If 2010 was the year of hanging on, 2011 could be the year of hanging a hook on a recovery.
Indeed, last year was a struggle to survive unlike anything else many Gulf Coast executives and business owners ever experienced. The good news: A diverse cross-section of companies sees brighter days in 2011.
The optimism ranges from an antique-clock shop owner in Naples to the chairman of one of the region's largest financial institutions. Even a construction company owner in Sarasota, Maurice Opstal of Stellar Development, is looking at a growth year in 2011.
Many executives and entrepreneurs, at least anecdotally, are using words like “retool” or “reinvent” to fuel the projected growth.
But the stock market's recent rebound is another key source of the cheery outlook. Plus, many business folks have confidence that elected leaders in Washington D.C. will be forced to account for their overreaching and anti-business ways on Election Day.
Still, despite high levels of optimism from New Port Richey to Naples, the one not-so optimistic word looming over 2011 is uncertainty. Questions abound, such as what will taxes be next year? What will happen with Obamacare? What impact will Florida's next governor have on the state's business climate?
The Business Review spoke with 20 business leaders spread through all three regions of the Gulf Coast to get their thoughts on the 2011 economy. Here's a closer look at each region.
TURNING THE CORNER
Despite comments by national economists that Florida's recovery will drag on longer because of housing, several Tampa Bay area business leaders don't see it that way.
It's difficult to predict how long a rebound will take, but they don't consider the path to be any slower from here than other parts of the country.
“It's going to take the same time as the rest of the economies [in other regions] are going to take,” says Tom James, longtime chairman of St. Petersburg-based Raymond James Financial Inc. “We're hurt more because of our dependence on real estate and related businesses, and on tourism.”
James, who also serves as president of the Salvador Dali Museum in St. Petersburg, is confident tourism will come back strong next year, particularly along the shores of Pinellas County. The new $36 million Dali being finished on St. Petersburg's waterfront should be a strong draw for both visitors and area residents upon opening Jan. 11.
“The Dali is going to be a great addition to downtown St. Petersburg,” James says. “A lot of money and effort has gone into creating this iconic facility with the great collection that we have.”
Besides making Tampa Bay attractive from an artistic standpoint, the subsequent decline in real estate values following the abnormal run-up in the last decade should help bring back prospective residents and other property investors. Perceived bargains in single-family homes as well as high-rise condominium units are bringing buyers back to closing tables.
“This will be the year that we turn the corner,” predicts Jerry Campbell, chairman of Tampa-based HomeBanc, which deals primarily in residential mortgages. “We're pretty optimistic at this point.”
Commercial real estate, meanwhile, will lag any residential rebound by at least six months, but there's already promise on that front heading into 2011.
Patrick Kelly, executive vice president and managing director of the Tampa office of Grubb & Ellis|Commercial Florida, says the Bay area's attractive quality of life and exceptional work force, along with current affordability of properties, will bring tenants and buyers back to the market next year.
“This is a real silver lining, not a manufactured one,” Kelly says. He refers to the past frenzy that drove property sales to unsustainable record-setting prices during the mid-2000s, before the commercial crash that started in 2008.
Property values have now gone back to what Kelly terms as a “mark back to market,” saying the return to historical pricing sets the stage for future prosperity.
Property investors, Kelly says, are “sitting on a ton of cash” and await the right time to invest in commercial properties again. Apartment complexes are seen in a favorable light and industrial buildings will rebound along with demand for consumer goods. Office buildings, however, will be the last sector to make a comeback since it was the first to go into decline, he says.
Tampa Bay business owners believe the outcome of the Nov. 2 election won't have much bearing on economic improvement next year, other than possibly bringing a little more stability to public policy. “You'll see the rules stop fluctuating and changing for a time,” notes Richard Nicholas, chief operating officer of E Solutions Corp. in Tampa.
Bruce Livingston, president of Boyd Industries Inc. in Clearwater, says stimulus efforts by the federal government, even though well intended, need to be clear of bureaucracy in order to help businesses prosper. “If you're going to provide a stimulus deal, it needs to be a hands-off transaction,” he says, pointing to the large amount of paperwork involved in getting Small Business Administration financing, for one.
Campbell, whose bank also makes SBA loans, says criticism against major banks that don't appear interested in making loans is sometimes justified. “The mid-market is underserved,” he says, although he adds that banks still face greater scrutiny from regulators and auditors over lending.
Another positive indicator for the Tampa Bay economy is the recent uptick in the stock market, with the Dow Jones Industrial Average going back above 11,000. Forecasters predict a return next year to the Dow's peak of 14,000 in October 2007.
