John Allen: How to keep your company healthy in poor economic times

John Allen, President and COO, G&A Partners

When times are lean, eliminating excess and making do with less is simple common sense. That’s true for households as well as companies. However, the recent economic ups and downs have prompted some companies to cut so much fat that they have become too lean ― they suffer from what some call “corporate anorexia.”

Most Americans are all too familiar with anorexia, a physical and mental health condition that results in otherwise healthy individuals starving themselves. Despite the disorder’s pervasiveness in our culture, we rarely think about anorexia in relation to companies. It is, however, an appropriate description of companies that, perhaps due to managers’ fears of economic unknowns, get overly lean by cutting jobs.

Eliminating jobs, either through layoffs or attrition, is not in itself unhealthy. In a slow economy, it is often an unavoidable maneuver to reduce cost structures and operate more efficiently. However, when companies cut too deep or remain too lean for too long, they can experience languid performance and ultimately stagnate growth.

The damaging effects of corporate anorexia manifest themselves in a variety of ways:

Corporate anorexia can have an immediate and devastating effect on a company’s existing work force. When a company cuts back, remaining employees are often required to work additional hours or take on added tasks with little or no added pay. In a tight job market, employees are unlikely to complain, but over time, they are sure to feel increased stress and job dissatisfaction, and those overworked and underpaid employees will be quick to leave should an opportunity present itself. If you are suffering from corporate anorexia now, it will only get worse if those few key people decide to leave.

Even if an anorexic company manages to retain its best, most experienced people, how effective can they be? It is inevitable that when there is too much work, things fall through the cracks. Ultimately, product and service quality, along with customer responsiveness, can suffer. The potential for lost business is obvious.

When a business is “lean and mean,” it is thought to be quick, agile and responsive to market movements. But being too lean can have the opposite effect. When a company is too lean, it does not have the energy (in the form of “manpower”) needed to respond to opportunities quickly. As a result, the anorexic company misses opportunities for new business and potential growth.

Almost all of us binge now and then. We allow ourselves to eat a little more on vacation or over the holidays, knowing we can cut back later to lose the added weight. As individuals, it is relatively easy to change course, but it is not so easy for companies. Just as it takes time to cut back, it takes time to staff up again. Managers can’t decide to staff up for a project one day and have qualified people on site ready to work the following day. They have to recruit and hire the right people, and then those people need time to be trained and get up to speed. When companies become too lean, proactive recruiting efforts are a positive step in the right direction, but the benefits can be months or even years away.

With so much negativity surrounding the current economy, it is natural for managers to think about getting lean. It is smarter, however, for managers to plan wisely so their companies remain healthy in spite of the economy.

John Allen is president and COO of G&A Partners, a Texas-based HR and Administrative Services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For more information about the company, visit www.gnapartners.com.

Automakers see slower U.S. sales growth in 2012 because of weak economy

DETROIT ― Automakers expect lower sales growth in the United States in 2012 because the economy remains weak, even though U.S. auto sales in December were strong.

General Motors Co’s. U.S. sales in December rose about 5 percent, while sales at Ford Motor Co. and Chrysler jumped 10 percent and 37 percent, respectively.

U.S. new-vehicle sales are an early indicator each month of consumer spending, and the United States is the world’s second-largest auto market behind China.

Automakers are headed for full-year 2011 sales of about 12.8 million vehicles, 10 percent higher than 2010. U.S. auto sales have been a relative bright spot, with many cash-strapped consumers forced to purchase cars and trucks to replace vehicles that have been on the road for a decade or longer.

GM, Ford and Volkswagen AG, which reported a 36 percent gain in December, all said growth would increase at a lower rate in 2012.

GM and VW expect 2012 U.S. sales in the range of 13.5 million to 14 million vehicles, which implies growth of between 5 and 9 percent. Ford sees a range of 13.2 million to 14.2 million, excluding medium and heavy-duty trucks.

“The momentum coming out of the fourth quarter gives us confidence that the low end of that forecast is less likely,” Ford economist Ellen Hughes-Cromwick said on a conference call.

