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Local CEOs Are Optimistic About The Economy

Audio

Aired 7/27/10

Focus: How are companies fairing in the recession? We'll look at an optimistic CEO survey and whether it is enough to push the economy forward.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh, and you're listening to These Days on KPBS. At a time when we all badly need some reason to be hopeful about the economy and job growth comes a surprisingly upbeat survey of small business CEOs. San Diego-based Vistage International conducted a national survey of CEO confidence which finds most CEOs questioned believe their businesses will grow and they'll hire new employees in the next 12 months. Since even Fed Chairman Ben Bernanke told Congress last week that the nation's economic outlook was unusually uncertain, where are these CEOs getting their confidence and why? Here to help us answer that question are my guests. Leo Bottary is vice president of public relations for Vistage International and adjunct professor at Seton Hall University. Leo, welcome to These Days.

LEO BOTTARY (Vice President, Public Relations, Vistage International): Well, thanks, Maureen. Great to be here.

CAVANAUGH: Brian Rott is president of Cart Mart, Incorporated located in San Marcos. And, Brian, good morning.

BRIAN ROTT (President, Cart Mart, Inc.): Good morning. My pleasure to be here.

CAVANAUGH: Now I’d like to invite our listeners to join the conversation. Later this hour, we’ll be talking about what it’s like to look for work in this economy. If you’ve been searching for a job, tell us about it. What problems have you encountered? Are local businesses hiring? How long have you been unemployed? Give us a call with your questions and your comments and your stories. 1-888-895-5727 is the number to call. Leo Bottary, who participated in the CEO survey that was conducted by Vistage International?

BOTTARY: This survey went out to 1617 Vistage members who were CEOs of small to medium-sized businesses across the country. And we have conducted this survey since 2003 every quarter and, you know, it has not only, I think, provided a real voice for small business but it’s also essentially been a reliable predictor of the GDP by two quarters, as a matter of fact. So typically, when you see the confidence index trend upward, you can think – count on the GDP trending upward two quarters later. So, it’s been a survey that we’ve done for quite some time. Dr. Richard Curtin from the University of Michigan supervises that for us and, you know, we’re happy to keep doing it and bringing the information every quarter.

CAVANAUGH: Right, now what did you find in this particular confidence survey?

BOTTARY: Well, we found confidence up for the sixth consecutive quarter. There was an all-time low in late 2008 at 48.7 and today we’re up at 94.4, and I think in large part this confidence is a result of businesses feeling confident in their own business, that in many respects small businesses have weathered the storm, they have made adjustments, and they’re really prepared and confident about the future.

CAVANAUGH: And what kind of adjustments have they made? Are we talking about basically narrowing, paring down their workforce and changing their business models in some way?

BOTTARY: I think in some respects that’s correct. I think businesses, you know, each in their own way have looked at the challenges ahead, have made adjustments quickly in many respects, anticipating what was going to be happening in the economy and as our CEO Rafael Pastor often says, it’s often easier to turn the small boat than the large ship. And I think small business is, you know, very well prepared, I think, for the challenges ahead.

CAVANAUGH: Brian Rott, you’re president of Cart Mart here in San Diego in San Marcos. And you participated in this survey. What is your confidence level?

ROTT: Well, I’ve always been an eternal optimist…

CAVANAUGH: Uh-huh.

ROTT: …so I don’t let the media or, generally, indexes get me up or down. I run my business every day with the hope that the decisions that we make as an organization, as a leader, are the right decisions for my business and for my employees and my customers. So while I’m pleased to see that the confidence index is up, it’s always been up in my book even when the economy has been showing its ugliest head…

CAVANAUGH: Right.

ROTT: …including the last 12 months.

CAVANAUGH: Now is your confidence based largely on optimism or do you have some solid hopeful signs that you’ve been seeing in your business?

ROTT: Well, in our niche business here in California, we see a need for the products and services that we sell. What we are also seeing is that the competition, whether they’ve been run – well run or poorly run, we’re starting to weed through the – weed through some of the poor run organizations and it allows our company to improve. We’re able to hire better, well-trained staff.