“Lots of people are loaded with cash because their stocks have doubled, tripled and more since the end of the bear market in March 2009,” says Joe Cotton, a technical analyst in St. Pete Beach who publishes Cotton's Technically Speaking newsletter. “This is a big impetus to the economy, both monetarily and psychologically.”
Cotton adds that home prices and mortgage rates in the Tampa Bay area have returned to levels that compete with apartment rents, which he terms as “a real buying opportunity and bullish scenario for the real estate market.”
Local executives also say they will keep a close eye on two significant efforts that will impact the economy in 2011 and beyond: The potential introduction of commuter rail lines in Hillsborough County, which could expand to Pinellas County, and the ongoing debate over a new baseball stadium for the Tampa Bay Rays.
CAN ONLY GET BETTER
Growth is back in vogue in Manatee and Sarasota counties.
The welcomed trend spreads through a variety of industries and a wide range of companies. The growth ranges from hiring more people to projecting double-digit sales increases and seeking larger spaces.
Mark Krywko is one of the growth chasers. The CEO of Palmetto-based Sleek Audio, Krywko says 2011 could be the three-year-old company's best year ever. “Things are looking really good for us,” says Krywko, whose 15-employee company makes high-end headphones and earpieces.
Krywko declines to discuss specific sales figures, but he projects Sleek Audio will hire at least 15 more people next year and grow revenues 80%.
The growth will come from selling new products in new markets and even going overseas for opportunities. The company also plans to launch domestic and international advertising and marketing campaigns.
Krywko says a key to the company's strategy is to reinvent itself and its products through lower-cost options. Says Krywko: “We will rely on our ability to offer something better and different.”
Reinvention is what Ed Marin, CEO of Sarasota-based art and commercial wall decor firm Soicher-Marin, hopes will be the foundation for a growth-filled 2011. “After doing the same thing for two years and seeing the same results, we looked up and said this is not working,” says Marin, who moved his company from California to Florida last year. “We've done a strategic shift of the business model.”
Marin projects sales will grow at least 35% in 2011 for Soicher-Marin, which built a $5 million-plus business from a client list mostly made up of department stores, commercial office buildings and homebuilders.
One key to the shift, says Marin, occurred recently when the company doubled its sales force, from 21 to 43 independent contractors who work for the firm nationwide. The firm now has more people who cover smaller areas. Moreover, Marin has instructed the sales force to be more aggressive when they meet prospective clients.
Marin also hopes Election Day will bring more positive change to the economy, when tax-and-take politicians are thrown out of office. “I think that will send a clear shot across the bow to both parties,” says Marin. “Business as usual will not be tolerated.”
Meanwhile, several other companies in both Manatee and Sarasota counties project a strong 2011, especially in terms of hiring more people. In some of those instances, the economic development offices of both counties have dangled incentives for the expanding companies.
The list of companies expected to hire more people next year through incentive-laden job creation and retention programs includes Manatee County-based Mustang Vacuum Systems, which builds equipment and machines for solar cell manufacturers; Bradenton-based Natural Prosthetic Dental Lab, which makes dental prosthetics and is working on some new digitally produced dental restoration products; and Sarasota Medical Products, a manufacturer of medical devices for advanced wound care and infection control.
Another company looking at a growth-filled 2011 is Sarasota-based Cruise Car. The firm turns golf carts into solar-electric low-speed vehicles that meet new federal government mandates on using recycled materials and reducing energy requirements.
Cruise Car, founded in 2004 by retired pharmaceutical executive Ken Chester, recently sold 30 of its retrofitted vehicles under its All-American line to the U.S Navy. It was a low six-figure deal Cruise Car General Manager Adam Sulimirski projects will be repeated often in 2011. The company, which doesn't disclose revenues, grew 300% in 2010, Sulimirski says.
“We could blow that out of the water next year,” says Sulimirski. “I don't see any limits.”
The growth possibilities at Venice-based drinkware firm Tervis Tumbler likewise seem limitless. Indeed, the $48 million company has garnered widespread local attention the past year or so for its expansion, which includes revenue and employee increases in each of the last three years. It's also expanding its manufacturing plant.
The growth pattern will likely continue in 2011, says President and CEO Laura Spencer. “We are continuing to come up with new products our customers are looking for,” says Spencer.
The company has long been known for its innovative and insulated cups — the ones that keep cold drinks colder and hot drinks hotter. But over the past 18 months, it has also grown through licensing agreements with some powerful partners, including Major League Baseball, the National Football League and the Disney Co.
