Local business owners won’t say how tough it is

Copyright © 2008
Gallup Independent
By Bill Donovan
Staff writer

GALLUP — For decades, local business leaders have been saying that Gallup is recession-proof.

They were wrong.

In past recessions, business owners said that their businesses flowed along with nary a blip, fueled by an economy that was based on government grants and welfare checks.

But this recession, which is already being billed as the worst financial downfall in the United States since the Great Depression, is affecting almost every business in Gallup adversely.

In the past week, several local business owners were interviewed about conditions with the agreement that their names would not be used since no one here wants to give their competitors information that they could use against them in this faltering economy.

All of them said business was down — some said way down — and all seemed to have a different reason to explain why Gallup is now suffering along with other parts of the economy.

Government grants have been cut severely in recent years, with many programs in the Navajo Nation suffering four or five years of cuts. Others, like the Navajo Housing Services, saw their grant cut by almost two-thirds, forcing deep cuts in employment.

“We’re seeing families from the reservation cutting the number of trips they make to Gallup,” one restaurant owner said. “Instead of making two or three trips a month — and some would come in every weekend — they’ve cut back to once a month because of the high gasoline prices.”

In an economy based for the past 45 years on Navajo business from the reservation, this has hit Gallup hard, especially restaurants and motels that catered to these Navajo families.

But another thing that seems to have made this recession different than the others is that the fear that seems to have gripped consumers nationwide has hit Gallup as well.

Hearing all of the stories about consumer fears, local businesses say they are seeing area consumers keeping a tight rein over their wallets and pocketbooks, refusing to buy anything but necessities.

Toy sales are down, people seem to be cutting back on their dry cleaning, car purchases are being postponed.

Attendance was good at the Navajo Nation Fair, but there have been indications that families spent a lot less than they have in the past.

Mickey Menapace, co-owner of Rico Motors, said in a recent story that the rising gas prices have had an effect on local car sales for months.

Menapace said owners of SUVs are seeing the book value of their cars drop by half because of the rising gasoline prices. Although gas prices have gone down in recent days, no one expects these prices to continue, and gas guzzlers are expected to see their values continue to drop.

When asked what he was doing about adapting to this new economy, one business owner said simply, “praying.”

Restaurants are cutting back on their staff and people living on commissions said they are taking home a lot less than they have in the past. Housing sales have been reported to be sluggish for months and last week, there were a total of 142 houses in Gallup on the market when the normal market, said one real estate dealer, was between 90 and 110.

For a town that bills itself as the center of the Indian arts and crafts industry, things have not gone well in the past few months. With retailers nationwide afraid that people will be worried more about paying their rent and car payments than in buying Indian jewelry and rugs for Christmas presents, local wholesalers are looking at shelves filled with merchandise that they can’t sell.

As a result, signings saying “we aren’t buying today” are everywhere and Navajo craftspeople who depended on the Christmas sales to provide them with the money to have a nice Christmas will be struggling to find buyers ad as a result, said one dealer, many will be forced to sell their products for little more than the cost of the materials they used to make it.

Some businesses, however, are recession proof.

Bill Keeler of Gallup Jewelry and Pawn, said recently that the ups and downs of the stock market haven’t affected him. The amount of pawn he is taking in hasn’t changed.

Another business that seems to be doing well this season is the movie theaters.

“Our business has been up for the past three months over last year,” said Larry Allen, owner of the Allen Theater chain.

Allen said the philosophy is that when the going gets rough, people will go more to the movie theaters for entertainment.

“In the last seven recessions, movie-going has been up for five of them,” he said.