won’t choose to delay spending money, said Mary Ayala, chief economist for Washington state’s Employment Security Department. Grocery retailers also are not likely to be impacted, she said..

Other service jobs, however, could sag as consumers cut back on spending, she said.

“I would say you can see that impact now (in retail) in the durable goods category,” which includes companies that sell big-ticket items such as vehicles, furniture and major household appliances, Ayala said.

More retail job losses are likely following the holiday shopping season, said the Olympia-based economist, who reviews data from across the state.

“People in general will be much more selective over what they’ll buy,” Ayala added.

Dianne LaValley, a division director at the Spokane office of Accountemps, a nationwide staffing agency, said consumers can be expected to slow spending on higher-priced entertainment and food.

But one category likely to stay constant or gain jobs is retail pizza, LaValley said.

“Pizza always seems to do well in a recession,” she said.

The number of temporary workers is growing, she added. As companies lay off workers, they frequently turn to temps to manage the workload, LaValley said.

In the case of Schelling’s dry cleaning operation, he managed to hold on through the last recession in 2001 and 2002. But over the past year, he’s been watching as customers pull back.

“Instead of people coming in for dry cleaning every week or every month, they’ve cut it down to twice a year,” he said.

His options for maintaining the business took another hit when the state Department of Revenue fined him an undisclosed amount for failure on Schelling’s part to remit sales taxes he collected at his Spokane stores.

Mike Gowrylow, a spokesman for the revenue department, said Schelling owes about $21,000 to the state for those taxes, plus penalties for nonpayment.

Schelling said he plans to pay off that amount over the next several weeks. But he’s bitter at what he considers the state’s intransigence in fining him at a time of economic stress.

“They (at the state level) don’t offer any options. They treat you the same whether you’re a big business or one that’s trying to keep going but are struggling,” he said.

Without the penalties, Schelling said he might have kept the business going.

“That was the straw that broke the camel’s back,” he said.

Contact Tom Sowa at (509) 459-5492 or toms@spokesman.com.


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