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WNY COMPANIES BEGIN TO FEEL ECONOMIC IMPACT OF TERRORISM

The shock waves from the Sept. 11 terrorist attacks that have been battering businesses in the Buffalo Niagara region for the last month-and-a-half are beginning to take a toll.

Exactly how much of a toll is still in question, but there's a growing load of anecdotal evidence that the impact is far-reaching and quite substantial.

From the first wave of casualties in the travel and tourism and retail industries, the ripple effects have spread to local manufacturers, who already were having a tough go of it this year, to local insurers and beyond.

Executives, who were grappling with a weakening economy even before the terrorist attacks sent it spiraling further downward, are hunkering down. They're cutting spending, curtailing investments and eliminating jobs. And they're saying they don't have a clue about how long the slowdown will last, or how bad it will be.

"These are clearly difficult economic times," says Timothy T. Tevens, the chairman, president and chief executive officer at Columbus McKinnon Corp., an Amherst company that makes chains, hoists and other equipment to move materials.

And how. Look at how these local companies are dealing with the slowing economy and the accelerating decline since the attacks:

Columbus McKinnon, which was struggling with weak industrial markets, said last week that it is cutting its capital spending in half. The company also stopped paying a dividend to its shareholders so it could use that cash to pay down its debt. And after deciding to close plants in Arkansas and British Columbia last summer, Tevens says more factory shutdowns are possible.

Bush Industries, like Columbus McKinnon, was battling a declining market long before Sept. 11. But the terrorist attacks have made a bad situation worse.

The Jamestown maker of ready-to-assemble furniture has slashed its Western New York work force by 30 percent since July 2000, eliminating more than 625 jobs as it responds to a sharp drop in its furniture sales, says Ernest Artista, a Bush vice president. It now employs 1,468 people in Western New York, down from 2,100 in July 2000.

After the terrorist attacks, sales of Bush furniture through the big office superstore chains -- one of its main sources of business -- fell off by 10 percent to 15 percent as consumers stayed home and kept their wallets shut.

The company already is planning to stop production for two weeks during this quarter to keep its inventories down in the face of falling demand and might extend it if necessary. "We don't know, at this date, if that's going to continue through the fourth quarter," says Robert Ayres, Bush's president. "The uncertainty makes it difficult to make a final decision" on production levels.

Regardless, Bush recently closed one warehouse in Virginia and plans to shut another in Erie, Pa., as a cost-cutting move, Artista says. But Bush executives also say they don't want to close factories, betting that demand will pick up eventually.

At Gibraltar Steel, chief executive Brian J. Lipke says the terrorist attacks "clearly exacerbated" the slowdown in its steel products and metal building materials markets.

As a result, the Hamburg-based steel processor has eliminated 150 to 170 of its 3,500 jobs, a 6 percent reduction that so far has spared the company's local employees. The company also has curtailed virtually all discretionary spending, and imposed a wage and hiring freeze at the end of last month. And because most Gibraltar employees have part of their pay tied to the company's profits, the slump means their paychecks won't be as big, either.

Even Buffalo-based insurer Merchants Group is taking a hit. The company expects nearly $2 million in claims because 13 or 14 of its policyholders had offices in and around the World Trade Center complex. Most of the claims, which turned what would have been a third-quarter profit into an $800,000 loss, will come from business interruption policies that the company had written, says Robert Zak, Merchants' chief operating officer.

"We target Main Street businesses, small offices and small shops," Zak says. "Most of these were second locations for businesses that we insured elsewhere."

Astronics Corp. isn't cutting back, but the Buffalo-based company is feeling both the good and bad side of the terrorist attack fallout. The company makes cockpit lighting equipment, so its sales for commercial jets and business jets are being cut back. But Astronics also sells those products to the military, and all the extra flights that American fighter jets and other military aircraft are making is sure to lead to a significant increase in spare part sales.

So the company is shifting more of its resources away from its commercial aviation products to those used by the military, says Kevin Keane, Astronics' president.

Of course, not all the news has been bad. Wilson Greatbatch is expanding its research operations at the battery maker's Clarence headquarters, which will add jobs. Fleet Bank is bringing 95 telemarketing jobs to Niagara Falls, and Graham Corp. expects to add workers at its Batavia factory after winning a big contract to sell condensers used in power plants.

But that isn't enough to offset the otherwise somber mood that has settled over the business community.

How long it will last is anyone's guess. But we're probably going to be feeling its sting for some time to come.

e-mail: drobinson@buffnews.com

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