Drake Software CEO Phil Drake is taking the tough economic times with ease.
He believes he can get through the recession without closing any businesses or laying anyone of his employees off. With 500 employees, Drake is the second largest employer in Macon County.
“Overall our business is up, especially in software,” Drake said.
Drake pays out about $16 million in payroll and benefits annually.
“I really want Franklin and Western North Carolina to be a player when our kids grow up. I don’t want them to have to leave home to find a good job.”
Being responsible for so many employees’ livelihoods, Drake said he has some “trepidation.”
“There’s a huge responsibility in making payroll every Friday,” Drake said.
Other than his own businesses he also worries about the country.
“Our country has some dangerous times ahead,” he said. “Our country has got to stop spending more money than it has.”
Other than the software company, Drake has built a small business empire across Macon County: an Athlete’s Foot, Christian bookstore, a print shop, 9-hole golf course, a Microtel franchise, the Fun Factory, a marketing company, Internet service provider, a Christian radio station, construction company and a Verizon store.
And on July 3 he will open his 1,500-seat performing arts center in Macon County with the Oak Ridge Boys kicking it off. Charlie Daniels will also play at the center soon after, he said.
Out of all his businesses, his software company is the most profitable. Of his 500 employees, 300 of them work in the software side, he said.
“The software business is great,” Drake said. “I write tax software for accountants. That business is recession proof. People have to file income tax returns no matter what.”
Drake said his software business is up 14 percent this year. He said 30,000 accountants use his software, and his product does 10 million tax returns a year.
Business is up because, “We have a real good sales team and God has put me in a good place,” he said.
All of Drake’s other businesses are down, he said, adding that they started going south in September when gas hit $4 a gallon.
For instance, the Fun Factory isn’t on people’s priority list these days as they struggle to buy groceries and pay bills.
Drake may cut back on part-time high school workers at The Fun Factory.
Likewise, employees for his construction company have seen less work because of the slowdown, but there have been no permanent layoffs, Drake said.
“There have been weeks where there hasn’t been work to do,” Drake said.
Business will pick back up some when the weather improves, Drake said, noting that there is always a slowdown during the winter months when tourists aren’t here.
Tourism will be down this summer, he predicts, but he can’t foresee how much. Hopefully his performing arts center will draw people to the area, and people who would normally make long summer trips may stay in the region this year, he said.
By the summer of 2010 he thinks the local economy will rebound.
“I think we are very near the bottom,” Drake said of the national economy.
WNC not hit as hard
Western North Carolina hasn’t been hammered as hard by the recession as other parts of the country like Washington state, which has seen Microsoft lay off 5,000 workers, New York or Detroit, which is hurting from the automobile decline, Drake said.
Jobs in the area are not dependent on GM, Wall Street and other industries taking a big hit, Drake said.
“I don’t think the recession has hurt us too much. If we have a big impact it’s less tourism,” he said. “Most people still have a job, most people are still making the same amount they were making. Gas prices are down now.”
Seattle could be a tough job market now with 5,000 Microsoft employees looking for a job, he said.
“Those types of layoffs haven’t hit Western North Carolina,” Drake said.
Also, there hasn’t been as much subprime lending here compared to the rest of the country, he said.
Unlike Dade County, Fla., where the bottom dropped out of property values, this area has seen more modest declines between 3 to 5 percent, he said.
“We’re not seeing stuff drop through the floor,” Drake said. “There are not as many foreclosures.”
However, Drake acknowledges that North Carolina’s unemployment rate was 8.7 percent in December — the highest since 1993 — and that some small businesses are closing.
In fact, Drake, who’s been in business for 35 years, says it is still the worst he’s ever seen.
“It wasn’t this bad in the ‘70s during the oil embargo,” he said. “I remember having to line up at the gas station, and you could only buy $5 of gas or buy gas on even or odd days based on you tag number.”
A bad plan
Something has happened in the past 40 years to make the United States go from the greatest creditor nation in the world to now the largest debtor nation, Drake said.
“Part of it is that we are spending more money than we take in,” he said.
And he said the nation is about to do it again with the proposed stimulus plan.
“We’re about to spend $819 billion we don’t have,” Drake said.
Drake would prefer if the government took a laissez-faire approach.
“The best thing the government could do for the economy is stay out of it,” Drake said. “Doing nothing is better than what they’re doing.”
The government got the country into the current economic situation by encouraging banks to make sub-prime mortgages to unqualified buyers so low-income people could realize the American Dream, Drake asserted.
The Federal Reserve artificially lowered interest rates to entice people to buy homes they couldn’t afford, Drake added.
If anyone is to blame it may be whoever was on the Senate Finance Committee when Fannie Mae and Freddie Mac gave 0 percent down home loans, Drake said.
Drake calls the proposed stimulus plan before the Senate a “bad plan.”
“It ‘s bad for several reasons,” Drake said. “It’s not going to stimulate the economy. We’re just borrowing from our kids. We’re putting ourselves further in debt.” Moreover, the plan has lots of pork barrel spending.
“Some of it’s going to Planned Parenthood. It’s a bad bill.”
The bill has been compared to FDR’s New Deal in that it proposes to create jobs building roads and bridges across the nation.
“My grandfather did some WPA work laying rock along the roadsides,” Drake said. “I’m not saying it won’t help a few people.”
The economy will recover on its own if the government stays out of it, Drake said.
“Businesses have done well in America on their own for over 200 years,” Drake said. “That government is best that governs least. American people are ingenious and hard working and if left to their own devices will succeed.”