Posted: January 4, 2010

By Michael Schwartz
michael.schwartz@insidebiz.com

The hundreds of billions of dollars of stimulus money and what those dollars mean for businesses in Hampton Roads was the topic of discussion at the second installment of the Cox Business Executive Discussion Series held last week in Norfolk.
 
The event, organized by Inside Business, brought together more than 100 members of the local business community to hear the thoughts of a panel on how businesses can get their hands on some of the stimulus money.
 
The discussion was moderated by Cathy Lewis, media personality from WHRO, who told the panel, “My 401(k) is now a 201(k) and I’m going to be working until I’m gumming my food.”
 
Gil Yochum PhD., professor of economics at Old Dominion University, was the first to address the topic of how much of the stimulus money is making its way to Hampton Roads and how it will be used.
 
Yochum, who is also director of the ODU Economic Forecasting Project, said stimulus money will eventually trickle down to create or save about 8,500 jobs in Hampton Roads and will add $300 million to the gross regional product by the end of 2010.
 
“You may not literally see the jobs,” Yochum said, because a main function of the stimulus plan is to preserve jobs throughout the economic system and along the supply chains tied to major industry.
 
By fourth quarter 2010, Yochum said, estimates show about 20,000 jobs will have been created locally as a result of the stimulus initiatives “when the private sector gets to work.”
 
“It’s really the private sector that creates growth,” he said.
 
Much of the discussion was about how the stimulus can help small businesses.
 
Panelist Cathy Williams, business diversity and government administration manager with Wolseley North American, the parent company of Newport News-based Ferguson Enterprises, discussed how slowly stimulus money is making its way down to businesses.
 
Just 10 percent of the contracts related to stimulus projects have been awarded thus far, Williams said, and if a small business is relying solely on stimulus money to stay alive over the next six months – it’s probably not going to happen, she said.
 
“For small businesses you have to do a lot of homework to get access to this money,” Williams said. “Manage your expectations.”
 
Williams said businesses should look to the U.S. Small Business Administration as it is working to “get some of this funding out.”
 
Another tip for small businesses looking to get in on the stimulus funds is to team up with other companies in order to be able to pitch their combined capabilities when going after stimulus contracts.
 
The discussion was mostly steered by questions from the audience. Beyond the stimulus, many in the crowd just wanted to hear the panelists’ thoughts on the economy.
 
Yochum was asked whether there’s such a thing as financial firms too big to fail.
 
“If you don’t believe in it, we saw a case study of it with Lehman Brothers,” Yochum said.
 
That doesn’t mean the government must throw money at every large firm, he said.
 
“Part of capitalism is that you have to let firms die,” he said. “The stimulus is like medicine; too much and you’ll die – or get diarrhea.”
 
Another audience member wanted to know if the fears of some might be realized: Will commercial real estate be the next sector hit by a wave of foreclosures?
“Is that wave coming?” Yochum said. “Yes. It does have the potential to derail things.”
 
The conversation then turned to unions and how the policies of the Obama administration may or may not be strengthening unions, particularly the question of the so-called card check legislation that could make it easier to unionize industries.
 
Panelist Ira Agricola, senior vice president of governmental affairs with the Hampton Roads Chamber of Commerce, said card check legislation is a hot topic and has the potential to jeopardize Virginia’s status as a business-friendly state should unions become more powerful.
 
“I have not seen the business community as spun up as it is on this issue,” Agricola said. “We have to be careful. Virginia achieved that Forbes ranking for a reason,” referring to the state’s status as the best place to do business, according to Forbes magazine.
 
The conversation turned to health care reform and the economics of such an initiative, as President Obama has continued a push toward changing the system.
 
Yochum said any major health care reform should not be implemented now because the nation doesn’t have “the fiscal ability to do it right now without increasing the deficit or raising taxing to a point where it cripples the private sector.”
 
The final question came from a financial adviser in the crowd who wanted the program to end on a bright note – that’s if there are any out there, she said. No one offered any real hope except for Yochum.
 
“This is coming to an end,” he said of the downturn. “We’re smart and when the government gets out of the way we’re good.”