Strome Business Minute with Dr. Jeff Tanner: Recent Episodes
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The title of the band's fifth album, “Dance Fever,” refers to a 14th century ritual where groups of people burst into dance frenzies to the point of exhaustion or even death.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The COVID caused recession has affected the Port of Virginia but really only in a mild way. While the number of ships calling on the Port has declined every year for the last 4 years. That’s really because the ships are getting bigger and carrying more cargo, necessitating fewer ships. Import volume and value, though, have declined 12 and 15 percent due to the recession. Export value, on the other hand, has held steady though volume has declined about 5.5 percent. Coal exported from Virginia is down over 13 percent. One piece of good news in all of this, though, is that employment recovered in maritime supply chain and logistics from a dip in May and is now back to nearly 250,000 jobs. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. We already discussed here the shrunken inventory of homes for sale in the 757, down to its lowest level in 15 years. New home construction can’t keep up with the demand due to labor shortages so the median price of homes has crept up as supply can’t keep up with demand. Strome real estate professor Walter D’Lima’s research shows that our market is representative of the national residential market. Overall, new listings for existing homes are down across the country, as demand is shifting from apartments to houses. But his study also shows that starter home owners are also trading up. But mid-priced owners aren’t trading up. Inventory of higher priced homes is way down and those prices have actually declined so now may be the time to move up. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. With interest rates so low, the mortgage refinance business has been going strong, up some eighty four percent. Fannie Mae and Freddie Mac, the two largest purchasers of mortgages, though, just slapped an additional half a percent fee on cash-out refinances, claiming the COVID-induced recession adds risk. The two government-sponsored organizations are forecasting an increase in losses on qualified loans due to recession-based defaults. Trade groups denounced the fee, which begins September 1, noting that borrowers who haven’t locked in their refinancing will have to pay the fee, expected to average fourteen hundred dollars. Still, a Zillow spokesperson told Barron’s that the refinance market is likely to remain hot and Forbes expects rates to fall even more. Lenders could choose to absorb the fee, so shop around and pay attention to the closing costs. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. In June, Facebook committed one hundred million dollars to advance US-based Black businesses, artists, and nonprofits. Last week, they unveiled their plan to offer Black businesses up to forty million dollars or forty percent of the original commitment, as grants. The grants, for Black-owned businesses with fewer than fifty employees, are broken into twenty five hundred dollars in cash and fifteen hundred dollars in Facebook advertising credits and the program will be administered by Accenture. Facebook’s goal is to pump the cash out in a hurry, hoping to get all of the cash released by the end of August. The grant application process opens today and they plan to support ten thousand businesses before the program concludes. With Black-owned businesses closing at twice the rate of other small businesses, every bit helps. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The Brookings Institute is publishing a weekly economic recovery matrix that reports a metro area’s performance across a dozen measures. For each measure, Brookings reports the actual value for that metro, color-coded by how it compares to other metros of a similar size. The measures include things like business closings, unemployment, commercial real estate vacancies, multifamily rent, and air travel. Our metro area is compared to 52 others with greater than one million in population. Compared to most in our class, we’re doing pretty well, much better than Richmond for example. We’re actually among the 5 strongest for variables like business travel, multifamily rent, and small business closings, and in the next tier for jobs change and job postings. Yes, things are down but much less than in other cities. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. When the COVID caused recession began, one segment that seemed unaffected was construction. Of course, commercial construction projects can take years and typically, though not always, continue on in spite of the economic downturn. The Association of Building Contractors, though, says that construction shrank thirty five percent last quarter, a little bit more than the overall economy. Supply chain disruption made it harder to get materials, some laborers left to take unemployment with the bonus, and other factors contributed to the decline. Hardest hit were retail and hospitality, and with the closing of so many businesses in those sectors, new space may not be needed, leading to postponements and cancellations. But data centers, fulfillment centers like the two Amazon is building here, healthcare and manufacturing may begin to pick up the slack. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner and this is a Strome Business Minute. I’m often asked how the stock market remains at record highs while the economy struggles. As we’ve discussed here, the stock market and economy are not the same thing – for one, when you buy stocks, you’re buying future earnings one to two years out. The market is betting on beating the pandemic, whether by a vaccine, herd immunity, or better treatment. For another reason, what you see as the market is really only a few stocks. The Dow Jones average, for example, is the average price of only thirty stocks and six of those propping up the entire market. Companies with a strong online presence are actually benefiting from the pandemic. But so are large companies are benefiting from the closure of smaller competitors who haven’t been able to weather the pandemic. Put it together, and the market stays strong. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. According to Virginia Business Magazine, Virginia is home to 281 companies listed in the Inc 5000, comprised of the fastest growing companies in America. Other than growth, criteria for the list include that they must be private independent companies, not divisions or subsidiaries, and that they had to be at least one hundred thousand in revenue five years ago. Number one in Virginia is Sassy Jones, an online retailer of jewelry and accessories based in Richmond. We had one in the 757, Kern Technology Group in Virginia Beach, a government services provider primarily serving maritime and defense customers in developing new products and solutions. The company grew over 1,000 percent, placing them at number 407 on the list. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. ODU cancelled its football season last week, hoping to play a shortened spring season. The financial impact on the school will be tough but imagine the financial impact of the Pac 12 and the Big 10 dropping fall sports. Just in television advertising alone, companies spent an estimated one point seven billion last season. A T & T led the way spending seventy million dollars, followed by Allstate, Chic-Fil-A, and State Farm, each spending about thirty million. According to Kantar, a firm which tracks advertising spend, the national championship game alone brought in over ninety million. Fox and Disney will take the greatest hits, as they own ESPN and ABC, the two largest college football broadcasters but it puts more pressure on other Power Five conferences to play for the money. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, and this is a Strome Business Minute. Student loans have been put on hold for another 90 days by executive order. The CARES Act had originally included a provision suspending payments for 6 months, or through the end of September. Trump’s order suspends payments until the beginning of 2021. Interest will not accrue during the period. The COVID crisis isn’t the first time student debt has been suspended. Other times included natural disasters such as Hurricanes Harvey, Irma and Maria and the California wildfires. But did it help? In the three quarters following the suspension period, defaults and delinquencies increased significantly. Clearly, the economic conditions caused by those disasters were harder for some borrowers to overcome. For others, the pause simply delayed the inevitable. What we don’t know is how many avoided delinquency because of federal suspension. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. This fall will be strange without high school football and baseball’s empty stands at the World Series. But at least we’ll have Pumpkin Spice. In fact, Dunkin is bringing it back one week early, today, with Pumpkin Spice coffee, donuts, and muffins. You can put COVID down as the cause but Dunkin has moved the introduction for the flavor one week earlier each year. Starbucks will maintain their late August start date, August twenty seven, for its pumpkin Spice Latte. While I don’t have sales numbers for Dunkin or Starbucks pumpkin products, overall the category has grown over fifteen percent in revenue and over seven percent in volume over the past few years, making this one of the most anticipated announcements each fall. Even Rover can get pumpkin flavored dog food. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Sentara’s blockbuster merger with Cone Health in North Carolina will result in a healthcare system with eleven billion in assets. While Cone brings five hospitals compared to Sentara’s twelve, Cone officials are adamant that this is a merger, not an acquisition, and state the new company will maintain a regional headquarters in Greenville. But the merger can only result in efficiencies and lower overhead by consolidating back office functions. Both hospitals struggled in the first quarter, pre COVID, with Sentara actually posting a loss, performance which heightens the need for cost reductions. Cone has recovered but Sentara said last May that even if services reached normal levels, revenue would still be down millions this year, performance that will put the pressure on to lower operating costs particularly in the home office. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Last week, we discussed the Justice Department’s probe into Facebook, Apple, Amazon and Google. The companies also just posted earnings for the last quarter, adding more fuel to the fire because most of their growth came from advertising revenue, the area of concern for the probe. Google’s sales actually declined for the first time in the company’s history, but less than expected at one point five percent. Facebook had a record quarter in user growth and revenue growth, with almost all of the revenue growth from advertising. Apple, however, also saw growth in its music streaming and iCloud services. Amazon was the biggest winner with a forty percent increase in revenue and a more than five billion dollar increase in profit. Overall tech stocks jumped on the blowout earnings, except Google which dropped slightly. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The internet giants Facebook, Amazon, Apple, and Google are being investigated by the Justice Department for violation of antitrust laws. The company facing the strongest pressure is Google, and expectations are that the Justice Department will file suit against Google by the end of the year. The reason for the probe is potentially illegal tying contracts, which require a buyer to buy unwanted products in order to get the products really wanted. Google’s problem is that they bundle services into packages and you have no choice but to buy the full package. Companies that want the Google search engine and advertising services also have to buy YouTube and other services. This won’t change the creepy tracking we get on the internet, but unbundling would reduce costs to advertisers and perhaps consumers. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. ADP recently released payroll numbers, stating that 167,000 jobs were added to the private sector payrolls this past month, well below the 1.9 million that were expected based on a survey of economists by Econoday and a forecast of one million from Dow Jones. The wide variance in forecasts and the actual outcome point out the challenges in making any predictions in this turbulent economic time. Almost all of the new jobs were from service providers and mid-size companies actually lost twenty five thousand jobs. The government unemployment numbers will be released Friday, but ADP’s estimates have generally tracked government numbers fairly well, even though they are developed using different methods. The lack of job growth will certainly add urgency to stimulus talks. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Tax policies of the political parties are fairly stable over time, with the Republicans favoring wealth creation over wages and the Democrats favoring wages over wealth. You see this in changes to capital gains taxes, estate taxes, and income taxes, but you also see it in property taxes and usage taxes, like gasoline. So who would the stock market prefer? Surprisingly, over the last twenty seven presidents and thirty eight terms of office, the market performed better under a new president than a second term president, regardless of party. Further, markets under Democrats tend to do better, and the markets like it best when the parties switch, especially from Republican to Democrat. But the Raymond James analysts who did this analysis say there really isn’t enough data to know with any certainty. