Recession, lockdown of credit hammers businesses of all sizes

December 29, 2008
Stock markets fell, jobs disappeared, and the outlook for the economy seemed to grow grimmer by the week in 2008.

Banks, real estate developers, retailers and manufacturers took some of the worst hits, but all types of businesses in central Indiana felt the pain. From health care to technology, education to philanthropy, every industry tried to take setbacks in stride.

But it wasn't easy, as credit markets locked up, preventing many companies from getting the credit needed to continue operating their business. Then consumers locked down their spending, further cramping businesses.

Indianapolis-area casualties of the credit crisis included surveillance and security firm American Sentry Guard, which had to fold in August after a couple of customers went bankrupt and New York-based JP Morgan Chase & Co. pulled the plug on a line of credit.

The Greenwood-based company had 43 employees and annual revenue of $8 million. In 2006, it landed on Inc. magazine's ranking of the 500 fastest-growing U.S. private companies.

Local mechanical-contracting firm Frank E. Irish Co., which helped build Lucas Oil Stadium, closed in May after National City Corp. yanked a loan.

Company President John T. Irish said he had been trying to find alternative financing when the bank pulled the plug, a move he told IBJ at the time had little connection to the company's financial condition.

"We've never had a [not profitable] year in our 92 years," he said.

Industries that relied on borrowing from financial institutions or spending from consumers felt the most pain, said Kenneth A. Carow, a professor of finance at Indiana University's Kelley School of Business. More immune were staple industries such as consumer products and health care.

The biggest concern: fear.

"Fear doesn't help the economy at all," Carow said. "It's time to realize things will get better. It's not like this is a downturn in everything."

The economic problems affected every industry in a different way: Convention boosters moved to capitalize on the nasty economy by selling customers on the city's value relative to competing cities. Banks tried to reassure customers their deposits were safe. Local charities wooed reliable donors. Ivy Tech Community College saw an increase in students hoping to land better jobs. Hospitals treated more uninsured patients.
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