Pent up big business spending will lead the nation back to economic recovery from its ongoing doldrums once decision makers decide to think positive again, according to Richard Davis, who runs U.S. Bank, the country’s fifth largest. Kentucky business leaders can play a key role – even gain national recognition – if they simply decide to show confidence in their own ultimate success, he advised.
After a recession more difficult than any in the lifetime of today’s business community, no one is leading the charge in the United States or elsewhere, according to Davis, and no one has a definitive answer on the best way forward, not even Federal Reserve Chairman Ben Bernanke. Davis knows because he visits Capitol Hill “almost weekly,” he said, and confers with President Obama and his economic policy advisers.
The 52-year-old banker is chairman, president and CEO of U.S. Bancorp, a financial holding company with $281 billion in assets and business across the United States, Canada and Europe. It is the parent of U.S. Bank, whose 3,015 full-service banking offices and 5,148 ATMs in 25 states include 127 branches in Kentucky, where it ranks fifth in market share. Headquartered in Minneapolis, U.S. Bancorp is also the parent of Elavon, a leader in the payment processing industry.
Financially, Davis’ company is thriving: $1.4 billion in profit per quarter the past five quarters.
His business advice is fundamental: Visualize success – and act on it.
“Wouldn’t it be great if this part of the country were the first to reach out and grab opportunity?” Davis told a March 22 luncheon audience in Lexington. “Whichever community has leaders who believe the most in themselves and the people in those communities, who inform them to be more confident, will be the ultimate winner.”
U.S. and global financial markets have exhibited their faith, rebounding to near pre-crisis levels, Davis said. One problem, though, is a widespread “self-insurance” practice that he called “one step removed from putting money in your mattress.” Individuals and businesses are keeping “excessively high amounts of money” in their accounts because of fear instilled when they watched the financial system crashing in fall 2008.
“This is causing a slowdown in the recovery,” he said, “because there is a missing belief that we are still great.”
Such times are when leaders and leadership are most important.
“There will be a recovery. I have no idea how or exactly when,” Davis said, “but someone is going to lead that and it might as well be you.”
Younger people are looking to those with experience.
Beyond business skill and analysis of fact, pure imagination is part of the formula, Davis said. Decision makers have to act based, in part, on the faith that they and their organization can and will work though problems as they go and be successful.
“Imagination has a great deal to do with winning,” he said. “It’s up to you to believe anything is possible.”
Assuming the role of cheerleader – a straightforward and matter-of-fact one – Davis presented supporting information on the scientific effectiveness of positive visualization. Skill, practice and experience are important, but it has been proven over and over that performance improves when visual imagery is added. “It’s not funny, weird or religious,” he said.
The U.S. economic recovery will be a long, slow process that will involve years of unemployment above the “full” 5 to 6 percent rate America experienced the decade before the recession.
“The reason things are slow is because we are not sure what we believe,” he said, again urging commonwealth business leaders to be bold and fill the void. “Consumers and investors are not confident.”
On the upside, he did note that surveys now find more than two-thirds of people no longer fear the weak economy poses an ongoing threat to “take their (financial) lives away,” a measurement more than twice as good as findings a couple of years ago.
Among Davis’ chief worries is overregulation of banking. Banks typically turn $1 in deposits into $7 in loans, which provide the leverage business needs more than ever to lift the economy. Despite the financial crisis that rocked confidence in late 2008 and early 2009, banks generally do a good job of managing risk, he said, and are successful with at least a 98.75 percent of the loans they make.
Post-crisis, though, governments and regulators the world over are bending over backward today to show constituents that another financial crisis won’t take place on their watch, said Davis. However, allowing acceptable risk is an absolutely vital component of the system, too.
Banks equal risk and risk equals bad, is a common view. But no risk is worse, he said. If risk is removed completely and banks may only loan for sure bets, banks can’t achieve returns for their investors. Without those investors there isn’t money in the system to loan and leverage into growth that enters the broader economic system to the benefit of everyone.
Banks have funds and are ready to loan to qualified customers, but at time “when we need to be reaching down and taking a little more risk,” Davis said, “is the time that we’re been forced by the regulators to go upstream and take less risk.”
Meanwhile, big business is champing at the bit after reining in operations for two years. It’s done more with less than it thought possible for longer than it thought possible. There’s little to no more productivity to be wrung from present employees and equipment. And no one wants to miss out on the recovery.