Industry research firm TrueCar.com expects 2012 U.S. auto sales to reach 14 million vehicles.

That is still much lower than the nearly 17 million in U.S. annual auto sales averaged in a 10-year period through 2007. In 2008, recession began to take hold and a year later GM and Chrysler filed for bankruptcy.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” GM U.S. sales chief Don Johnson said in a statement.

“It’s now clear that auto sales should continue to grow in 2012, barring a shock to the system,” he added.

Fed must act now to boost economy, Evans says to college group

MUNCIE, Ind. ― The Federal Reserve must take immediate action to inject new life into a moribund U.S. recovery, or risk letting the nation settle into a permanently lower growth path, a top Fed official said on Monday.

“There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape,” Chicago Fed President Charles Evans said in remarks prepared for delivery to the Ball State University Center for Business and Economic Research. “It is imperative to undertake action now.”

Evans, known for his dovish views on inflation, was the only Fed policy maker to dissent last month on the decision to leave monetary policy unchanged. Then, as today, he called for further easing to boost the recovery.

The U.S. central bank has “clearly” missed on its mandate to foster maximum employment and is in danger of undershooting its 2 percent inflation goal for the foreseeable future, Evans said.

Without new monetary stimulus, Evans warned, the U.S. could become mired in a 1930s-like Depression, impairing economic growth permanently as the skills of the unemployed atrophy and businesses defer new investment.

To avoid such a scenario, Evans argued, the Fed should promise to keep interest rates near zero as long as unemployment remains “somewhat above its natural rate,” so long as inflation does not threaten to rise above 3 percent.

While 3-percent inflation may sound “shocking,” he said, research shows that central banks should fight liquidity traps by allowing inflation to run above target over the medium term.

Since high U.S. unemployment is probably due to the effect of a liquidity trap rather than a structural shift in the economy, Evans said, added monetary stimulus is justified.

And if, he said, it turns out that the real problem was indeed structural and easier policy sparks a rise in inflation, the Fed can simply tighten policy before it threatens to reach the hyperinflationary levels of the 1970s.

“We would also know that we had made our best effort,” he said.

Employment realities

Peter Munson, Managing Partner, Executive Career Services

Peter Munson, Managing Partner, Executive Career Services

As the U.S. economy continues to falter, unemployment has never been such an influencing factor since the Great Depression. Unemployment stands at between 12 percent and 15 percent, not the 9 percent you hear every day. That number is based on government statistics that come from people registering for unemployment. In reality, it is estimated that there are as many 25 million people who are currently unemployed.

The average monthly paycheck is $3,500. The average monthly unemployment check is $1,000. That means it costs the government as much as $50 billion each month in lost payroll taxes and paid unemployment benefits. The question then becomes, “How does the future look for job seekers, employers and the economy as a whole?” Also, “How does the HR and talent management industry react to the constantly changing landscape during these uncertain times?”

Many manufacturing jobs are simply gone forever. They are not coming back, either as a result of outsourcing overseas or because certain sectors have become obsolete or uneconomic from a production standpoint. Today, more than 50 percent of consumer goods — from semiconductors to washing machines — are manufactured outside of the U.S., and that trend continues to increase. At the same time, new industries are emerging, which are very much technology-driven but will take time to develop their full potential, especially as it relates to employment.

As a result, many companies are outsourcing their help desks and customer service activities to countries like India, which is having the effect of creating something of an unemployable labor pool in the U.S., due to a lack of job training and/or education.

So what this means is that for as far as the eye can see, we risk having a permanent unemployment rate of between 8 percent and 10 percent, compared to what was previously the norm of between 3 percent and 5 percent.

Looking to the future, the private sector of the U.S. economy is going to be far more dependent on service industries than manufacturing. Therefore, the human capital of industry must be re-educated and re-trained to meet this new criteria. Initially, it will be a painful transition that probably will get much worse before it gets better.