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Last Sunday at Fresh Market I noticed these signs all over touting their rating as one of the cleanest stores in America. Today, I got an email from American Airlines outlining their policies for safer flying. These two marketing strategies really have the same goal, to build consumer confidence that they can safely buy from both. Having a clean store or touchless ticketing is great but one problem is other people – those shoppers who defy mask orders. Cathy Lewis, host of W H R V’s Hearsay, set up the facebook page Mask- Friendly businesses in the 7 5 7 so you can find places to shop where people wear masks. Restoring consumer confidence in the safety of doing business is foundational to getting out of this economic crisis but it takes all of us. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. A lot of focus has been on the potential for a COVID vaccine. In fact, one economist likened the rush for a vaccine to the development of the atomic bomb, a race run by countries who want to be first. But a vaccine is only part of the story. Another part, and possibly more important if COVID acts like the flu and mutates every year, is effective treatment. And one of our local companies is on the forefront. Realta, the Norfolk based pharmaceutical development company, received FDA approval for first round studies of a treatment for the effects of the Corona virus. This treatment won’t eliminate COVID, but it does show the possibility of reducing the inflammation of the lungs that so often kills the patient, which, if it can do that, will save lives and that’s great news. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. If it feels like you’re spending more on groceries during COVID, it’s because you are. I compared grocery costs December to May using government monthly reports of prices for the same items. My analysis shows an annual average increase of eight percent. I compared thrifty baskets and luxury baskets for a family of four with pre-teen children. The luxury basket is rising faster, at almost twice the rate. But we’re also spending more when we have groceries delivered and spoiled produce is included, and it also feels worse because we’re eating out less or paying more for delivery. These findings, though, support those of IPSIS which did a global survey and found that consumers report spending more. But deflationary pressures in other areas of spending have helped soften the blow. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. I was on a call with several local business owners talking about the challenges facing our region’s ability to grow. While the world may have seemed pretty good pre-COVID, Hampton Roads was actually last in economic growth among region’s our size. One of the biggest limitations is finding talent – especially skilled trades for manufacturing. To address the issue, the Virginia Economic Development Partnership and the Virginia Community College System announced the Virginia Talent Accelerator, a program designed to recruit and train workers at no cost to qualified new and expanding companies so that they can expand jobs. The services are customized to the needs of the company and the jobs they are trying to fill. It doesn’t stop there, as they also offer ongoing organizational development support to create a culture that optimizes performance. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. COVID has hit people of color and their businesses disproportionately. One reason is personal finances. African-Americans are twice as likely to live in poverty, while Hispanic poverty is seventy percent higher which means they don’t have access to health care and are more likely to have underlying health issues. Home ownership is also lower due to credit problems. Similarly, black owned businesses were much more likely to be denied PPP loans because they could not meet the minimum credit requirements. Bank On Hampton Roads is one program designed to help families build financial health. They’ve got a full slate of virtual classes as well as personal coaches who volunteer to help individuals achieve their goals. Bank On is free, go to w w w dot bankon h r dot org to sign up or volunteer. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The economic recovery appears stalled out as many indicators of economic health flattened over the past month or so. For example, weekly reports of new unemployment claims show no improvement, whether you look at regular unemployment claims or those made possible by the Pandemic Unemployment Assistance program, which helps those who were self-employed. Similarly, Gross Domestic Product, a measure of the total productivity of our country, is lower for last quarter compared to the previous quarter. But measures of confidence were slowly creeping up through June. Consumer confidence, business confidence, purchasing managers index – didn’t matter, all were inching back up to normal levels before the COVID surge began shutting things back down. But its really a tale of two economies - some industries are as busy as ever while some, like travel, are on hold. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner and this is a Strome Business Minute. One University of Georgia and two Notre Dame professors recently found that CEOs who were hired and paid at an above market rate outperformed those paid at or below market rates, with market rates weighted by company size and industry. Controlling for a number of other factors, these CEOs had a significant positive impact on their company for their entire tenure. The study focused only on the largest fifteen hundred US firms, according to Fortune magazine. What’s also interesting is that those paid below market also performed lower than the average. Given that the average annual compensation for this group was more than twelve million dollars last year and only a small difference in company performance can mean millions in stock price changes, hiring the right CEO is important. If pay is any indication, boards are making good decisions. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
I’m Jeff Tanner and this is a Strome Business Minute. With COVID, we’ve seen the acceptance of tele-medicine grow rapidly. At the same time, however, the country’s three largest pharmacy retailers, Walgreens, CVS, and Walmart, have either just inked deals to build primary care centers at their stores or are already building their own network of care centers. Walgreens partnered with VillageMD and plans to open five hundred plus locations in thirty markets over five years, with more than half in underserved areas. Walmart already delivers healthcare in some stores and is now building heathcare super centers offering everything from dental to mental health and basic healthcare. They also opened a health insurance company last week and acquired a patient medication tracking platform called CareZone. CVS, who acquired Aetna insurance two years ago, operates eleven hundred Minute Clinics. What they haven’t done is acquire a virtual healthcare provider…yet. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. Baseball is trying to hold a sixty game season, much shorter than normal, while hockey is moving to Canada for its remaining playoffs. What has the fallout been for sponsors? While many sponsors are trying to renegotiate their deals with teams in light of shortened or cancelled seasons, sports sponsorship researcher and consultant Kirk Wakefield notes that fans are fans three hundred and sixty five days a year, not just for sixty or twenty four games. They visit team websites, they listen to podcasts, and most importantly, they buy the team’s sponsors’ stuff. In fact, his research has documented that while the cost of many sponsorships seems astronomical, the returns can be so high as to be unbelievable. And so far, even in the pandemic, sponsors for consumer goods continue to benefit. This has been a Strome Business Minute, presented by the Strome College of Business, at Old Dominion University.
I’m Jeff Tanner, dean of the Strome College of Business, and this is a Strome Business Minute. Massachusetts-based Moderna announced a successful early stage trial for its COVID vaccine, causing stock prices in the NASDAQ-traded pharma to jump more than sixteen percent on the news overnight. The trial was on forty five patients, all of whom maintained COVID antibodies following two injections. The company is beginning large scale trials next week that will test the vaccine on thirty thousand people world-wide. It requires two doses one month apart. Moderna is one of more than a hundred companies working to develop a vaccine but Moderna has been the fastest, the first to also have something ready even for a preliminary trial. If successful, the vaccine would go into production with three hundred million for early next year. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business, and this is a Strome Business Minute. The federal government rescinded regulations that prohibit international students from taking a fully online schedule. The regulations meant that if a University pivoted mid-term to online only, those students have to leave without finishing the term. However, they failed to recognize the financial impact these students have on local economies. According to the US Department of Commerce, foreign students contributed forty five billion dollars to the US economy in twenty eighteen. At Michigan State, international students support an estimated 4700 non-university jobs by living, shopping, and eating there. In Boston, the economic impact of international students is $1.6 billion. And that doesn’t include the impact of profitable higher tuition, as they pay the full rate. Exporting American education is big business, and rescinding those prohibitions is a big economic boost. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, and this is a Strome Business Minute. Hotels and related tourism businesses make up a large part of our local economy. The good news is that we’re doing better than pretty much everyone else in the country. In fact, our hotels were the only properties in the country averaging over sixty percent occupancy in any major region last week, off only six percent from last year. In addition, hotel revenues are higher in Hampton Roads than anywhere else in Virginia. In the July fourth holiday week, Northern Virginia revenues were down fifty five percent compared to last year but down only twenty seven percent here. So why is revenue down so much more than occupancy? Because prices have fallen. The average cost of a room is down twenty percent to just under ninety five dollars a night but is on the upswing. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, dean of the Strome College of Business, and this is a Strome Business Minute. While driving up the Eastern Shore, I thought that with the COVID virus and the quality of car sound systems, it was time for drive-in movie theaters to make a comeback. Walmart and the Tribeca film festival people, agree, announcing a partnership to show movies in one hundred and sixty Walmart parking lots beginning next month and running through October. That represents a 50 percent increase in the number of drive-in theaters across the US, with six of the old school style in Virginia. There’s no word yet on what movies Walmart will show or where they will set up theaters but there will be concessions! Walmart has a lot of real estate to optimize and if the movies do well, they may become a permanent fixture. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The 757 just got a new transportation option to DC, called the ROX – or the Rapid Overland Express. The ROX is a luxury motor coach and, having traveled on something like this in Mexico, I’ve wondered for years why we haven’t seen something like it here. You have wifi, wide leather seats with a small tray table, a coach attendant, and a meal from Taste. The ROX makes the nonstop trip to DC in about three and a half hours from the Westin in Town Center, leaving at 8 and noon, with return trips at 1 and 6. An alternative to Amtrak or flying, it’s definitely a business traveler’s dream; the cost is about the same as mileage for driving yourself, plus you can work or watch streaming movies for free. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Employees with paid sick leave take an average of 5.2 days off a year. Those without paid sick leave only take 3 days. Either way, about 25 percent of sick days are taken to care for someone else. Sounds like an argument for not paying for sick leave. The problem is that those without sick leave are nearly twice as likely to go to work sick, whether it is with the Corona virus or another illness, which then spreads it at work. According to one study, younger workers are most likely to come to work sick because they can’t afford to miss. And many of them are in high customer contact jobs, in retail and restaurants. Now that Corona virus can shut a business down if one employee infects several other employees, maybe every company should offer paid sick leave. This has been a Strome Business Minute, presented by the Strome College of Business, at Old Dominion University.
