Considering how bad the economy was in 2009, North America's 50 largest for profit chains (see list on page 25) fared pretty well. In fact, about half of these organizations actually expanded their capacity in 2009 — although the expansion wasn't spectacular, averaging just under 3%. About one-fourth of the organizations maintained their capacity and a fourth experienced minor decreases. So it was not a stellar year, nor was it a disastrous year for the Top 50.

For the two largest for profit organizations — Knowledge Universe-US and Learning Care Group — 2009 was not a growth year. In fact both organizations decreased their capacity slightly. The last two years have shown no growth for both organizations. This is in stark contrast to their activity earlier in the current decade. Both Knowledge Universe and Learning Care Group engaged in a flurry of ­major acquisitions between 2003 and 2007 (see chart on page 26).

CEOs of the Top 50 organizations are nervously watching the economy for signs of improvement. When these CEOs were asked to rank the most ­serious challenges they face, far and away their top concerns were "the state of the economy" and "the ­rising cost of health insurance."

In recent conversations with for profit CEOs, considerable uncertainty was expressed on what the future holds. There are many who believe that for child care things will get worse before they get better. State funding for child care, although temporarily bolstered by stimulus money, will decline even more in the coming 18 months.

Likewise, as the economy recovers, people will not simply return to their old jobs, but will move on to new forms of employment. People may move to new locations, work part time instead of full time, or start working from home — all of which will cause shifts in patterns of demand for child care.

Despite all of these uncertainties, CEOs were remarkably optimistic about their prospects in 2010. Two-thirds of them projected that their organizations would expand in 2010 by an average of over 5%.

Competition remains an issue

In recent years, the challenge rated most serious by for profit CEOs (and by non profit CEOs for that matter) was "competition from Pre-K in the public schools." This time around this concern was ranked third on the list and was joined by "competition from unlicensed providers." In both of these situations, CEOs argue that public funds are being administered in ways that undermine ­licensed community child care programs.

When public schools offer free or reduced cost child care for four and five year olds, this diminishes the customer base of existing programs in the community. Likewise, when public funds for child care are distributed to unregulated, untrained 'family and friends,' this undercuts efforts of licensed child care to deliver a quality product.

There is some hope that the new administration will reverse recent declines in public support for child care. However, there is also resignation to the fact that with so many more urgent matters facing the administration — such as health care and Afghanistan — it may not be a time when the inadequacies of the current delivery system will be fully addressed.

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