Cool cups, cars and earpieces, of course, only make up a few isolated examples of projected growth in the region. To be sure, many Sarasota-Bradenton entrepreneurs and executives will likely scratch and crawl their way through 2011, especially some who are connected to real estate and hospitality.
Still, it is reassuring to some degree that even someone like Maurice Opstal, who founded a construction firm in 2007, is using good-times words like “backlog” and “prosper.” Opstal projects his $5 million firm, Lakewood Ranch-based Stellar Development, will grow at least 10% next year.
“My theory three years ago was that this would all end by 2011,” says Opstal. “I hope I'm right.”
RECOVERY SIGNS RETURN
Jack Anderson came close to closing his antique-clock shop in Naples when the recession suddenly ended.
“Last August, within the space of one week, I got more work than I could cope with for no apparent reason,” says Anderson, a Scot who moved his business to the U.S. in 2001.
Anderson, who repairs and sells antique clocks at his store, Clockmaster of Naples, confirmed the official end of the recession in June 2009, ending as suddenly as it started. “There's no rhyme or reason for it,” he says.
Today, 2011 looks a lot better than the bleak days of early 2009.
“I'm still not making sales, but I'm getting lots of repairs in,” Anderson says. “I'm a couple months behind now and season's about to start.”
To clear the backlog, Anderson, 65, will close his shop for a week in November to catch up. “I can't afford to be away from work,” he says.
Other signs of a recovery can be found throughout Lee and Collier counties.
At the University Grill, a popular business-lunch spot in Fort Myers, tables are filling up again with executives meeting with customers.
“People are doing deals and doing business,” says Mark Blust, vice president of marketing and operations for the Prawnbroker Restaurant Group, which owns and manages the University Grill. “They're out meeting with industry partners and things are getting done.”
Greg DePasquale, owner of Fort Myers Floral Designs, says repeat customers are buying flowers with greater frequency. “Our local business has increased year-over-year and it should continue,” he says. He's hopeful people who used to spend lavishly to decorate their homes with flowers during the holidays will start doing that again after paring back the last few years.
Luxury items such as yacht sales are also showing signs of improvement. The time on the market for used yachts has shortened by 30%, says Marc Harris, of Fort Myers-based Marcali Yacht International. “The foreclosure market has slowed down considerably,” Harris says.
People who have money are spending it, says Keith Hanson, whose company, Diversified Collateral Recovery Corp., does high-end repossessions. “The people who have the greater net worth, they're spending money and buying bigger things,” he says. One client, a restaurant owner, told him he was selling his 52-foot yacht so he could buy a 70-foot one.
Some entrepreneurs are venturing out on their own, confident the worst recession in decades is behind them. Accountant Samantha Howes recently split from a larger firm to start her own CPA practice in Fort Myers. “You have to have confidence and not let other people get you down,” she says. “The market's turning. People are starting to make money.”
If she hadn't been so confident about an improving economy, Howes says she would have joined another large CPA firm. Instead, the 17-year Lee County resident has a dozen clients and keeps her overhead and fees low by renting space in an executive suite.
Meanwhile, companies with customers outside the Gulf Coast are benefiting from improved conditions in other parts of the country. For example, Bonita Springs-based Shaw Development manufactures fuel systems for trucks and earth-moving equipment. “Our Caterpillar business is up 100% and that will continue next year,” says Kevin Hawkesworth, president and CEO of Shaw. “We see next year being a very strong year for us.”
Shaw makes parts for large vehicles that mine commodities such as ore and potash that developing countries need to build and feed their people. “China is the biggest consumer,” Hawkesworth says. “They have a lot of infrastructure growth and they have an insatiable need.”
Moreover, companies that expanded their geographic reach are expecting stronger results next year. For example, HSA Engineers is doing work for the Canadian government on remediation of a high-profile contaminated site. “If you become the expert at a certain type of work, that transcends boundaries,” says Richard Lewis, the Fort Myers-based principal engineer and largest shareholder at HSA. Lewis recently was appointed chairman of the Chamber of Southwest Florida, a regional economic development group.
The downturn has given companies yet another boost: The opportunity to hire talent they might not otherwise have been able to get during the boom. “Our last three hires have been some of the best engineers,” Lewis says. “It would have been difficult to get people of this caliber a few years ago.”
Finally, the region is a beneficiary of the improving stock market. “The saving grace right now is Wall Street,” says David Aldrich, whose firm, Aldrich Development Company, builds luxury homes in Naples. Wealthy people can now borrow more money against their bigger portfolios to build high-end homes, says Aldrich, who is also president of the Collier Building Industry Association.