Human resource managers are now looking at significant changes in their hiring practices in an effort to reduce costs and improve efficiency. Due to the uncertain economic outlook, companies are relying more on temporary staffing than full-time employees. Fewer companies are outsourcing their search requirements and are scanning the job boards and going to social networks, such as LinkedIn, Twitter, Facebook and cloud computing to identify job applicants — from CEOs to entry-level trainees. This, in turn, has required talent management firms, such as ours, to essentially reinvent themselves.

No more brick-and-mortar office space. Outsourcing of consultants and virtual delivery has become the norm. And, many client companies have decided not to provide outplacement services when they plan a reduction in their work force.

The retained search business has also become a victim of these changes. Ancillary services, such as executive coaching and leadership development programs, have been put on hold by many employers indefinitely.

As a result, our company, ECS, has adopted something of a hybrid approach that incorporates a hi-tech/hi-touch delivery system, providing the best of both worlds to the candidate, including high-quality virtual programs as well as the more personal one-on-one consultation.

Today, the industry is becoming more sophisticated in the development of online career centers and interactive webinars. Consolidation has also begun to create economies of scale. All of the changes now allow candidates a choice to develop their job search from home by accessing the selected service providers’ website, as well as select online certified job training programs. This change has been slow in coming but is now more the rule that the exception. As such, more focus is being given to alternative careers relative to preferred training options and home office environments.

This will not be an overnight recovery. We anticipate unemployment will continue at between 8 percent and 10 percent well into 2012. Political uncertainty, along with tightening of bank credit, concern about higher taxes and the unknowns of health care reform, virtually guarantee it.

Most people in this country want to work and be successful. If we can combine this desire with a re-education program where we have round pegs in round holes, we really can “win the future.”

A viable solution is creating a task force composed of management, government, labor, educators and HR professionals. This group could begin the process of industrial renewal that will put us on a path toward rebuilding our labor pool into a more practical, sustainable level that will launch us into the 21st century and beyond.

In this land of opportunity, there is room for everyone to succeed in their own way.  That’s what makes America great.

Peter Munson is managing partner of Executive Career Services. Reach him at [email protected] or (310) 442-7734.

Bullard: Fedederal Reserve will act if economy weakens further

ST. LOUIS ― The Federal Reserve will act if the economy weakens further and has the tools to do so, a top Fed official said on Friday.

St. Louis Fed President James Bullard said he expects the economy to grow modestly over the next year — though the sluggish pace leaves it vulnerable to shocks.

“Should economic performance deteriorate, monetary policy will respond,” Bullard said, according to slides of a presentation he was scheduled to make . “The Fed is not now, or ever, ‘out of ammunition’.”

With interest rates near zero, Bullard said, the Fed can support the economy through inflation and inflation expectations and asset purchases are a “potent tool.”

Dealers polled by Reuters earlier this month gave a median chance of 32 percent that the Fed will embark on a third round of quantitative easing.

The Fed said last week it plans to buy $400 billion of longer-term Treasuries and sell the same amount of shorter-term Treasuries by the end of June 2012, in an effort to lower longer-term borrowing costs.

It also said it would support the mortgage market by reinvesting principal payments from its mortgage-related debt into mortgage-backed securities.

Bullard said policy should aim to be more rules-based than it has been since the crisis hit and return to a meeting-by-meeting approach by the Federal Open Market Committee.

“The policy approach over the last several years, with announcements of large dollar amounts, fixed end dates, and rapidly changing tactics, seems fairly discretionary,” he said.

“Returning to a more rules-based approach may provide needed stability to the U.S. macroeconomy.”

Bullard repeated his view that promising to keep rates low for a specific period of time has a number of drawbacks, including the possibility of its hurting Fed credibility.

He also warned against tying monetary policy to the unemployment rate, as Chicago Fed President Charles Evans has suggested.

Unemployment rates have a “checkered history” in advanced economies over the last several decades, he said. In Europe over the last 30 years, for example, the unemployment rose and stayed high.

“If such an outcome happened in the U.S. and monetary policy was explicitly tied to unemployment outcomes, monetary policy could be pulled off course for a generation.”

Jobless claims fall but not enough to dispel worries about economy

WASHINGTON ― Americans filed fewer new claims for jobless benefits last week, but the decline was not enough to dispel worries the economy was dangerously close to falling into a new recession.