College Athletics may be amateur sports but it’s also a business, and the pandemic appears to be wreaking havoc. Old Dominion dropped wrestling earlier this year, taking the wrestling community by surprise but all sports are facing cuts across the country. Tennis has been the hardest hit, the only sport nationally with more than four universities dropping the program. With nearly two-thirds coming from other countries, tennis is more international than any sport, even soccer, which means fewer alumni who donate and that may be a reason why it’s dropped so much often. Tim Cass, USTA general manager, argues that programs should engage their communities with youth and adult tournaments and after-school programs, to generate the support they need. But the truth is college sports are expensive and the pandemic an easy excuse to stop the bleeding. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
They say if your neighbor loses a job, it’s a recession. If you lose your job, it’s a depression. When I talk with business leaders, their view of the economy depends on what sector they’re in. And while the economy and the stock market are not one and the same thing, they are related. Shockingly good news on May’s employment numbers led to a stock price surge driven by individual investors. But those same investors grew skittish, fearing more lockdowns in the face of a COVID resurgence in states that tried to re-open too early, and stock prices fell. Those individuals shifted quickly to what Bloomberg analyst Mohamed El-Erian calls “stay at home” stocks, like Netflix and Amazon. Now, the hope is for a Fed action to prop up the market but the bigger needs are the virus and the economy. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Dominion Energy sold its gas pipeline business to Berkshire Hathaway, intending to focus on regulated energy lines in gas and electricity. The deal cleans up a strained balance sheet and also means the end of the Atlantic Coast Pipeline. The problem is that pipeline is needed to prevent lack of supply during periods of high use. Our naval bases bear the brunt because they’re the first to lose access during peak demand so some assets may leave for more stable supply and recruiting new ones is now less likely. The pipeline is also needed to attract and retain businesses. As a low-cost cleaner burning energy source, the gas would also offset the higher cost of wind and solar energy, for a competitive average cost. The stock fell ten percent on the news but will likely rebound as the investor mix changes. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
On Christmas Eve 1926, Wheaties, the Breakfast of Champions, became the first product ever advertised with a jingle. Changing the words to a popular song, it was broadcast on a Minneapolis radio station. The product was actually a mistake – it was created when hot wheat bran was spilled onto a hot stove. But it took nearly three years of trying before the company could make a flake that could withstand packaging and shipping. The slogan, Breakfast of Champions, led to using sports celebrities’ photos, with Lou Gehrig the first to grace the front of the box eight years later. By the end of the thirties, it became the dominant brand, with celebrities from all fields seeking a chance to be on the box, a tradition that continues today. A mistake, a song, and a picture became the dominant brand. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Boeing begins flying the seven thirty seven Max jet aircraft in the next week or so, testing to re-certify the plane as safe for commercial use. At least three days of flights will occur at the company’s test site outside of Seattle, enabling the company to gather thousands of data points to determine whether changes to the software that guides the plane’s anti-stall system have worked. The system was blamed for two horrible crashes that killed over three hundred passengers. Getting the plane back into production and service into will have a major impact on Boeing’s financial status, as well as the ability to survive for the hundreds of smaller companies that supply parts and systems for the plane. But with the virus reducing air passenger traffic, whether there will be demand for the new plane remains to be seen. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Beef substitutes Impossible Foods and Beyond Meat have really taken off this spring. Impossible’s first big breakthrough was at Burger King with the Impossible Whopper, followed by products sold through Starbucks, White Castle, Red Robin, and Little Ceasar’s, and grocery distribution through Kroger. Now the brand has partnered with Yelp, another company that has done well during COVID, to provide free Impossible breakfast sausage and free marketing help from Yelp services like Connect and Waitlist to top independently-owned diners across the country. Locally, Anchor Allies in Virginia Beach made the list of Yelp’s Top Thirty diners and will participate in the program. Beyond Meat took the opposite approach by gaining grocery distribution first, then restaurants. It’s now available at Dunkin, Carl’s Jr, and TGI Fridays. Yelp trend expert Tara Lewis says plant-based meats are a top trend at Yelp. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Facebook continues to lose major customers due to its unwillingness to regulate content. Beginning with North Face, the company has lost dozens of advertisers, including Coca Cola, Campbells Honda, Starbucks, Eddie Bauer, and Levis. While Facebook has announced policy changes, groups such as the Anti-Defamation League and the NAACP continue to press for boycotts. Only about one in four boycotts actually result in the desired change, but one study shows that boycotts cost companies about one hundred and twenty million in stock price value over the following two months. Most boycotts ask individual consumers to change their buying habits, who lose interest quickly. In this instance, however, Facebook’s largest customers are boycotting, not individuals, so we’ll see if the desired changes occur. We’ll also see if the boycotting brands are hurt or helped by their stance. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
This is a Strome Business Minute, presented by the Strome College of Business. If your dream is to produce the number one box office movie, it’s now a little easier than normal. In fact, two guys just did it with a movie that cost them nothing to make. Called Unsubscribed, the horror movie was made with all volunteer talent and lasts all of twenty nine minutes. Filmmaker Christian Nilsson and actor Erich Tabach created the movie, then rented out an entire theater. Apparently, there’s this practice where if you rent out a theater, you keep all of the revenue from ticket sales. So Nilsson and Tabach charged themselves over twenty five thousand dollars, which they got back, to sit and watch the movie over and over – three times in all. And that made it the number one movie at the box office on June 10th! This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
This is a Strome Business Minute, presented by the Strome College of Business. If you’re listening to this in your car, what would you do if someone walked out in front of you? Everyone would swerve to miss the pedestrian, even if swerving put you in danger. Research shows that most people would still swerve and take the risk. As a driver, we feel responsible for those around us and try to protect them. But what if you are a passenger in a self-driving vehicle? Should your safety take precedence? Research by Laurian University professor Tripat Gill in the Journal of Consumer Research showed that more people preferred that the car try to save their life than that of the pedestrian, unless it was a child. The research further explains that this is one reason for slow acceptance of autonomous vehicles – the inability to distinguish moral hazards. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
This is a Strome Business Minute, presented by the Strome College of Business. Even though we’re officially in a recession, some economists are saying the bottom occurred in April and recovery began in May. In fact, the Citi Economic Surprise Index which measures how many economic data points are way off expectations, hit a new record high with positive data coming in much stronger than expected. Most startling was the most recent jobs report earlier this month which showed our economy gaining two point five million jobs instead of losing an anticipated eight million. While still way short of total unemployment, more good news on the job front should come soon due to the expiration of the unemployment bonus. May retail sales also rose at double the expected rate, suggesting the consumer is back. Assuming no national lockdowns, a long slow recovery seems to have begun. This has been Strome Business Minute, presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. Colleges and universities will play an important role in rebuilding the economy according to Thomas Barkin, president of the Richmond Federal Reserve, and Steven Moret, president of the Virginia Chamber of Commerce. The two were part of a panel last Friday at Virginia Tech. As Barkin said, many old jobs won’t be available, at least not in the numbers they were before. Displaced Workers will need new skills, skills they can get from colleges. But with more than half a million Virginians without access to broadband, online education may not be possible. All of Virginia’s community colleges and universities, though, will be offering face to face classes this fall, so long as the state can remain open. But fall enrollment so far is down most places, Eastern Shore Community College being the exception. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. Last week at this time, corporate responses to the racial protests felt different based on the donations to African American organizations. African Americans said otherwise, based on the lack of direct support for black-owned businesses. Aurora James, founder of Brother Vellies luxury fashion accessories, posted on social media that retailers should pledge fifteen percent of shelf space to black owned businesses, as that’s the percentage of the national population that is black. One luxury brand retailer, Sephora, agreed, and quickly realized that less than three percent of its vendors are black-owned. In an NPR interview, the CEO said a similar initiative to support women-owned businesses proved very successful, so perhaps real change will happen. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. According to Goldman Sachs, the average investor has beaten the pros in the stock market during the pandemic. The portfolio of stocks purchased by individual investors since the bottom on March twenty third has returned sixty one percent, compared to a forty five percent return on stocks purchased by mutual funds, hedge funds and other pros. Individuals looking for value purchased stocks that were beat up the most by the pandemic, including Penn National Gaming, MGM Resorts, Royal Caribbean Cruise Lines and Marathon Oil. Also doing well for individuals were GoPro, Snap, and Tesla. Most of the gains were made on stocks purchased in mid May when both the virus news and economic news got a little better and the market began its climb, though now it seems to beaded back down. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. No tombstone ever read, “I wish I’d spent more time at the office.” With permanent telework offered at Facebook and Twitter, one has to wonder whether anyone will go back to the office. But some local business leaders have told me that they’ve seen productivity declines during the lockdown and Amazon is steadfast in its plans to build a second headquarters of four million square feet. One factor against permanent telework is the lack of spontaneous conversations that lead to new ideas. Pre-COVID, Google tested how to set up their offices to encourage spontaneous conversations, especially between people who didn’t know each other, to generate innovations. Why? Because research shows spontaneous conversations between people who DON’T know each other beats brainstorming sessions or personal reflection for innovations. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
I’m Jeff Tanner and this is a Strome Business Minute, presented by the Strome College of Business. Move over Amazon. Here comes ASGN. Well, okay, not quite the size of Amazon but the relocation of ASGN corporate headquarters from California to Henrico County could be a sign of things to come as more companies flee the high cost of California, bringing 700 jobs to Virginia, including an expansion of its Virginia Beach operations to 147 employees. ASGN provides IT consulting services to commercial and government clients, and already has 4,000 employees across the state. The company will spend more than 12 million on two locations to provide room for the growth and the governor kicked in 900,000. The CEO told Virginia's business that this move brings the two largest divisions together, but you can't overlook that they also save a lot of money. This has been a Strome business minute, presented by the Strome College of Business at Old Dominion University
Welcome to a Strome Business Minute, presented by the Strome College of Business. Kroger joined Target and Starbucks in ending its two dollar an hour hero pay to workers for hazardous duty due to the Corona virus. Kroger employees responded by protesting across Virginia, holding drive-through rallies and standing outside stores with signs calling for return of the hero pay. Target and Starbucks employees, though, haven’t protested. Starbucks sales are expected to be down some three billion dollars so maybe their employees were cutting them some slack. Meanwhile Dollar Tree announced last week that it is extending its hero pay at least through the end of June. Like the others, Dollar Tree’s hero pay is two dollars per hour, and the company estimates that the total additional cost will be about fifteen million dollars, having already spent about one hundred and five million on hero pay so far. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. Wow, what a rough couple of days on the stock market. After erasing just about all of the pandemic-related losses of the past ten weeks, the market was easily overpriced but as the media focuses on the apparent second wave of increased corona virus positive tests, investors got nervous and sold off, driving prices down. The Fed added to the worries on Wednesday by warning of high unemployment for some time to come. The Dow fell seven percent and the NASDAQ six yesterday. Some of the hardest hit were retailers, airlines and cruise lines, companies more likely to be hurt by a return to lockdown. What investors forgot is that many companies stopped forecasting earnings, afraid of the pandemic’s effects, and those that did guided to lower earnings, so this correction seems like it was probably overdue. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business, Old Dominion University.
