Cautious optimism expressed by Corridor business leaders

CORALVILLE -- While saying that the economy is still vulnerable to volatility and uncertainty, a panel of Corridor business leaders on Wednesday expressed cautious optimism that better days are ahead.

Speaking at the Corridor Business Journal's annual economic forecast luncheon at the Coralville Marriott, Mary Quass, president and chief executive officer of NRG Media in Cedar Rapids, said the broadcast station owner is seeing signs that businesses want to grow.

"For the first time in a long time, we're seeing some optimistic trends for 2012," Quass said. "We're starting to see people wanting to move forward, rather than remaining depressed. 

"One of the things that is different from the past is the recognition that it's not going to be business as usual. Things have to change and I think the key words for 2012 are 'change and get close to your customers' because what your customers are doing today is different than what they were doing even two years ago."

Having helped start and finance five businesses in the Corridor  employing about 300 people, Steve Gray, founder of Gray Venture Partners in Cedar Rapids, said the biggest challenges facing small and midsize businesses are volatility and uncertainty.

"This country is working its way through a pretty big deleveraging process (paying off debt), which began in 2007," Gray said. "Depending on who you believe, we're either one-third or two-thirds of the way through that process.

"It's going to take time to get ahead of that curve before we start seeing thousands of new homes being built and jobs created. I think we still have another two to three years to go before we complete that deleveraging."

Gray said the international debt crisis in Greece, Italy and other European countries is another cause of volatility in the capital markets and uncertainty for businesses. He said a "dysfunctional" Congress in Washington, D.C., also adds to general uncertainty for business.

"Until these people realize that they need to put what's in the country's best interest 'first' and their party 'second,' we're going to continue having a lot of questions surrounding taxes and what the real agenda is coming out of Washington, D.C.," Gray said.

With the housing market continuing to deal with an overhang of foreclosed homes and tight credit, the appliance industry has experienced a sharp decline in domestic demand, according to Dan Smith, division vice president/Amana Division of Whirlpool Corp.

"We've seen a marked decline in demand over the last five or six years, primarily focused in North America and Europe," Smith said. "Prior to a year ago, we saw explosive growth in Brazil and India, but that has slowed. We're still on a growth trajectory, but not nearly as quick as it had been.

"Over the next year in North America, we're expecting some growth in demand, but nothing to really write home about. We expect to see that increase over the next 18 to 24 months, coming back to about 5 percent to 7 percent growth after that 24-month period."

While appliance demand is off, the education sector continues to expand, according to Jon Whitmore, president of ACT in Iowa City.

"Education continues to be a growth industry in the Corridor with record enrollments at the University of Iowa, increased research support in health sciences and increasing numbers of students at Kirkwood Community College," Whitmore said. "The assessment industry, where ACT is active, is expected to grow between 5 percent and 6 percent nationally over the next few years. At ACT, we're eager to get our fair share of that growth and we have strategies underway to achieve that goal."

While college graduates have experienced difficulty finding employment in recent years, William Hunter, dean of the UI Tippie College of Business, said the tide is turning in their favor.

"Ninety-four percent of our undergraduate students who graduated in May are either working or going to graduate school, according to the Pomerantz Career Center," Hunter said. "These graduates are primarily working in Iowa (37 percent) and Illinois (34 percent). Our placement people are telling us that we're moving back toward where we were previously in terms of graduate placements."