Applications for unemployment benefits dropped to 423,000 in the week ending September17 from an upwardly revised 432,000 the prior week, the Labor Department said on Thursday.

Analysts polled by Reuters had expected claims to fall last week to 420,000.

With fears mounting in the country that a new recession is at the door, the Federal Reserve on Wednesday warned of “significant” risks to the economy as it launched a new plan to boost growth through cheaper borrowing costs.

“(The data) suggests that job growth this month is probably not going to be stellar,” said Rudy Narvas, and economist at Societe Generale in New York.

“It gives more backing to the Fed’s decision yesterday to provide more stimulation. The economy is chugging along near stall speed.”

Recession fears are growing around the world. Data in Europe and China on Thursday showed private sector business activity declined sharply this month as the euro zone debt crisis and a stalling U.S. recovery hit confidence.

The Fed’s warning and the weak data in Europe and China hammered global stock prices. U.S. stock futures tumbled early Thursday on worriers about the global economy.

The four-week moving average of claims, which smoothes out volatility, rose to 421,000 from 420,500 the prior week.

Excluding one week in early August, claims have held above 400,000 since early April. A Labor Department official said there was no discernible effect from Hurricane Irene or other recent storms in the national reading.

Continuing claims eased to 3.727 million in the week ending September 10 from 3.755 million the previous week. The data showed that in the week ending September 3, the number of total recipients on benefit rolls was 6.889 million.

World Bank chief says world economy in new danger zone

WASHINGTON ― The head of the World Bank said Wednesday the world had entered a new economic danger zone and that Europe, Japan and the United States all need to make hard decisions to avoid dragging down the global economy.

“Unless Europe, Japan, and the United States can also face up to responsibilities they will drag down not only themselves but the global economy,” World Bank President Robert Zoellick said in a speech at George Washington University.

“They have procrastinated for too long on taking the difficult decisions, narrowing what choices are now left to a painful few,” he said, according to a prepared text of his remarks, which come ahead of meetings of the World Bank and International Monetary Fund next week.

The meetings of global finance and development leaders in Washington will focus on Europe’s debt crisis and the risk of a Greek default, which has led to growing alarm in financial markets.

Mixed signals from European leaders have escalated concerns the 17-nation euro zone may be unable to unite behind a common approach to tackle the crisis.

Zoellick said European countries were resisting difficult truths about their common responsibilities, Japan had held off on needed economic and social reforms, and political differences in the United States were overshadowing efforts to cut record budget deficits.

Just as those very countries had called on China to be a responsible global stakeholder as a rising economic power, so too should they act responsibly to get a handle on their own economic problems, Zoellick said.

“The time for muddling through is over,” Zoellick said.

“If we do not get ahead of events; if we do not adapt to change; if we do not rise above short-term political tactics or recognize that with power comes responsibility, then we will drift in dangerous currents.”

The World Bank chief said emerging market nations would not sit on the sidelines as advanced economies try to right themselves.

“The story then won’t be about tectonic shifts that have made emerging markets the new engines of the global economy,” he said. “It will be about tectonic shifts that have left developed countries slamming on the brakes.”

Zoellick focused on the shifting global landscape in which emerging economies were playing a greater role in the world economy — and in development.

He said developed countries had yet to fully recognize the global shifts and still operated under a “do what I say, not what I do” policy. They preached fiscal discipline but failed to rein in their own budgets, and advocated debt sustainability while their own debts were at record highs, he said.

Zoellick also said it was time to rethink foreign aid.

While aid remained a life or death issue for millions of people around the world, it had also become a vehicle for helping poorer countries develop and grow, he said.

“In a world ‘Beyond Aid’ assistance would be integrated with — and connected to — global growth strategies, fundamentally driven by private investment and entrepreneurship,” he said. “The goal would not be charity, but a mutual interest in building more poles of growth.”

He said development also meant tapping the power of women by eliminating gender inequality.