Welcome to a Strome Business Minute, presented by the Strome College of Business. The Fortune 500 list was just issued by Fortune magazine, and as you might expect, there have been some changes. Walmart still holds on to the top position for the eighth year in a row but Amazon jumped past ExxonMobil and Apple to claim the second spot. CVS Pharmacy moved into fifth because of its purchase of Aetna, the insurance company. Walmart’s profit doubled last year but the fastest growing company in profit was internet equipment maker Cisco Systems. Cigna doubled revenues last year, the most of any company on the list. Walmart may have the largest revenues but the largest in terms of shareholder value or market cap is Microsoft – Walmart is seventh on that list. The biggest money loser in the 500 last year? That was Uber, followed by Pacific Gas & Electric. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The protests over George Floyd’s death and the other recent deaths of African Americans feel very different this time. For one thing, businesses are taking tangible action. The most eye opening was Bank of America’s pledge of one billion, that’s billion with a b, over a four year period, to go to local programs to support economic mobility and access to healthcare. BOA, which also owns Merrill Lynch, also pledged an equal amount for loans to black-owned businesses. Other companies don’t have that much money to give but are giving what they can and are redoubling efforts to create inclusive work environments. Nike launched a For Once Don’t Do It campaign against racial intolerance. This time it feels different, in part because businesses have decided that statements alone are not enough. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Covered California, the open marketplace for California’s health insurance, conducted a study that predicts significant increases in healthcare insurance costs thanks to the COVID crisis. Their study predicts increases of forty percent, mirroring what some organizations have been saying about their healthcare premium renewals. The Society for Human Resource Management predicts much lower increases, only seven percent. An average corona virus related stay of twelve days will cost seventy two thousand dollars, with total commercial payouts estimated to range from thirty one billion dollars to two hundred and thirty eight billion dollars. The wide range in projected insurance payouts is partly due to separating out patients covered by Medicare. The wide range of estimates, though, also shows that we still know very little about the longer term effects of this pandemic. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The Trump administration is examining European taxes on American digital service providers and considering a tax, or tariff, of its own. In addition to the EU, Brazil, Indonesia, and others are considering similar taxes. Jordan Hass, of the Internet Association, a trade group representing companies like Amazon, Google, and Facebook, said in the Washington Post that taxes that target only American companies are discriminatory but to be fair, these taxes target an industry which happens to be American-dominated. Britain is considering a two percent tax on search engines with the European Commission going with three percent. Brazil is looking to pass an e-commerce sales tax, just like what we have here in the states. Trump has signaled that he will respond with tariffs on goods from those countries if the taxes are passed. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Elon Musk is celebrating the successful launch of his Space-X flight to the space station. But don’t worry, he isn’t neglecting Tesla. In fact, he had the astronauts ride to the rocket in a Model X, snow white to match their space suits. This isn’t the first Tesla Space-X convergence. He strapped a car to a rocket in twenty eighteen, complete with a mannequin driver. The trip was live streamed courtesy of NASA, to over 2 million viewers. Other brands have also enjoyed space rides. Toy Story’s Buzz Lightyear rode into space in two thousand eight, and Disney got more mileage out of it when the Smithsonian accepted the action figure into its permanent collection. Other brands include Coke, which flew into space on the Challenger while Omega is the official watch since Apollo 11. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Another round of fiscal stimulus is coming from Congress and there’s one group that won’t be included, at least directly, and that’s large companies that were already in trouble. Regular listeners know that I’ve long touted the importance of low debt levels, as the piper always wants to be paid. According to three Harvard professors and one from the University of Chicago, that payment may come in the form of up to eight million jobs if all of those companies went under. The choice, though, is to include them in the stimulus and run the risk of burdening the taxpayer with their debt as they may fail anyway. Congress is also loathe to reward companies for poor decisions as it would encourage others to do the same, a lesson learned in the last financial crisis. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Keeping in mind this is a business minute, what has been the reaction of businesses to the deaths of three black men? Some do nothing and some issue a statement supporting the protests. But some are taking it a step further, including Target, whose stores in Minneapolis were looted. Target will provide aid to the community, pay employees whose stores closed due to looting until reopening, and more while also working on longer term solutions. GM, whose CEO will chair an inclusion board working internally and externally to advocate for inclusion. YouTube is giving one million dollars to The Center for Policing Equity, an organization that works with law enforcement to promote more equitable practices, as well as reviewing its own algorithms so that the social media site’s content is more balanced. Let’s all do more. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
For some people, the toughest aspect of the virus is not getting to travel. Travel companies are promoting travel destinations already so that when people feel comfortable, they’ll go. And the research says that’s not a bad thing. In fact, it’s been well documented that the planning and dreaming about a trip is more satisfying than the actual trip. Several studies have found that when planning for the trip involves learning about the destination and imagining what it must be like to be there, for example, dreaming of looking over the ancient city of Machu Picchu or sipping espresso at a café in Paris, can be just as satisfying as being there. But if anxiety over the virus turns this activity sour, pack it away, and save it for another day. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Amazon and Netflix may be big winners in the economic crisis, but other businesses have done surprisingly well. One such local business is Garrett Realty Partners, a residential real estate agency that enjoyed the strongest month in sales in its twelve year history in April, a record broken in May. When the pandemic hit, the company decided to operate safely but fully, without layoffs. As a result, they were able to capitalize on a robust local housing market, setting astonishing sales records. Across the state, home sales declined during the month of April but at a lower rate than expected. Here in the 7 5 7, April home sales actually increased. New listings are down more than twenty eight percent across the Commonwealth and the lack of supply is driving prices up. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
When COVID struck, ventilators became central in the fight to keep patients alive. But high levels of use quickly overwhelmed the equipment and companies’ ability to repair the equipment. Technicians were further hampered by supply chain disruptions for parts, the inability to travel to distant cities to do repairs, and just the sheer volume of repairs needed. Some parts, like valves, can be three D printed. But hospitals couldn’t do the repairs because they didn’t have the manuals. That changed last week when iFixit, a website promoting the right to repair the products you buy, posted the repair manuals of thousands of medical equipment products. The right to repair movement, though, faces copyright restrictions on the manuals, setting up the chance for legal consequences from manufacturers who don’t want to lose the business. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The Hampton Roads Economic Development Alliance or Her-ed-ah was renamed last week as the Hampton Roads Alliance or just the Alliance. The new brand looks like a transition as they are minimizing the Hampton Roads moniker toward the 7 5 7. Whatever you call it, though, the new Alliance is shaking things up in a good way. The Alliance lures new businesses to our region while helping existing local businesses grow. It partners with the Chamber and the municipal economic development offices to make sure that this is a business-friendly region. When Rick Weddle resigned, many including me, thought a merger with the Chamber would be best. But Doug Smith has built strong relationships with the cities and business community. In this time of crisis, we’re better prepared because of a strong Alliance. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
RISE is a Hampton Roads based non-profit, economic development organization funded by a federal HUD grant to accelerate innovation and business growth in developing solutions to coastal flooding. One of the ways it does this is to offer challenge grants to companies with innovative business ideas. RISE announced five grant winners receiving up to two hundred fifty thousand dollars each to set up shop here and begin their business. Winners include Natrx which offers a digital technology to architects and engineers that incorporates nature-based solutions to flooding and Storm Sensor which makes sensors for smart cities to measure flooding. Other winners include a customizable mapping solution, a financial service that offers capital for flood mitigation, and an artificial intelligence-based weather forecasting service. In addition to the money, the companies also get business assistance. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Towne Bank’s stock price has plummeted to well under twenty dollars per share, falling more percentage-wise than its peers to sixteen dollars and fifteen cents before climbing back to nearly eighteen dollars but well off its one year high of twenty nine dollars. Analysts are mixed on Towne’s future, with BidAskClub lowering from sell to strong sell, Zacks reiterating a sell rating, and Value Engine improving its rating to hold. With a consensus price target of nearly twenty eight dollars, you’d think there would be some buy recommendations, and indeed, the bank’s largest investors, BlackRock, State Street, and Geode Capital have increased their holdings during the first quarter. But April also saw an increase in shorting activity, meaning more investors thought the price would fall, in spite of an earnings report that beat estimates. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Now that the beach is open for business, will tourism immediately return? The answer is probably a qualified yes. Global tourism and travel will gradually open up with tourism accelerating toward normalcy at a much faster rate than business travel. Business travel, a part of our hospitality sector that gets less attention in the press, is really important to us locally. Hotels in Norfolk, for example, are more reliant on business travel than those at the beach. But businesses will be slow to allow employees to travel, primarily for cost reasons, and will rely more on web-based meetings whereas there will be pent-up demand among tourists for vacations and seeing sites and places that can be easily reached by car, like the beach and the historic triangle, will be among the first to benefit. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Adweek agrees – it’s time to pivot to the positive. A recent analysis suggested that consumers are tired of hearing negative messages. According to Adweek’s Robert Klara, a Pew Study found 71 percent of Americans turning off the news to avoid hearing about the pandemic. Another study by Mitto found that 41 percent of consumers think it’s time for brands to talk about something else. For one thing, these consumers are probably tired of the piano music as the people in the commercial repeat “We’re here for you.” So if mannequins in restaurants are part of the new normal, at least for now, and consumers are ready to get out, as we saw in Virginia Beach last weekend, it’s also time for advertisers to pivot to new normal strategies with hope and optimism. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
