San Diego's small-business owners and bankers are starting to see a slow uptick in business, but election-induced uncertainty has some clients waiting to make decisions and companies feeling the pain.
Twelve local small-business and lending executives gathered for a Daily Transcript roundtable discussion Oct. 30 to discuss how they're faring on what will hopefully be the tail-end of this recession, and how their lending, borrowing and hiring habits are evolving.
Jeff Stone, the executive vice president and chief credit officer at North Island Credit Union, which sponsored the roundtable, said that on the banking side, customers seem to be slowly recuperating from the recession and returning to previous borrowing habits.
"It's been very, very encouraging to see over the last several months that many of our commercial borrowers who have had issues based on the economy are bouncing back," Stone said. "They're getting new jobs, new cash flows coming in. So it's encouraging -- it's nothing dramatic, but at least it's moving in the right direction."
Trish Watlington, owner of Red Door Restaurant and The Wellington Steak and Martini Lounge, seconded that notion from the commercial side, noting that customers' checks are getting larger while the number of customers remains relatively unchanged, signaling a small step in the right direction.
Watlington also commented on the benefits the depressed economy brings to tenants, with rent rates down and owners or agents looking to fill buildings. Andrew Meyers, client adviser at McKinney Advisory Group, said low rates and months of free rent are only some of the means brokerage firms are using to court tenants.
"Now we're seeing a combination of a lot of concessions to fill buildings," Meyers said. "It's still very much a tenants' market. A lot more empty spaces and tenants looking for them, so we've seen and negotiated tenants getting equity in properties."
While market conditions have improved slightly, the uncertainty surrounding Tuesday's elections, as well as the fiscal cliff approaching on Dec. 31, means not everything is peachy in San Diego. Barry Swaim, chief financial officer of glazing contractor Tower Glass Inc., said his company has faced a barrage of customers not wanting to start projects until the haze surrounding the future business environment is lifted a bit after the election.
"On the private development side, we are specifically hearing that," Swaim said. "We're hearing from the guys, 'We're not going to do anything until we know what's going to go on.' We budget projects a year or two before they're actually in process, and, yeah, we want to price them, we want to be ready, but we're not going to do anything until we know for sure what's going on."
Jeff Bingham, president of Bingham Construction, said the election isn't the only thing slowing hiring decisions and development, particularly commercial real estate, in his experience.
"If that sequestration hits, it's still not identified who's going to get the ax, and how much," Bingham said. "So I think that's why everyone, including ourselves, are saying, 'Well let's see what happens here,' because all the financial pundits are saying, 'Well, if that cliff goes into effect, then we're going to go into another recession.'"
Not all sectors are experiencing this lull, however, as service-oriented industries have continued to grow. Willie Payne, owner of Payne Pest Management, said the election has little if any effect on his business, and Reid Carr, president of Red Door Interactive, said business is still booming for him as well, though the latter part of 2012 saw customers trying to drag out the decision-making process, but not specifically because of the political environment.
"We've found that, regardless of the elections, the market is what drives us," Payne said. "We're a service business, as predicated on human emotion."
Perhaps the strongest unifying sentiment expressed was that the hiring process has become increasingly arduous, as adequately skilled employees are harder to find, and younger generations lack the same work ethic as those retiring, and bring with them a sense of entitlement.
As for why this lack of knowledgeable potential employees exists, several participants posited that this was because the top-tier workers kept their jobs through the recession and consequent boom-and-bust cycles, while it's the poorer performing employees who are let go and then in turn apply for other jobs.
Yukon Palmer, president and founder of FieldLogix, said he's noticed the risk of leaving current employers often stops his would-be hires from switching over, making it difficult to find the level of employee he wants.
"We just had to fill one position and we have another one we're still trying to fill, and for me, it's really difficult because it seems like a lot of really good people are staying with their current employers," Palmer said. "They're not budging. So that's been somewhat of a challenge. I find that it's taking me a lot longer, a lot longer, to find people to fill the roles."
* Kelly Abbott, President, RealTidbits
* Jeff Bingham, President, Bingham Construction
* Ray Camacho, Owner, J.R. Construction Inc.
* Reid Carr, President, Red Door Interactive
* Christopher Clark, Founder, Shaper Studios
* Andrew Meyers, Client Adviser, McKinney Advisory Group Inc.
* Yukon Palmer, President and Founder, FieldLogix
* Willie Payne, Owner, Payne Pest Management
* Bob Reck, First Vice President of Business Services, North Island Credit Union (sponsor)
* Jeff Stone, Executive Vice President and Chief Credit Officer, North Island Credit Union (sponsor)
* Barry Swaim, Chief Financial Officer, Tower Glass Inc.
* Trish Watlington, Owner, Red Door Restaurant/The Wellington Steak & Martini Lounge