“We will not release the full potential of half of the world’s population until globally we address the issue of equality; until countries, communities, and households around the world acknowledge women’s rights and change the rules of inequality,” Zoellick said.

Hunker down or push forward? What businesses should do with innovation in the current economic climate

With the volatility and uncertainty in today’s economy, should you push ahead with innovation efforts or wait out the turbulence? This is a common problem. After all, innovation has a mountain of uncertainty associated with it, and the current economic climate just adds to the risk.

To make sense of this issue, Smart Business spoke with Dr. Frank Navratil, Professor of Economics and Finance, Boler School of Business at John Carroll University, for an academic perspective. Chip Gear, a master member of the John Carroll University Entrepreneurs Association, provides his perspective as President of The Technology House — which specializes in product development, prototyping and production processes. They offer their views on the economy and their recommendations for other organizations.

Is the volatility in the economy indicating we should hold off on innovation or move forward?

Navratil: There is a lot of psychological pessimism about the future right now and the question is how much of that pessimism is really warranted?

The economy is definitely struggling:

  • The debt crisis in the U.S. is a critical variable in the future strength of the U.S. economy and Washington, D.C. certainly isn’t giving us a lot of confidence about that right now.
  • In Europe, Italy and Spain are in serious fiscal difficulty, which is putting tremendous pressure on Germany and other economically stronger countries in Europe.
  • Here in the U.S. there are signs the economy is slowing: unemployment claims are up and capital spending is down.
  • Funding for expansion is scarce because banks are in a very conservative lending mood.

On the other hand, unlike the last economic disaster that started with the real estate crash, nothing in the current economy is really broken — these problems can be turned around. The real message here is that the current challenges can present opportunities for businesses. Innovative thinking that solves problems is what customers need right now. Adopting a position of cautious optimism and moving ahead with innovation seems warranted, assuming the business has the resources to do so.

How do you recommend businesses handle their innovation efforts in this economic climate?

Gear: Although the economy is messed up, somebody is really going to have to break it to make it worse. I think cautious optimism is the best perspective to have right now. Having said that, based on my experiences during the 2008-2009 slow down, I think that in this economic climate protecting your cash flow is critical.

If the innovation effort is going to significantly increase an organization’s debt burden, then I might suggest holding off. You have to evaluate your financial position in light of the possibility that, if the economy gets worse, some of your customers could push out their production orders six months or more. If you have increased your debt burden, this can crush your cash flow.

On the other hand, if the innovation is focused on new processes or new technology that makes manufacturing more efficient, then push ahead. Customers continue to want innovative solutions to their problems, so you have to think through how to provide those solutions without a substantial increase in risk exposure. Cautious optimism is a matter of moving forward while evaluating the potential impact of a downturn.

What strategies do you suggest for enhancing an organization’s innovation efforts in this economy?

Gear: There are five strategies that can really have an impact on the bottom line in this economy.

1.     Build a ‘warchest.’ In this economic climate, cash is imperative. You have to have enough of it to be able to respond to potential crises.

2.     Build your employee engagement. When you are getting crunched, you have to have your employees engaged in the decision-making process. I gather my employees together on a regular basis and say, ‘Here’s the situation — how can we make this work?’ The collective wisdom among employees has significantly improved efficiency in our company and has resulted in some really innovative solutions for our customers. An engaged and loyal employee base is critical if the economy takes a downturn.

3.     Strengthen your point of differentiation. You have to identify the most important thing that will bring customers to you instead of your competitors and do that one thing really well. We spent considerable time and effort earning a number of certifications for quality that some of our competitors don’t have. This is one of our sustainable competitive advantages that attract customers to us.

4.     Pursue new markets. Diversifying your customer base is a great hedge against economic volatility and encourages everyone in the organization to think innovatively about the products or services being provided.

5.     Form strategic alliances with competitors. These alliances allow one company to produce more than its capacity without increasing its investment in plant and equipment and the other company to fill its production capacity to gain efficiency. Obviously, this takes some careful selection of alliance partners and due diligence in evaluating each partner’s capabilities.