It’s time to pivot to the positive. A phrase coined by regional chamber president, Bryan Stephens, he suggests we focus on the positives in our region. What are some of those positives? The first may surprise you: strong regional collaboration. It doesn’t take the memory of an elephant to remember the kerfuffle between Virginia Beach and Norfolk over access to the discount mall, but the fighters are gone, replaced by collaborators like Norfolk and Suffolk cooperating on utilities construction so an Amazon warehouse could happen in Suffolk. If you need more convincing, look at 757 Recovery dot com, a region-wide effort involving peninsula and south side business organizations. Still not convinced? Developments in offshore wind, coastal resiliency, and other areas of economic diversification are benefiting from greater collaboration. It’s time to pivot – to the positive. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Eating more at home and rising meat prices due to plant closures has changed meat consumption patterns. Data analytics firm Lotame observed massive spikes in consumer interest in a fish-only diet, or pescatarianism, in March compared to a year ago, along with a jump in interest for vegetarian diets. But it wasn’t just interest. According to Adweek, sales of meat alternatives like Beyond Meat and Impossible Foods grew four hundred and fifty four percent in one week in March compared to the year before. Beyond Meat’s stock nearly doubled over the past month, as have sales, and privately-held Impossible Foods tripled the number of retailers selling its products. Similar growth in pescatarianism would help our region but lacks the supply chain and simple preparation of a vegetable-based hamburger. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
JC Penney finally filed for bankruptcy last Friday and it looks like this is really it. The poster child for the slow decline into oblivion among department stores is not alone, however, as both J Crew and Neiman Marcus have also filed for bankruptcy. Squeezed by online retailers who could provide greater variety and big box retailers who had better prices, department stores simply lost their place. But their place accounts for thirty percent of the square footage in the nation’s malls, a fact that has mall owners more than a little panicky. But all three are Chapter eleven filings, meaning they come back from bankruptcy, assuming they can reduce the debt they owe, one point seven billion for J Crew, three point seven for Penney’s, and four point three billion dollars for Neimans. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The stay-at-home orders have certainly changed the rhythm of our days. For many people, this is a time to plunge back into hobbies and home improvement activities. Locally, Stihl has enjoyed a couple of good months of equipment sales as homeowners take on their lawn and garden projects. Nationally, a WebIndex survey found that one in three are renewing their hobby interests, but for the other two-thirds, it seems their plans are to spend more time on social media or play video games. Working out at home is popular, too, with Peloton reporting strong sales increases for its exercise cycle platform. Emarketer dot com reports that ad spending for toys and puzzles was up in March and April but is down at the moment, as those companies wait for buyers to finish their puzzles. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
One trend I expected to happen began this week, sooner than I thought – permanent teleworking. Companies are learning that teleworking isn’t necessarily terrible and may be cost effective. Twitter is leading the way, as their CEO, Jack Dorsey, told employees by email that most of them could permanently telework if they wanted to. Why didn’t he tweet that? Anyway, such a move has office building owners shaking with fear, but could benefit cities like ours, as well as benefit co-working space companies like Gather who can rent a single office or even less. Office workers could choose where to live based on any personal desire, making year-round beach living easier. Our area has a lot of available office space, though, which may also make us attractive for distributed work teams, like ADP’s Norfolk office. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Delta announced Friday that today will be the last day for service out of Newport News and consolidate all of its Hampton Roads operations out of Norfolk. The decision was made possible by an FAA ruling that allows airlines to consolidate in any region served by two or more airports. Taking advantage of the ruling, Delta is closing operations in ten airports across the country. The move is intended to be temporary, assuming that air travel returns to normal levels. American Airlines also flies out of both airports and has not said yet whether it will be consolidating operations in any regions. The company has announced suspension of flights to Philadelphia out of Newport News, leaving only Charlotte as a destination. Overall, airlines have lost well over ninety percent of their business. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Maybe it’s because we couldn’t take Mom out for dinner or maybe we just wanted to make this Mother’s Day special but whatever the reason, Americans spent more on Mother’s Day this year than we did last year. Gifts nearly reached twenty seven billion dollars, up eight and a half percent from last year, driven by an increase in the number of people buying Mother’s Day gifts as well as an increase in the average spent. And before we get too far into thinking it’s all a commercial racket, this year’s presents tended to be more sentimental and personalized, according to Profitero’s analysis of Amazon data. And while Profitero’s research found that gifts involving social outings were down nine percent, most men still plan a special outing for mom – we just don’t know when. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
April was actually a pretty good month for the stock market and May hasn’t been so bad either. A question, though, is whether the rally has been justified. Kelly Bogdanova, a leading analyst for RBC, says yes, well, sort of. She didn’t use this term but over the years, I’ve developed what I call the pendulum theory, meaning that the psychology of the market causes it to overswing in either direction. So she says that earnings have justified a rally but one not quite as big as what we’ve seen. She also cautions buyers to remember that they are buying future earnings and she is predicting a long recovery. You can observe the pendulum effect with individual stocks as well as sectors or, as is the case now, the full market, and that creates opportunity. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
With all the fuss over the CARES Act and its Payroll Protection Program or PPP, the second round of funding passed without so much as a whimper. Of course, most of the paperwork was completed in the first round rush. The Virginia Bankers Association says the average loan in the second round was half that granted in the first round, or about seventy-nine thousand dollars. Large banks, like Wells Fargo and Capital One, had difficulty processing loans; Wells stopped taking applications May third and Capital One was widely criticized in the first round for not accepting applications until after the funding ran out. If your business missed out, there’s still six hundred billion in the Federal Reserve’s Main Street lending program aimed at supporting small businesses with loans up to half a million. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
757 Recovery released the results today of its study of local businesses. The group is comprised of area economic organizations like the Chambers, the Economic Development Alliance, and the Workforce Councils, along with the Strome College of Business at ODU. Data indicate that the impact of the COVID crisis is wide-spread. Two-thirds say business is down at least twenty-five percent, with about twenty one percent reporting that they’ve lost over half of their usual sales. Ten percent have closed permanently. There is some good news. Nearly half report that the CARES Act has helped, particularly older established businesses. Some businesses have actually grown during the crisis and one in four expect to begin hiring workers in June. The full report is available at 7 5 7 Recovery dot com. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
757 Recovery released the results today of its study of local businesses. The group is comprised of area economic organizations like the Chambers, the Economic Development Alliance, and the Workforce Councils, along with the Strome College of Business at ODU. Data indicate that the impact of the COVID crisis is wide-spread. Two-thirds say business is down at least twenty-five percent, with about twenty one percent reporting that they’ve lost over half of their usual sales. Ten percent have closed permanently. There is some good news. Nearly half report that the CARES Act has helped, particularly older established businesses. Some businesses have actually grown during the crisis and one in four expect to begin hiring workers in June. The full report is available at 7 5 7 Recovery dot com. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Opening up for business will not mean business as usual. American Airlines already provides face masks and requires them on some flights and we’ve all heard that airlines, for example, will leave the middle seat open. But Frontier, um, no. You want that middle seat open? It’ll cost you thirty nine dollars. That’s lower than full fare but I guess they could sell it OPEN to two people. I mean, who’s to know? ‘That’s my empty middle seat – no that’s mine.’ Southwest Airlines hasn’t decided what to do, as they’re waiting to see how the media reacts to Frontier. Restaurants also leave a seat open, utilizing half-seating capacity to maximize distance between patrons, with a full staff who cleans constantly. That practice will put pressure on prices and can’t be sustained. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The Language Group based in Virginia Beach placed sixth in this year’s Fantastic Fifty a list of the fastest growing firms in the state compiled by Virginia Business magazine. The company, which employs twenty four people and provides translation services, enjoyed nearly one thousand four hundred percent growth. Companies with at least two hundred thousand dollars in revenue in twenty fifteen could enter, and ranking was based on percentage growth since then. ITA International in Newport News, placed nineteenth with three hundred seventy six percent growth. The engineering, cyber security, and maritime support services company employs three hundred and seventy three people supporting commercial and government clients globally. Norfolk-based port management company T Parker Host came in at thirty fifth and Buzz Franchise Brands of Virginia Beach was thirty ninth. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Major healthcare systems across the country, including Virginia’s Bon Secours and Sentara, have announced resumption of elective surgeries. Some that classified as elective under the ban that expired last night at midnight include such things as knee and hip replacements, medical necessities but not life-saving. The resumption of these surgeries is critical to the financial health of hospitals, which are as empty as a mall except for COVID patients. In fact, non-COVID healthcare services are down as much as seventy percent, according to Virginia Business. Hospitals have furloughed staff, which may slow the re-start as they re-assemble staff. Also slowing the restart will be the need for new tests and imaging studies in order to document the progress of a condition. But at least it’s one area of our economy that’s restarting. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Yesterday’s stock market was a nice rally. Some big gainers included Google, up ten percent, Paypal up six percent, and of local interest, Norfolk Southern up five percent. In fact, overall, the market is only down eight point five percent year to date, as investors are sorting through those businesses which are still doing well and those which are not. If you pull the oil stocks out, the market is only down about six percent. Town Bank was up over four percent, Huntington Ingalls up just over two percent and Dollar Tree up barely. To be fair, Dollar Tree is twenty percent up from its low of about five weeks ago. The good news in earnings, especially in tech stocks, drove the rally; whether it can be sustained is up to the virus. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Economies of scale drive business – the bigger an operation is, the lower fixed cost per unit of production. Take Smithfield – the bigger a pork production plant, the fewer people per slaughtered pig. The same with a ship –bigger ships mean lower operating costs per container. Greater operating efficiencies lower costs and improve profits. COVID changes that. As global trade declined, shipping companies anchored empty ships but the move to giant Panamax ships has hurt their cost structure. In Smithfield’s case, it’s largest plant closed when employees got sick. If that plant been split up into five plants, they might have had to close one or two but production could have continued. Post-COVID, business will have to figure out how bigger can be better. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Analysts wonder if we’ll have a U-shaped recession, or fast drop, fast recovery, a swoop-shaped recession, or fast drop, long recovery, or W-shaped, a fast drop with ups and downs before we really recover. The Raymond James analysts make the most sense with their K shape model. Picture a K –some companies dropped like a stone and will never return, like over-leveraged businesses, while others, think Amazon, Walmart and Teladoc, are unphased or even thriving. Others are the right leg of the K – they’re sliding down but they’ll come back, like oil, airlines, and car sales. And a fourth group, the arm of the K, include elective healthcare and tech, will come back quicker. But not all will come back at the same time. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Brandom acts of kindness is a new turn on an old phrase that describes how some companies are responding to the COVID crisis. I resisted random acts of kindness because they don’t address the person’s needs and create an unfair obligation on the recipient. A brandom act of kindness is not random, it is purpose-driven in that is in response to a need AND is consistent with the brand’s purpose. For example, Domino’s, KFC and others donating meals numbering in the tens of millions to healthcare workers and first responders, while Taco Bell and Burger King provide free meals to children dependent on school lunches. Crocs, already loved in healthcare, is giving a pair to every healthcare worker in the country. Brandom acts should be one good thing we remember about this time. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