CAVANAUGH: Umm-hmm.

ROTT: We’re able to feel better about making big decisions about purchasing equipment and/or making the next move for acquisitions and we’ve found that this has given us an opportunity to really challenge our business and challenge the way that I’m running the business.

CAVANAUGH: I’m speaking with Brian Rott and Leo Bottary, and we are talking about a survey conducted by Vistage International of CEO confidence. And they found most CEOs questioned believe their businesses will grow and they’ll hire new employees in the next 12 months. Brian, give me a sense of your business. How many people do you employ?

ROTT: At the moment, we’re 49 people.

CAVANAUGH: Uh-huh.

ROTT: We’re up 18% since January of 2010. All of 2008 and 2009, I’m proud to say we had zero terminations due to the economy. We’ve actually grown our business. We’ve have made acquisitions, and as a 50-year-old company we’ve found that this is truly the time for us to make a difference in making this a business that will extend another 50 years.

CAVANAUGH: Leo, let’s talk about the other findings in your survey. How did Southern California or California’s CEOs fare in their confidence levels versus their national counterparts?

BOTTARY: Sure, they were probably a little less optimistic, I would suggest, than nationally. For example…

CAVANAUGH: Hmm…

BOTTARY: …we had a question where we said during the next 12 months do you expect overall economic conditions in the U.S. will be better, the same or worse than now? And about 7% fewer Southern California CEOs answered ‘better’ to this question. Typically, when we received questions – answers to those questions, Southern California CEOs were more likely to think in terms of it being about the same versus it getting better. And we saw that across the board on a number of questions. The other question that I think, though, represented the biggest difference is we asked a question which said, does government understand the challenges faced by American businesses well enough to expand business opportunities for small business? You know, nationally, you know, from the federal government standpoint, they answered no by the tune of 87%, and 80% no for the states. The states kind of fared a little bit better. Here in Southern California, however, CEOs suggested, you know, at a level of 90% that the federal government did not understand small business well enough to expand business opportunities but it was a whopping 92% in terms of confident in state government, which is obviously substantially higher than the national average of 80%. So that’s where we saw the biggest difference, I believe, in terms of Southern California.

CAVANAUGH: Speaking of Southern California, we have Ted Owen on the line right now. He is CEO of the Carlsbad Chamber of Commerce and just recently the Carlsbad Chamber came out with an assessment where the businesses in Carlsbad, they say, are rebounding rapidly and robustly from the recession, the mood is up and the trend is toward growth. And, Ted, first of all, welcome to These Days.

TED OWEN (CEO, Carlsbad Chamber of Commerce): Thank you very much.

CAVANAUGH: Why do you think the business climate is like this in Carlsbad?

OWEN: Well, I think there’s a number of reasons why it’s good, and there’s probably a couple of strong reasons why it’s not as good as it could be in the country as a whole. But, basically, I believe the chambers of commerce, when they do their jobs, put like minded people together in a room in a hotel in somewhere in symposiums or whatever, and they start to deal with like minded people have like minded problems. We have groups like Netforce and Pathways and others that we put forth here at the chamber and one of the side effects of the net-weaving that we do with our clients is we don’t really count on them hiring people. We want to keep their doors open and let them grow their businesses. But Netforce as a group, for example, has 35 members and they’ve created 20 jobs, and we didn’t envision that as a mission. But the reason that they’re successful is because they sit down and look at each other and they say, well, I have this problem and they say, well, this is what we did when we had that problem. And I think what happens is when people get the confidence to do something and they live in a community like Carlsbad, which is economically probably one of the most viable in the county, it’s certainly the third wealthiest city in the county, and it’s the only city that has 25 years of positive growth and/or surpluses in their budget for the city including last year. I think once your confidence builds and you see your comrades in arms and your competitors growing, and if you don’t get out of the game, you’re going to grow…

CAVANAUGH: Right.

OWEN: …because there’s not enough business out there for everybody but those who stick it out are going to grow their business.

