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Blog: Measuring the Impact of the Government Shutdown

By Bridget McCrea

From his vantage point as vice president of United Electric Supply’s vendor and new services development, Rick Freebery started thinking about the government shutdown in August – roughly three months before most business owners were aware of the looming threat. Not only is the distributorship a U.S. General Services Administration (GSA) contract/schedule holder, but it is also situated just two hours away from the shutdown’s home base in Washington, D.C.

“We felt the impact pretty quickly,” says Freebery. In fact, the company’s GSA team was initially challenged back in early-2013, when the government sequester took hold. Once that mountain was conquered, Freebery says the rest of 2013 went relatively smoothly – that is, until the shutdown. “We work with a number of government entities and military bases, and we were having a decent year until the shutdown turned off the tap for us.”

The shutdown started at midnight on October 1 when a dispute between the Republican-controlled House of Representatives and the Democratically-controlled Senate over Obamacare halted a wide swath of government activities. The move – which has closed national parks, furloughed transportation inspectors, and even prevented the GSA from updating its website – is already directly impacting the sales of NAED members like United Electric.

To offset the drop-off in business, Freebery says the forward-looking company started “focusing its energies in other directions,” several months ago. But even as it does that, Freebery says the firm remains hopeful that its government business will remain intact and be back online soon. “We’re in a tough patch right now, but this isn’t going to go on forever,” he points out. “Our GSA team will stay in place and should even expand in 2014.”

Potential Impact Ahead
As politicians continue to wrangle over the fine details of the government shutdown, all of the nation’s national parks remain closed, new applications for small business loans are in limbo, and new patients waiting to get into the National Institutes of Health’s clinical trials are turned away at the door. Hundreds of thousands of federal employees have been furloughed indefinitely without pay, including those who protect the nation from terrorist threats, defend our borders, and inspect our food.

In the electrical distribution field, some distributors are feeling the negative impact of the shutdown while others have been so far unscathed by the national event. At Controller Service & Sales in Avon, Mass., Vice President of Sales and Marketing Scott O’Day says the shutdown is still “too new” to directly impact his firm’s sales and business pipeline. He points to the government’s October 17th deadline (when the federal government exhausts its ability to borrow money, unless Congress raises the limit it can borrow) as a possible turning point in the situation, should it not be resolved by then.

“While we haven’t seen any impact yet – nor have we heard about any on the customer side – things are still largely up in the air at this point,” says O’Day. “What happens on October 17 will likely play a big part in how everything plays out [going forward].”

Doug Borchers, vice president of sales at Dickman Supply in Sidney, Oh., says that while the shutdown has yet to directly affect the company, the longer the holdup persists the better the odds are that it will take away from the distributorship’s sales.

“I assume we’ll see some negative impact – namely because we do business with customers that do business with the government,” says Borchers, who last week heard from one customer that was planning a 400-person furlough. “When the government announced that a certain number of people were going back to work, our customer decided not to furlough the workers. So even though the shutdown hasn’t affected us yet, it definitely has the potential to.”

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