We’ve said it before but now others are saying the same – reliance on corporate debt may cause a recession. Yes, we’re already in a recession but global debt surged seven point five trillion dollars in the first half of last year and is expected to be over two hundred fifty five trillion when the final numbers come in on last year – all well before the massive borrowing that is part of the stimulus. If you want to see evidence of the effects of debt in a recession, look at oil companies who can’t pay their loans back. With global GDP likely to decrease by at least three percent, there will be strain on those who are highly leveraged. Companies which didn’t use cash to buy back stock or pay dividends will thrive. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
What’s going on in your house? Apparently, it’s baking! And companies reaping the rewards of a national baking frenzy include King Arthur Flour. The premium-priced brand said its sales of flour were up more than two thousand percent year-over-year, six point six million bags in March. Karen Colberg, company co-CEO, told Yahoo Finance, “… baking is the new baseball, it’s become the national pastime.” All baking ingredients saw increases in demand. Adweek says sales of baking yeast quadrupled, baking powder tripled and sugar sales nearly doubled. King Arthur has benefited from adopting a digital marketing strategy several years ago. Recently, they introduced The Isolation Show on Facebook, with tips and original recipes, live chat for novice bakers, and an online store. Yup, online marketing works for a product as simple as flour. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Performance Food Group, or PFG, the Goochland based food distributor, announced it is selling thirteen point five million shares of common stock this week, two million more shares than originally planned. While this isn’t the best time to sell stock, the company is seeking funds for working capital, which really means they’re using it to cover operating expenses. The company primarily serves restaurants, hospitals, universities, and other institutions, which is the hardest hit segment of the food business, so they’ve been signing up grocery stores too. PFG sales declined fifty percent the last two weeks of March and the company expects continued revenue declines until the economy reopens. Stock that is being sold was purchased by the firm as recently as last month. Share prices have fallen fifty percent in the past year. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
How the heck did oil prices go below zero yesterday? Truthfully, it’s a quirk of the technology used to manage oil trades but at the same time, prices were so low that people stopped selling. Oil is a perfect commodity, meaning the law of supply and demand works efficiently. If demand falls, and it has during the COVID crisis, prices fall unless supply also falls. And the OPEC Plus agreement a week ago to reduce production ten percent doesn’t reduce supply until May. The problem is that too many US oil producers took on debt when times were good and now, at ten dollars a barrel or less, they can’t pay back the interest so they face bankruptcy. Economists fear similar consequences for other companies that relied on debt for expansion. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
By now, you’ve seen more than a few television commercials with coronavirus themes. Some promote social distancing, others promote home delivery or take-out food, and a few that offer dreams of post-COVID experiences. But should they? A Global Web Index asked if brands should advertise as normal. In the US and globally forty percent said yes while thirty five percent were neutral. But in a second study done by Kantar, nearly eighty percent said they want brands to talk about how the brand is helpful in the new every day life and three of four agreed that brands should inform consumers about how they are handling the situation. Several other studies support consumer openness to virus-related messages, but tread lightly, avoid humor, and definitely do not exploit the virus in any way. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The National Federation of Independent Businesses reported that on March tenth, only 16% of its members were very concerned about the potential impact of the COVID virus but by April first, the number was well over 70%. Data released this week by a regional task force comprised of economic development agencies, chambers of commerce and the Strome College of Business finds similar results, indicating that locally, three out of four businesses have been disrupted or severely disrupted by the crisis, with twenty-eight percent saying that their revenue is down more than half, while another fifty five percent are down twenty five percent or more. Three out of five businesses say that they expect more layoffs will occur, particularly if the crisis continues. The full report can be found at 7 5 7 Recovers dot com. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
When the global economy stops, the need for oil nearly ceases and when that happens, the strict laws of supply and demand kick in. The price for a barrel of oil plummeted to about thirty dollars. That price devastates American oil producers because they rely so heavily on debt to finance production, compared to the Middle East and Russia. If you can cut supply to match demand, prices should rise. At first, Russia seized the opportunity and refused to cut so as to put American operators out of business. But under US pressure, they gave in, only to see Mexico back out of the agreement. Again, the US applied pressure and Mexico came back. Now oil production is limited and prices should rise to a survivable level, though prices will rise at the pump too. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Smithfield Foods announced the closure of a pork production facility in Sioux Falls, South Dakota after hundreds of the company’s workers tested positive for the coronavirus. Nearly three hundred, or about 40% of the state’s seven hundred and thirty positive cases, are workers at the plant. The plant produces about eighteen million servings of pork a day, enough to feed about six percent of the US. The company had kept the plant open as other meat producing plants closed, following a three-day closure for deep cleaning and development of distancing policies, saying it was necessary to maintain the country’s meat supply. On Sunday, though, the company bowed to pressure from the South Dakota governor and others. Other plants closed around the country include one each owned by Tysons and Cargill and two belonging to JBS. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
The Coronavirus Aid, Relief, and Economic Security Act, dubbed the CARES Act, is already pumping millions of dollars into businesses through the Paycheck Protection Program, or P P P. Bankers report processing huge volumes of loan applications. One banker reported that she is working about eighteen hours a day processing loans. Average loan sizes are about two hundred and fifty thousand dollars. When a company is given a loan, three-fourths of the money must be used to provide paychecks. This requirement is intended to provide relief to companies who would otherwise have to lay off employees or lower pay but it only benefits companies who can continue to operate. Loan restrictions actually hurt companies like hotels who have to close, who’s employees are better off claiming unemployment because they get a CARES Act bonus. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
While the economic news has been pretty dreary, there are bright spots. For example, the Pilot reported that Global Technical Systems, based in Virginia Beach, was just awarded a US Navy contract worth seven hundred and eighty two million dollars to manufacture batteries. They’ll make these batteries in their new seventy million dollar facility being completed on Bird Neck Rd. where the Owls Creek Golf Course used to be, and plan to have about eleven hundred employees at the facility. The batteries are a non-chemical type, making for clean manufacturing. More importantly, the Navy contract brings the manufacture of these batteries back to the United States, which in the current state of the world, is important for maintaining a continuous supply chain and that’s important for national security. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
While consumers everywhere are trying to do their part by supporting their favorite restaurants with pick up or delivery, organizations on both sides of the water are working to support all businesses in the 757. A regional task force of leaders from the regional Chambers, Workforce Councils, the Planning District Commission, ReInvent and ODU’s Strome College of Business created the website seven five seven recovery as a repository of information about federal and local resources to support businesses, as well as forums with experts who respond to questions. The task force is also compiling a survey of local businesses to determine needs, and using results to design additional services, as well as providing data to our state and federal representatives. Again, to ask experts, that website is 7 5 7 Recovery. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
DroneUp is a local company founded in 2016 that provides aerial data collection, training, program integration and equipment sales for aerial drones. The company has trained and has available over ten thousand certified drone pilots. They just acquired AeroVista Innovations, a Chicago-area company also founded in 2016 and will rebrand the merged company as The DroneUp Training Academy, a division within DroneUp. AeroVista brings expertise in emergency management and law enforcement, as well as an established training background similar to DroneUp’s, and the employees will come over in the merger. One goal for DroneUp is to be a one-stop shop for drone services for both commercial and government customers, and the company recently announced contracts with the states of Utah and Arizona for drone services. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Well, how quickly things have turned from the rosy forecast for commercial real estate made just a couple of weeks ago to today's reality. What we're hearing is that some deals are still moving as buyers and tenants are able to, but other buyers and tenants have lost the cash they planned for their acquisition. Other deals are halted because of the coronavirus pandemic lockdown. So, when the virus does run its course, real estate professionals are a bit worried that the move to teleworking will become permanent, reducing the need for office space. Now perhaps - that may happen. Bur some say that we'll see people come back to common workspaces. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Chmura released projected economic vulnerability report of the coronavirus on metropolitan statistical areas or MSAs, those regions used by the government to collate data. Our MSA extends into parts of North Carolina. For the MSA, we are at higher risk than average for the country. If the average is 100, they estimate we’re at a risk of 105 to 110, meaning slightly higher risk. But if you switch to the county level, we shoot to the highest level risk in Hampton Roads. Why? Because of the impact on the tourism and hospitality industry, as well as the impact on transportation, that is, the port. Further, the county view also shows significant vulnerability for the closest part of the eastern shore, again due to tourism. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Fed Chairman Jerome Powell says he expects the economy to rebound quickly once people are allowed to go back to work because the economy is fundamentally sound with no reason for continued recession. While many wish they shared his confidence, it's safe to suspect a fairly long recession will affect different sectors differently. For example, studies indicate that at least one-third of college-bound high school seniors are putting off going to college for at least a year. Another study indicated forty-two percent are undecided because college savings funds are being depleted early to pay rent and buy food when parents are unemployed. One result will be closure of an estimated twenty percent of colleges and universities. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Moody’s Investor Service downgraded higher education from stable to negative, warning investors about the potential inability of universities to pay off debt. The downgrade reflects the high costs of moving programs online coupled with likely revenue losses as students withdraw, either unable to move online or unable to pay tuition due to the loss of their own jobs. Add in the instability of the stock market and its damage to university endowments, non-tuition sources of revenue are likely to suffer. The impact of the virus on students is already being felt. Many students work in the hourly-types of jobs that are being laid off, such as in restaurants, retail and the like, leaving them wondering how they’ll survive. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The government has responded to the COVID-19 crisis with a massive economic stimulus bill.