Dr. Frank Navratil is Professor of Economics and Finance, Boler School of Business at John Carroll University. Reach him at [email protected] Chip Gear is President of The Technology House, which specializes in product development, prototyping and production processes. He is also a master member of the John Carroll University Entrepreneurs Association. Reach him at [email protected]

Can Texas stay at the forefront of the economic recovery?

 

Robert Winningham, Executive Director, CEO, Allen Economic Development Corp.

Smart Business spoke to Robert Winningham, Executive Director/CEO of the Allen Economic Development Corporation (AEDC), about the current economic climate in Texas.

With most of the motivation for corporate real estate decisions is still focused on cost reduction and consolidation, the justification for incentives to support business relocations and expansions is stronger than ever. This is at odds with the traditional motivations for granting incentives.

The changing incentive environment is truly the result of today’s “business not as usual” climate. With increased leasing and reliance on landlord tenant improvement budgets versus significant real property investment, many projects fall short of the qualifying thresholds outlined in outdated policies. In response to continuing economic uncertainty, incentive policies are currently in transition in seven states, with others surveying ways to increase their competitiveness.

According to the Texas Comptroller’s Economic Outlook, the “Texas economy has emerged from the recent recession” with job growth and sales tax collections up from business and consumer purchases. Private sector employment benefitted, as expected, from the strong performance of mining and energy industries. The state economy also benefitted from aggressive, flexible incentive programs geared toward recruitment, expansion and retention. In a down economy, retention can be the equivalent of growth and has become increasingly important to municipalities experiencing revenue shortfalls and shrinking budgets. Although most communities’ policies for incentives do not apply to retention projects, the reality today is that many communities are using incentives to retain or expand businesses.  Texas is one of the few states where there are local and state incentives that can be adapted for this purpose. These same flexible programs came under fire this year by some state legislators, however, the argument by proponents is that incentives, whether for retention or new business, are needed to help our struggling economy prevailed.

Texas’ state and local incentive programs survived this year’s 82nd Texas Legislative session despite a massive $27 billion state budget deficit.* Texas added 537,500 nonfarm jobs between June 2006 and June 2011, based on the latest seasonally adjusted figures from the U.S. Bureau of Labor Statistics. That’s nearly 10 times larger than the second-biggest increase by any state over the same five-year span, which is Louisiana’s gain of 55,900 nonfarm jobs. Texas also became the second-largest economy, passing New York and coming in second to California, per data released by the U.S. Department of Commerce Bureau of Economic Analysis.

Texas communities tend to work with performance-based incentives where a project is evaluated based on job creation, capital investment, and/or sales tax generation.  Performance-based incentives are becoming increasingly popular nationally where the long term trend has been to offer tax credits rather than grants. Most of these newer performance-based incentive programs are limited and usually tied to recruitment, screening and job training costs. Texas’ Economic Development Sales Tax, which allows local communities to use up to a half-cent of their sales tax for economic development efforts, serves as the backbone of local economic development efforts in more than 500 communities. These sales tax economic development corporations have become a model program by which communities can provide businesses with cash grants for relocation, tenant improvement costs, job training and assistance with infrastructure costs.

The credit crunch, coupled with the continued pursuit for bottom line revenue and cost reductions, has made locales with discretionary grant and financing-driven incentive programs increasingly attractive. There are new opportunities on the incentive front with nearby states, such as Oklahoma, Louisiana and Arkansas, following the lead of Texas with its discretionary cash grants, tax rebates and deal-closing fund either in place or in discussion.

Incentive programs may also face more scrutiny during the 2013 State Legislative session as a result of the review by the Legislature’s newly created Select Committee on Economic Development, whose role it will be to study and make recommendations on incentives. Add in the potential competition from the surrounding states’ incentive programs and it will mean added pressure for Texas. Continued global economic instability and intense competition abroad and at home for jobs and capital investment will have us watching to see if Texas can stay at the forefront of economic recovery.

*The Texas Legislature meets in odd-numbered years.

Robert Winningham is Executive Director/CEO of the Allen Economic Development Corporation (AEDC), in the Dallas-Ft. Worth MSA. In January 1992, the citizens of Allen passed a citywide half-cent Economic Development Sales Tax in support of economic recruitment, expansion and retention. A board of directors, appointed by the City Council, oversees the corporation’s operations.

