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December 18, 2001
Day-care Industry Proving Resilient
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s a rough time to be in business, unless, according to The New York Times, you're in the child-care business.

Institutional child care, fed by the wholesale arrival of women in the workplace 30 years ago, has emerged as a surprisingly resilient industry in tougher times, the Times reports.

The professional, for-profit chains are not growing as quickly as they did in the 1980s, but these businesses also say they are not feeling much of an economic pinch, at least not yet, even in areas where many working parents have been laid off.

Experts tell the Times that the industry's resistance to the ups and downs of the economic cycle has been strengthened by a growing acceptance of the value of early education and socialization for children. The high percentage of mothers in the labor force has also helped.

"We've had quite a few months into a fairly serious recession, and we don't see any letup in the number of centers," said Mike Wilson, owner and president of the Wilson Marketing Group, a consulting firm in Culver City, Calif., that specializes in child care services research.

There are dangers in the industry, low profit margins, constant staff turnover, heavy regulation, and the likelihood of higher insurance rates after the Sept. 11 terrorist attacks. Moreover, moves by many states to offer public preschool education could reduce an important source of business.

Roger Neugebauer, publisher of Child Care Information Exchange, a trade journal based in Redmond, Wash., said the largest for-profit child care chains have gone from projecting growth rates of 5 to 7 percent for 2002 to aiming for ones of 2 to 3 percent.

Yet some big chains are continuing to expand aggressively, assured of future business from corporate clients that offer subsidized child care as an employee benefit.

Bright Horizons Family Solutions, a Boston-based chain of employer-sponsored day care and early education centers with customers like Ford Motor, Merrill Lynch, and Johns Hopkins University, opened 21 sites in the July-September quarter alone, a record for the company.

Roger Brown, the chief executive of Bright Horizons, and his wife, Linda Mason, the chairwoman, founded the business 15 years ago. He said he expects to open 40 to 50 centers in 2002, compared with about 45 this year. The company, publicly held, reported a 23 percent increase in third-quarter earnings, to $2.3 million, on a 17 percent increase in revenue, to $87.2 million.

Others are expanding at a more modest pace. KinderCare, which is based in Portland, Ore., and is the nation's largest child care chain with 1,257 centers, plans to open 35 centers in its current fiscal year, which ends May 31, about the same as in the previous year.

To view the New York Times article, click here. (Registration required.)

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