Some companies in the promotional products industry say the partial shutdown of the federal government – now the longest in modern history -- is impacting their business. Not surprisingly, firms facing fallout from the impasse between Democrats and President Donald Trump include those that do business with federal agencies.

So, why *has* the US government shut down?

[Tap to expand] https://t.co/A1KDlhNTmF pic.twitter.com/6IYVG8rpP8

— BBC News (World) (@BBCWorld) January 11, 2019

A recurrent complaint among affected firms is that certain federal clients have put the brakes on orders amid the federal tumult. Located about 15 miles from Fort Bragg in North Carolina, distributor Margaret Joyner told Counselor that several governmental clients have communicated that bid requests are on hold.

[From left] Steve Flaughers, Proforma 3rd Degree Marketing; Howard Potter, A&P Master Images

Similarly, Steve Flaughers said an approximately $10,000 uniform order with a division of a federal agency is in suspended animation until the government reopens. “We’ve won the deal, but because of the shutdown, the client can’t issue the final purchase order,” the CEO/President of Ohio-based Proforma 3rd Degree Marketing (asi/300094) told Counselor. Other government accounts have buttoned up ordering, too. “Thankfully nothing was in a billing phase, which would have affected cash flow,” Flaughers said.

Meanwhile, the shutdown is complicating a deal that involves Top 40 distributor Staples Promotional Products’ (asi/120601) parent company Staples, Inc. acquiring fellow multi-billion dollar office supplies business Essendant for nearly $1 billion. The Federal Trade Commission is reviewing the proposed acquisition. The review was already complicated by criticisms from Essendant’s dealer and reseller clients that Staples, a long-time competitor, could obtain inside information on them and take sales away. The closure date has been extended twice. And now, the deal is further being hampered by the shutdown hamstringing the FTC.

“Our final approval has been delayed by the recent government shutdown, which has impacted the work of the FTC and timing of a number of pending approvals, including, unfortunately, ours,” Essendant CEO Ric Phillips said in a letter to customers. He added, however, that he expects the closure to get the FTC’s green light once the shutdown ends. “We remain well positioned to close the transaction and believe we will do so in early Q1 of 2019, subject to final approval from the FTC,” he said in the letter filed with the SEC.

Despite the issues for some promo companies, other industry firms told Counselor that they’re not experiencing any direct or indirect business problems as a result of the shutdown. Among some affected firms there was a sense that the timing of the shutdown was, in as much as it could be, fortuitous from their promo business’ perspective. Flaughers, for instance, sounded a positive note. “Our clients in this market tend to order later in the year, into spring,” Flaughers told Counselor.

Howard Potter shared a similar perspective. “So far, we have been fine. Most government agencies we work with are not ordering much this time of year,” said the owner of Utica, NY-based A&P Master Images (asi/102019). Still, Potter does anticipate a potential issue, which he characterized as minor, occurring down the line once the government reopens in full. “The only impact I could see happening is orders flooding in if they have been on hold,” Potter told Counselor. “That could create a bottleneck with ordering all at once, but we don’t view that as a big deal.”

Flaughers and Potter both expressed that their businesses are highly diversified in terms of the markets they sell into and how much of their revenue particular clients account for. That helps minimize bottom line impact when one particular market – federal government in this case – comes on hard times and ordering slows. “We learned our lesson in the last recession that being diversified with our clients is just smart business,” Flaughers told Counselor. Potter added: “This should be a good time for every business to really look at who their customer base is, and how much of their business is made up from particular customers and markets.”

In all, about 420,000 federal employees deemed essential are working without pay, while another 380,000 are furloughed, according to The Wall Street Journal.