Davis said he is strongly advising Washington officials avoid any policy steps that could hinder big business, which has a much greater capability to stimulate the economy quickly that small business can.
He believes it is the time for businessmen and financiers to set aside their fears about uncertainty.
“Whatever a leader does now sets up what he or she does later,” Davis said.
“And there’s always a later.”
No. 1 Where It Really Counts: Jobs
Lexington finished best among all metropolitan areas in the nation for hiring prospects this spring in the latest quarterly Manpower Employment Outlook Survey. That’s a poll position with which you can win the race.
Manpower, the national staffing services company, polled more than 18,000 employers across the nation. Among those surveyed in Lexington, 28 percent expect to hire employees this quarter and 4 percent expect to cut while the others forecast a staffing holding pattern. The 24 percentage-point difference to the good among expected hirers and firers in Lexington was strongest in the nation.
Employment prospects are improving nationwide.
Manpower said the Lexington, Ky., area had the best hiring outlook for the second quarter. Greenville-Maudlin-Easley, S.C., and Tulsa, Okla., tied for second, followed by Bridgeport-Stamford-Norwalk, Conn., and El Paso, Texas.
“We should see the same measured hiring pace in the U.S. as we did in the first quarter; however, unadjusted industry sector data reveals some positive signs,” said Jeffrey A. Joerres, Manpower chairman/CEO. “First, employers in 10 of the 13 industry sectors surveyed expect hiring to improve from three months ago. Second, there is a notable uptick in the manufacturing-durables sector where nearly one in five employers expect to increase payrolls.”
The survey reports 16 percent anticipate an increase in staff levels in their hiring plans for 2011 Q2, while 6 percent expect a decrease in payrolls, resulting in a Net Employment Outlook of +10 percent, according to a Manpower news release. Seasonally adjusted, the Net Employment Outlook becomes +8 percent.
Lexington area economic development team are delighted about the survey results and say they are working with an increased number of existing businesses this quarter on expansion plans, as well as new companies, to solidifying this ranking.
The survey was part of a Time magazine cover story last month (see http://tiny.cc.jpfpb) and garnered Lexington top attention from Forbes too (see http://tiny.cc/80fvw). The Forbes article, “Where the Jobs Are,” recognized Lexington as the best place to find a job and mentioned a few of our major employers including Toyota, Hewlett-Packard and UPS. Kentucky fares very well in this round of national media: Read all about it.
This came also before Commerce Lexington announced in late March that Allconnect, an Atlanta-based a consumer services company, is locating a new sales and customer care center in with 220 new jobs at the University of Kentucky’s Coldstream Research Campus.
Looks like Manpower, Forbes and Time were right!
Don’t Miss Launch of Our Email Blast
Since you’re reading this, we know you value being up to date about all the top business and economic developments taking place all over Kentucky. To help keep you informed, we are launching The Lane Report’s Faster Lane, a regular Kentucky business news email blast.
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New Publication for Young Professionals:
BG – Greater Louisville
In late 2009 The Lane Report launched BG – A Way of Life, our magazine for Central Kentucky young professionals age 21 to 49, to entertain and inform about the high-quality lifestyle the area offers.
Our editorial team, with Meredith Lane as BG editor, has worked hard to present the latest from across Central Kentucky – fun events, new restaurants, budding young entrepreneurs making a name for themselves, job opportunities, housing trends, fashion, finances, plus a lot more.
We’re excited to announce we’re about to do it again – in Louisville.
BG – Greater Louisville’s premiere issue will be released this spring.
With a creative and highly educated workforce, Greater Louisville is consistently ranked one of the nation’s best places to work, start a business or raise a family. BG – Greater Louisville will showcase exceptional young adults and the many ways available to plug into a wide range of social, cultural and professional scenes.
We’re very pleased to announce Stephanie Apple will serve as the editor of BG – Greater Louisville. Apple, vice president of marketing communications for Preston-Osborne, a marketing and public relations firm in Lexington and Louisville, was an integral part of helping create the original BG concept for us. Originally from
Crestwood, Ky., Apple returned to her home in the metro area two years ago to established her firm’s Louisville office.
She’s an active member of Greater Louisville Inc., a board member of
Kentucky CASA and president-elect of IABC of Kentucky.
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