Riding the stock market lately has been less like a roller coaster and more like riding the Tower of Terror, a 13-story drop at Disney World. We just experienced the fastest thirty percent decline in history, a rapid twenty-two days. And it took nearly seven weeks before we could get back-to-back days of average stock price gains, which happened last week. The daily volatility over the past two weeks has been greater than seven percent, according to Raymond James, and that is also a record. There have been three rounds of fiscal stimulus already: Round one was eight point three billion dollars, round two was one hundred billion and round three is two trillion, yet more may be needed in some sectors. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
As experts tear apart the two point two trillion dollar stimulus bill, or as some say, the survival bill, they are finding some unintended consequences, such as unemployment payments far higher than the wages that were earned for some workers. These are expected in any legislation this massive and written, argued, and voted on in about five days. There are some points to the survival bill that regular listeners know I support, such as if you want to receive federal aid, you can’t at the same time use your company’s cash to buy its stock back to bolster its price or pay big bonuses to executives. We need more execs like Marriott’s Arne Sorenson take a fifty percent pay cut through these times. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
If you haven't caught the theme over the past few days, all reports at the 25th annual Strome College Harvey Lindsay School of Real Estate Market Review were very positive. And Richard Counselman's report on Multifamily was no different.
I'm Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, and this is a Strome Business Minute. Mike Zarpas presented the Retail Real Estate segment of the 25th annual Strome College Harvey Lindsay School of Real Estate Market Review. We all hear about store closures, but Hampton Roads retail market is pretty healthy.
Deb Stern's Office Segment Report at the 25th annual Strome College Harvey Lindsay School of Real Estate Market Review declared last year to be outstanding!
We don't have the data for the 757 but the one region report that was released at the 2020 Shape of Region Conference Study, on the Northern Virginia region, demonstrates the importance of immigrants to the economy.
Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, shares Bill Throne's report on the industrial segment for the 25th annual Strome College Harvey Lindsay School of Real Estate Market Review.
The 25th annual Strome College Harvey Lindsay School of Real Estate Market review examined all segments of the real estate market, and last year was a great year in Hampton Roads. Barring a virus-caused recession, 2020 also looks bright.
Travel restrictions already dropped local hotel occupancy rates from 95 percent to less than 10 percent. Our local economy will be significantly hurt from the COVID-19 crisis as the canceled MEAC Tournament alone was worth seven million dollars, according to the Virginian Pilot.
As the impact of the coronavirus lockdown becomes clearer, economists are revising their forecasts for a recession.
Will the Corona virus trigger a recession? That’s the question on everyone’s mind and I think it will depend on where you are in the economy. Some sectors, like oil and travel, will experience a recession, which is technically two quarters of decline. Other sectors, like online retail, may not. The challenge will be stimulating the economy because there’s little the Fed can do with the funds rate, given that it is already near zero. The Fed did what it can, cutting rates in an emergency meeting a week ago. Congress, though, hasn’t done its part. A tax cut for lower-income workers is the best short term strategy but the best long-term thing they can do to boost the economy is infrastructure spending. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Amazon announced two new distribution facilities, one in Chesapeake employing 500, and one in Suffolk with 1000 workers. Some facts on these new facilities, which should come online next year, include that the Suffolk facility, at nearly four million square feet, will be the largest building in all of Virginia. In addition to more than fifteen hundred workers, the two facilities will also employ two thousand robots. What has been lost in the excitement of these two facilities is that Amazon is also building six solar farms to generate its own electricity, minimizing its carbon footprint. Importantly, it took the combined efforts of both cities, Chesapeake and Suffolk, but the projects also needed cooperation from Norfolk, which they got. Maybe regionalism is here. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The economic laws of supply and demand are best observed in oil markets. There’s no difference in oil pulled from Russia or West Texas Shale, except the grade so the only things driving price are supply and demand. And with the Coronavirus causing huge drops in air travel and other sources of demand for oil, the only way to maintain price is to cut supply. That’s what Saudi Arabia wanted to do but Russia refused, sending prices down more than 20% in the face of declining demand. Now add to that a plan by Saudi Arabia to increase supply by more than 25%. Yet futures prices rallied slightly in expectation of some increase in demand in April and May, as the virus threat passes. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jazmin Elliott, PR Specialist of the Strome College of Business at Old Dominion University, and this is a Strome Business Minute. I took six flights last week on American for business and every flight was full, with standby passengers that could not be accommodated. So when I read (REED) of empty flights and empty airports, I’m skeptical. I would expect any reductions to be limited to international travel, and that has been the case. But Southwest, which has almost no international routes, noted in a securities filing that it has been affected. According to the New York Times, Southwest CEO Gary Kelly said they began noticing the declines at the end of February, a few days before my travel. He said at a global air conference that the decline manifested rapidly. It’s too early to estimate the full impact or how long the decline will last. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The General Assembly agreed to raise the minimum age over the next three years to twelve dollars an hour, beginning with nine fifty next year. They also agreed to a regional study of wages that will guide future wage legislation but if the Assembly does not specify future wage increases, they will be tied to inflation. The regional study idea is in recognition of the differential impact of wages across our state. Urban areas can swallow wage increases more easily than can rural; in fact, urban employers will only see minimal impacts as competition for labor has already caused wages to rise well above minimums. Rural areas, with larger fixed income populations, can’t afford the higher prices caused by higher wages. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jazmin Elliott, PR Specialist of the Strome College of Business at Old Dominion University, and this is a Strome Business Minute. In anticipation of stock market slides, I sold some stocks early, planning to buy back in when prices are low. But how low will they go and for how long? Merrill Lynch has a list of fifty five stocks not directly affected by the COVID virus, like banks, as well as stocks that may be helped by the virus. But banks and others will be indirectly impacted. Look at it this way – travel has already been significantly impacted. If travel reductions affect our tourism industry, we will all feel it. Yes, there might be less traffic on 264, but there will also be fewer dollars spent in our region, hurting our retailers, restaurants, and hoteliers, which then hurts our accountants, banks, and everyone. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Dominion Energy scored a major victory when a Senate committee voted 8 to 7 to table indefinitely a bill that would establish state oversight of the company's rates.
The Stock Market continues swinging up and down based on Coronavirus news but after the big drops at the end of last week, most stocks were still ahead of where they were a year ago.
Games of skill or games of chance. No matter your position, they represent a great example of the economic principle of substitution. Michelle Carpenter reports.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. When Marc Benioff, founder of software giant Salesforce.com, bought Time magazine, people questioned his motives. An odd decision for a software mogul to buy a print magazine, to be sure. But what Benioff and Keith Grossman, the person he hired as president, have done is to reimagine Time as a content company. Like Disney or HBO, Time has an inventory of stories and the company is re-imagining how those stories can be presented. The first is the immersive virtual reality experience that puts the audience into the March on Washington so they can experience Martin Luther King delivering a portion of his I have a Dream speech. Adweek notes the strategy seems to be working as revenue is up nearly nine percent. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. In recent months, we’ve covered stories on the Navy Hill development in Richmond – their plans for a new coliseum and its impact on any possible coliseum in the 757, CoStar’s plans to relocate an additional two thousand employees to Navy Hill, and so forth. The Navy Hill development plans have been scrapped, however, as the Richmond City Council decided against proceeding with funding in spite of threats from CoStar to consider other localities for their relocation. CoStar has been silent and it appears that Navy Hill will be sold for smaller development. Perhaps they’ll consider moving here. Still, the decision to not build a new major league sized coliseum in Richmond should encourage local leaders to accelerate coliseum plans for the 757. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
One person’s troubles is another person’s opportunities. Or at least that’s the case in business. For example, Victoria’s Secret has experienced a number of problems lately, from styles that seem to have fallen from favor to executives that allegedly created an abusive culture. Their iconic fashion show was cancelled late last year, and the brand was sold to a private equity firm last week. ThirdLove isn’t wasting any time. The seven-year-old Victoria’s Secret competitor exhibited strong growth last year strictly through digital marketing. The company is now aggressively growing by opening stores in selected markets and, according to AdWeek, preparing to launch its own television ad blitz just as soon as they can hire an agency, to capitalize on Victoria’s Secret’s misery. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
Recently, ODU economist Jim Koch said that building Dominion Energy’s wind farms was a bad idea. He says Virginians who spend more on energy have less to spend elsewhere, resulting in substitution of jobs, not new jobs. He fails to see reduction of other costs, such as flooding costs associated with sea level rise, the cost of remediating mines and water sources, and other costs eliminated by substituting wind for coal. It’s like plastic grocery bags; paper or heavy-duty plastic bags require reuse at impossible levels to break even – though just keeping the bags out of the ocean may make them worthwhile. Economic systems are complex and simple trade-off analysis can lead to incomplete recognition of the full cost of a decision. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The Coronavirus has already affected the global economy and Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains why the impact will be felt for some time to come.
As Black History Month comes to a close, it is timely to ask - how far have we come in the business sector?
The Hampton Roads Chamber hosts a Diversity Forum twice a year to examine the business case for diversity, equity, and inclusion. In the February 2020 forum, the Chamber began an examination of metrics to assess how the 757 is doing, and how we can make inclusion a regional, competitive advantage. Here's a snapshot of where we are based on research by the Strome College of Business. 42 percent of organizations in Hampton Roads align diversity with business goals and objectives. 40 percent have strategies to ensure diversity in suppliers and contractors, but only 16 percent hold managers responsible for diversity outcomes. Where does your business stand? Is it willing to develop goals and strategies to help create a regional inclusion advantage for the 757?
Virginia Beach based Optima Health continues to improve member care management through innovative solutions.
