Page 25 - ARUBA TODAY

BUSINESS Friday 30 November 2018
A25

Inflation angst: Businesses face higher labor, vendor costs

By JOYCE M. ROSENBERG exacerbate the increases.
Associated Press While customers expect to
NEW YORK (AP) — Diners pay more for her clothes —
are willing to pay more at her signature shirt ranges
Manhattan's upscale Go- from $258 to $649 — Bjorns-
tham Bar and Grill, but price son is hesitant to raise her
increases these days aren't own prices because she
about snob appeal — the doesn't want to lose sales.
restaurant is contending The solution, she says, is to
with higher costs, particu- scale back the types of
larly from rising wages. fabric she uses.
"We have been forced to "I make less silk (shirts) than
raise our prices to offset this I used to.
expense and our pricing I'm still using linen and cot-
still doesn't compensate ton," Bjornsson says.
fully for the increase," says Owners whose companies
Bret Csencsitz, managing require frequent travel are
partner in the restaurant getting hit hard, especially
located in the Greenwich if they're not flying in and
Village section. out of major hubs.
Gotham's hourly wages "I'm finding that coming out
have gone up along with of Santa Fe and Albuquer-
the city's minimum wage, que (New Mexico), the
which rose $2 an hour to In this Tuesday, Nov. 27, 2018 photo, a bartender talks to a customer at the Gotham Bar and Grill inexpensive flights I used
$13 last December and will in New York. to take are sold out," says
reach $15 this Dec. 31. The Associated Press Sarah Boisvert, who takes
restaurant is also paying minimum. Others under- "In the last year, we've prices to afford the creme about five trips a month
more for ingredients, espe- stand when they're forced done a better job at reposi- de la creme of personnel," for her technology training
cially eggs and other dairy to charge more that they tioning and being transpar- says Gendusa, who has 235 company, Fab Lab Hub.
items that are key dessert may lose some business. ent about what they get," employees. She's also find- She estimates her travel ex-
components. Gotham won't downscale Malesic says. "That's defi- ing ways to diversify; she's penses are up by a third this
Higher labor costs due to a its menu, and while it has nitely been helpful." added electronic mailing year.
tight employment market raised prices, it's also ab- Raising prices is difficult in services that bring in more Boisvert flies to cities like
and rising minimum wages sorbing costs rather than the printing industry, where revenue and are more Chattanooga, Tennes-
in states like New York are lose customers, Csencsitz many companies have profitable than printing. see, and Tulsa, Oklahoma,
a key factor as some small says. shut down in the past de- When inflation manifests and fares are higher than
businesses struggle with in- "There is a limit to what the cade, not only because of itself in the form of soar- on more heavily traveled
flation and consider wheth- consumer is willing to ac- the recession, but because ing rents, some companies routes like New York-Los
er to pass higher expenses cept to dine out. We'd rath- their business customers no shut down, forcing their Angeles. Some tickets she
along to customers. Whole- er take a hit on the bottom longer send printed docu- small business customers to used to pay $400 for now
sale prices, which reflect line," he says. ments through the mail. find new suppliers. When cost $900.
what businesses pay for Just a few years ago, Tom "I had to keep my prices some of Haldora Bjornsson's But Boisvert, whose compa-
goods and services, rose Malesic was able to pay decently low just not to go fabric vendors in New York's ny helps train people in skills
0.6 percent in October, the a website developer at his out of business," says Joy Garment District closed, like 3D printing, gets fund-
largest increase in six years. Lancaster, Pennsylvania, Gendusa, owner of Post- she had fewer resources for ing from grants and can't
Consumer prices, which the internet marketing compa- cardmania in Clearwater, the silk she uses in custom- pass along cost increases.
Federal Reserve considers ny $35,000. Now, he says, Florida. She absorbed the made women's clothes. She has to take steps that
as it determines whether to "we're lucky to get one at increases by resigning her- "Now, there aren't so many are hard for a company fo-
raise interest rates, were up $60,000." self to lower profit margins. choices, and we are pay- cused on new technology.
2.5 percent from October "Our biggest business ex- Now, however, with labor ing a higher cost," says "We have to cut elsewhere
2017. pense is labor. Our salaries costs up $22,000 a week Bjornsson, owner of Hal- — delay new equipment
Economists consider U.S. have had to go up substan- this year including what dora, a store in Rhinebeck, purchases, for example,"
inflation to currently be tially to stay competitive she pays for staffers' health New York. she says.q
mostly in check, but indi- and attract the people that insurance, she's passing Bjornsson also pays more
vidual businesses can feel we need to be successful," some increases to custom- for thread and buttons and
the impact of higher prices says Malesic, owner of EZ- ers. is concerned that Trump
in differing ways, depend- Solution. He also has other "We've had to raise our administration tariffs could
ing on where they're lo- rising expenses, including
cated, whether they have software that's upgraded
employees, are in tight real yearly and costs more with
estate markets and face each enhancement.
the Trump administration's Malesic has had to raise
tariffs on imports. prices, but rather than
Owners have varying strat- implementing an across-
egies for coping with infla- the-board increase, he's
tion. Where possible, they created a tiered system,
try to negotiate lower pric- packaging services and
es with suppliers or search pricing them according to
for new vendors. They may what each package offers.
change products or ser- Customer response has
vices to avoid raising prices been positive, he says.
or keep the increases to a