How University Hospitals plays a role in the region’s economic development

Tom Zenty, CEO, University Hospitals Health System

Tom Zenty, CEO, University Hospitals Health System

$1.2 billion.

That’s a big number by nearly any standard, and that’s roughly how much University Hospitals spent over a five-year span as it accomplished its Vision 2010 strategic plan.

At a recent Smart Business Power Players luncheon, UH CEO Tom Zenty spoke about this ambitious plan and how UH is playing a key role in the economic development of the region.

[Watch the playlist of videos from the event on YouTube]

“We thought it was critically important to focus on the communities we serve in a variety of ways,” he says.

The plan included construction of new medical office buildings, the Seidman Cancer Center, the Ahuja Medical Center and new ambulatory centers. In addition, the program renovated the neo-natal intensive care unit and invested in other programs and services. On top of all of that, about $140 million was spent on creating an integrated electronic health record system.

It’s a lot of development and a lot of money spent, but what’s interesting was the commitment UH made to helping the region throughout all of these initiatives. The plan called for 5 percent of the money spent to go toward women business enterprises, 15 percent toward minority companies and 80 percent would be spent with local firms.

“We live in not one of the most rapidly growing population regions or one of the most robust business communities in the United States,” Zenty says. “We wanted to make sure we were helping all those who would have an opportunity to work on a project who might otherwise not have the opportunity to do so.”

When all was said and done, 7.5 percent of expenditures had gone to female businesses, 22 percent to minority companies and a whopping 92 percent had been with local companies.

“We didn’t have to do this, but this was something that we committed to the mayor to do, but as well, we want to make sure we’re not only good business partners but good neighbors,” he says.

In addition to local and minority commitments, the Vision 2010 plan had other elements to drive development. One element was to create a project labor agreement that called for a no-strike clause so that even if national unions decided to strike, local work would continue. Another element was calling for participation from local vocational and technical schools to help students in programs like architecture, engineering and mechanics. The agreement created a volunteer program that all contractors participated in to allow students to work on the project from an educational perspective.

“As a company that’s been around since 1866, we wanted to ensure that we would continue to grow and be a good neighbor to the business community,” Zenty says.

The Vision 2010 program also created about 5,200 jobs, of which about 1,250 will be permanent positions. And with 20,000 employees, UH is the fourth-largest private employer in the state. Zenty noted that additionally, the second-largest is a health care company in town as well, and between the two, it shows the prominent role that health care companies can have on a region.

“Hospitals are operational 24 hours a day. We have laundry services, environmental services, business services, pharmacists.”

With so many different people needed to ensure patients get the care they need, Zenty also stressed the importance of developing the next generation of workers. One way UH tackles this issue is by working with nursing programs at nine different schools to make sure there’s a steady supply of nurses entering the work force for them.

But he also pointed out this wasn’t just a key to UH’s long-term vitality but was important for the region as a whole. One of the big issues in the region is losing young people to other cities. He said that most of UH’s 8 percent turnover comes from people who have been there less than a year, and many of those are younger workers coming in out of school who leave for other opportunities.

“If our goal is to keep the youth in Ohio, we can do a much better job, quite frankly, focusing on what various industries’ needs are going to be both today and three, five, 10 and even 15 years from now,” Zenty says. “Let’s begin to true up the educational programs we offer at the community college level, the undergraduate level and the graduate level.”

For example, in health care alone, there are a tremendous amount of areas that he knows they’re going to have a need for while also recognizing there aren’t available resources today. The development and long-term success of our region depends on forecasting needs and making changes now to fill those future needs.

“We should be doing this in every industry here in Northeast Ohio — manufacturing, business, advertising, fill in the blank,” he says. “There are any number of people we know we’re going to be needing, and we can’t guarantee jobs but we can say with certainty these are the kinds of positions we’re going to be needing.”

How to reach: University Hospitals, (216) 844-8447 or www.uhhospitals.org