CAVANAUGH: Ted, what industries in particular are doing well in Carlsbad?

OWEN: Well, I think just about every business that’s still in business after the last couple of years is doing better than they thought they would compared to what you read in the newspaper or whatever. But small businesses are hard to determine because, first of all, there’s about five definitions of a small business. The U.S. government’s version of a small business is 500 employees or less. We consider a small business 10 employees or less…

CAVANAUGH: Umm-hmm.

OWEN: …so you have to look at it that way. I have 6 people whose statements I’m looking at here. One is a business consulting firm, three people, business is excellent, we’re expanding. It’s due to getting out there and having a positive attitude. Here’s a law office that’s doing – I’m doing great. Business is great. I started my business in the recession and my growing pains sort of worked themselves out during that time. Here’s a window cleaning company. My business is recovering quickly. We are booming. When we weren’t busy we were really reaching out to the customers and to people, letting them know we were there. Here’s a construction company, small one. I’m putting more money into advertising and clients are referring me. I’m doing better than in years past. Trophy company, the first quarter of 2010 is the best quarter I’ve had in 15 years.

CAVANAUGH: Wow, Ted, that’s some – that’s some list you’re racking off there. And so I really have to wrap it up with you, Ted, but I really want to thank you for calling in and telling us about the confidence that is – that the chamber of commerce is seeing in businesses in Carlsbad. Ted Owen, thank you very much.

OWEN: You’re welcome.

CAVANAUGH: Leo Bottary, I want to take what Ted was saying about small businesses and the various definitions there are for what constitutes a small business. You said something very interesting early on and that is that small to middle-sized businesses don’t feel that their voices are heard very much in the national discussion. Talk to me a little bit more about that.

BOTTARY: Well, I think in many respects because they are not large companies, I think by definition they’re a bit of a more disparate group, you know, I think there is a bit of that. But at the same time, you know, in many respects, small businesses, in large part, are really just looking to be left alone. They are people who are, you know, creating in this country. They’re responsible for about 50% of the GDP, 75% of the new jobs. You know, they’re making things happen. They want the freedom to do that. And, you know, I think they’re excited, you know, to have that opportunity and, you know, that – that’s what I think in many respects fuels a bit of the optimism here, that, you know, in talking to Brian earlier, just in terms of his own business and in looking at, you know, you can’t get caught up in conversations about slow economy and double dip and all that. You’ve got to, I think, you know, remain optimistic and be in business for the reasons you got into business. And, you know, I think, you know, I think that’s – that’s exciting. It was interesting to hear a conversation, you know, when it comes to the chamber and people working together because that’s what Vistage members do each and every day. You know, about 10,000 of them in the U.S. are getting together, you know, each month and working together. Even though they’re in different businesses, they face common challenges and by doing that it gives them an opportunity, I think, to work together and thrive and inspire one another’s confidence.

CAVANAUGH: And Brian Rott, president of Cart Mart, I want you to have the last word in this discussion. Do you plan on hiring more employees in the coming year? Where do you see your business going?

ROTT: Actually, I see our business growing significantly over the next year to two years. I’m pleased and excited that we have opportunities that’ll help expand our territory, not just in San Diego but beyond San Diego County. For that, we will be hiring, and we are always looking for good quality people to join the organization. And I think there are plenty of small business owners who feel the very same way and are just stuck in the – stuck in a rut and waiting for something to happen. But I believe you’ve got to go out and make it happen.

CAVANAUGH: Brian, thank you so much. I appreciate it.

ROTT: It’s my pleasure. Thank you for having me.

CAVANAUGH: Brian Rott is president of Cart Mart. And I’ve been speaking also with Leo Bottary. He’s vice president of public relations for Vistage International. Leo, thanks.

BOTTARY: A pleasure to be here. Thanks so much, Maureen.

CAVANAUGH: If you’d like to comment, please go online, KPBS.org/thesedays. Coming up, we’re taking your calls about looking for work in San Diego, that’s as These Days continues here on KPBS.

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