Much has been made over the trillion dollar valuations of Google, Amazon and Apple, but less about the valuation of BlackRock and Vanguard. These two mutual fund companies control more than 10 times the value of any one of those companies, and more than twice of all of them combined.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. I thought it was just the loud rock n roll in my old ’66 Mustang that deafened me but there are quite a few restaurants I don’t like because I can’t hear any conversation. Turns out, I’m not alone and it’s due to the hard walls and ceilings in their design. And there’s an entrepreneur with a solution. Not the soft fabric wall coverings and ceiling tiles that deaden sound, it’s a high tech solution that allows for a loud environment but one in which you can hear your date. Like a cone of silence made out of sound, it’s called Comal Constellation. You feel like you’re in a party but you can still converse, which leads to higher sales and happier customers. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Norfolk Southern’s fourth quarter earnings declined five percent but that was less than expected by Wall Street. Revenues also declined nine percent, or about what was predicted. The better-than-expected profit decline suggests that the railroad’s better scheduling is yielding cost-saving efficiency at a faster than expected rate. One by-product has been the ability to idle a large number of locomotives, particularly less fuel efficient older models. Norfolk Southern also refurbishes locomotives to gain better fuel efficiency and lower maintenance. But the company has struggled to diversify from its dependency on coal shipments, which are declining. Slowing global trade reduces shipments through the port, but the company could see a shift back to trains from trucks as companies look to reduce their carbon footprint. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The Strome College of Business’s Dragas Economics Center recently held its 25th Forecasting Project luncheon and presented a ho-hum forecast for the Port of Virginia due to global headwinds in trade. Our port was constrained by construction which is now complete but our exports declined while Savanah and Charlotte gained. Some products, like automobiles, are now exported through ports closer to manufacturers, not our port. Our port has also been hurt by the trade wars, resulting in declines in exports of soybeans and grains, poultry, and forest products. While the recent Phase One deal with China may help increase exports, we also have to capture business away from Charleston, Savannah but do so when the forecast for exports is weak overall. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Vinod Agarwal of the Strome College of Business’s Dragas Economics Center expects a robust year for housing sales. Our market’s median price is under $250,000, and fifty seven percent of houses sold in Hampton Roads are also under $250,000. While most of the recent and forecasted increase in median price is at the lowest price level, the percentage of home sales in higher price categories is creeping up, and the total homes sold has also risen. Average monthly rent is now greater than average monthly house payments, and with growth that should follow the shipyard’s ramping up of its workforce to fill its carrier and submarine contracts, the market is moving toward a seller’s market for existing and new home sales. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The Strome College of Business’s Dragas Economics Center recently held its 25th Forecasting Project luncheon. Generally, the expectation for our region is good, with economic growth outpacing the nation’s for this year. Key to our expansion is federal spending, particularly on defense. Of course, Newport News Shipbuilding has carrier and submarine contracts that will support growth for a decade or longer. Overall, defense spending contributes forty percent to our economy, whether directly or indirectly. There are two ways to respond to this opportunity. The first is most likely to happen and that is to sit back and enjoy it. The second, which I prefer, is recognize that elections have consequences and take this opportunity to expand and diversify before defense budgets are cut. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Dollar Tree’s stock was downgraded by Bank of America from buy to neutral over concerns that changes to the Family Dollar stores will hurt margins. Family Dollar sells more discretionary products with higher margins while Dollar Tree’s product mix is made up of lower-margin supplies. As the merger continues, Family Dollar’s product mix, according to BOA analysts, is shifting to more of the lower margin products. They also cite leadership changes that put Dollar Tree execs in charge of merchandising for Family Dollar stores, a factor that will accelerate margin loss. Couple that with margin pressure from higher supply chain costs and the analysts are predicting continued margin decline this year. The stock is down over six percent since the first of the year. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Vegans and the lactose-intolerant may find themselves without products called milk if delegate Barry Knight has his way. He’s introduced a bill that only allows milk from an animal with hooves to be called milk in Virginia. Producers of soy milk, rice milk, almond milk, and other forms of milk would have to come up with a new name. The bill requires eleven other states to also adopt similar legislation before it can go into effect but we’d be first. His argument is that dairies are closing or struggling and need protection from confused consumers. Changing the name doesn’t mean those who want plant-based products will change their purchasing habits. Similar protections for animal-based meats were overturned in court, which is where this would end up. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
Don’t underestimate the power of consumer sentiment. When consumers as a group view the economic future as positive, we spend more, which then becomes a self-fulfilling prophecy as that spending then drives the economy forward. Flip that, and when we think the future is bleak, we spend less, and the economy suffers. A study just released by Roanoke College says Virginia consumers believe the housing market will be good this year but the numbers are down slightly from last summer. The index shot up last spring and then slowly declined but are still very positive, whether from a buyer’s or seller’s point of view. While better than a year ago, the index is still below the highs of 2014 and 2015. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Last Friday, the Strome College of Business and the Society of Human Resource Management released the results of the first Hampton Roads Workforce Summit Survey at the sold out Workforce Summit. Nearly 60% of regional HR managers expect their company to grow in the next five years, with one third expecting to accomplish that growth by including both project-based workers and independent contractors. Yet, a key finding in the study is that Hampton Roads companies are behind national averages in taking a strategic approach to Human Resources. Given the challenges of finding talent in this tight labor market, this limitation does not bode well for Hampton Roads companies. They also found that local companies fail to offer the benefits most desirable to millennials. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Norfolk-based medical device manufacturer Embody Inc. received a 2 point 5 million dollar federal grant for the second phase of development for its proprietary Microbrace ACL technology for anterior cruciate ligament repair of (ACL) injuries. This follows a nearly twelve million dollar DARPA grant for the first phase. Microbrace for ACL is a medical device restoring mechanical stability to the knee. It’s created from the biofabrication of collagen. Biofabrication is the automated production of tissues — often by 3D printing —combining cells and fibers into a device that can replace diseased or injured tissue. Embody is a Norfolk-based privately-held company founded in 2014 and develops implantable medical devices to be used for orthopedics such as Achilles tendon, rotator cuff and knee ligament repair. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. InMotion Hosting bought the Stratford University building in Virginia Beach to consolidate its local offices from 280 to 330 employees. The company is investing over twelve million dollars here and plans to grow. InMotion has offices in Los Angeles, where it began, and Denver, with this office opening in 2004 when partner Dan Cunningham moved here to follow his then wife. Since then, the company has found the workforce needed here by hiring people willing to work and providing them the technical training they need. Chenelle Harris, HR Director, says this gives them a uniquely inclusive culture. The company provides website design and hosting services, and is just one of the stories of our strong IT sector. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Downtown Norfolk is just a little more than a year away from losing its largest tenant, Norfolk Southern, but their building will likely have a new owner soon. Towne Bank, the largest bank in the 757, has said that it will not move to Norfolk from its campus in Suffolk; rather, I expect that the Corporate Banking team, brought over from SunTrust after the merger with BB&T, will locate there, along with other employees serving the Norfolk area. TowneBank released statement that negotiations to purchase the building are ongoing, and the final point seems to be a transfer of the parking agreement with the city at an adjacent garage. With 21 floors, TowneBank won’t fill it up but the sale is good news. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Up for discussion in the General Assembly is the right to work law, which allows workers in a unionized company to work without joining the union. Repeal of the law forces all workers in unionized companies to join and pay dues. According to George Mason professor Jeffrey Eisenach, a comparison of states with right to work to states without right to work indicates negative outcomes in states without right to work. Between 2001 and 2016, right to work states enjoyed lower unemployment, more than double job growth in the private sector, more than ten percent higher income growth, and significantly greater growth in per capita output and in manufacturing output. Further, companies are more likely to locate in right to work states. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Several bills to raise the minimum wage over time to fifteen dollars are being presented in our General Assembly. Other places have already done so with these results. Fast food employees will make ten to twenty percent more but over ten percent will lose their jobs. In Seattle, the net effect of a minimum wage hike was a reduction in earnings as hourly workers had their hours cut. Another likely effect is increased automation, as it becomes cheaper to replace people with machines. The federal government expects ten percent of affected workers to lose their jobs, but the tight labor market may reduce the impact. Wages have already risen for some but wage hikes without stronger upskilling programs may leave many workers unemployed. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Norfolk mall MacArthur Center will lose three more stores by the end of the month, J Crew, Fossil and Brighton. This mall is actually a good traffic mall during the year but the holiday season didn’t seem to go well as the mall was empty just before Christmas. The broader question being debated is whether there is a future for malls while the local question is what to do with MacArthur. What some call the death of traditional retail is really just normal comings and goings as fashion tastes change and companies fail to keep up. That’s my sense of all three – they have problems in merchandise mix rather than how they market. But that doesn’t answer the question of what to do with the mall. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Google announced last week that it will phase out third-party cookies in their popular web browser, Chrome, over the next two years. The initiative, which Google calls Privacy Sandbox and was first announced in August, will affect more than half of all web users. The plan is designed to increase privacy for users of Chrome while still maintain an ad-supported web, though advertisers are skeptical. What’s a third party cookie? It’s a tracking device placed on your computer by a company that wants to know where you go on the web and is used to determine what ads you see. You can block cookies through your web settings, which is Firefox’s default setting but Google’s plan means that you won’t have to. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Cincinnati-based Bon Secours Mercy Health continues to acquire Virginia hospitals, buying Petersburg’s 300 bed Southside Regional Medical Center, the 105 bed Southampton Memorial Hospital in Franklin and the 80 bed Southern Virginia Regional Medical Center in Emporia. All three were purchased from Community Health Systems, a Tennessee-based company operating hospitals in 17 states. With the sale, Community Health exits the Virginia market, while Bon Secours now operates forty eight hospitals in seven states and Ireland. A Robert Wood Johnson study found that when consolidation of hospitals concentrates market power, price increases and quality decreases. It’s unclear whether these changes concentrate market power any further but it’s basic economics: Without competition, there is less incentive to provide higher quality care and to maintain lower costs. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. What’s Popeye’s favorite food? In the sudden death round of Family Feud Canada, Eve Dubois confidently replied, “Chickeeeen!” As her family groaned of dismay, she quickly realized she had made a ten thousand dollar mistake. In case you’re wondering, they meant Popeye the Sailor and his favorite is spinach. But Popeyes Louisiana Kitchen was thrilled with her response. So thrilled they gave her ten thousand dollars! Well, ten thousand dollars’ worth of chicken! The video of her response went viral and gave Popeyes the kind of exposure that you just can’t buy. Just as important, Popeyes’ marketing director Bruno Cardinali, noted that her response shows how strongly the brand is growing, even in Canada where they are relatively new. Maybe it’s due to their sandwich. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Back in October, Virginia signed a deal with Dominion Energy to buy renewable energy, including wind-generated. But Virginia is one of nine states that doesn’t yet produce wind energy. That’s about to change. Dominion announced the signing of a contract with Siemens Gamesa, a Spanish manufacturer of turbines, which will be installed on the Coastal Virginia Offshore Wind farm just off Virginia Beach. Construction on the wind farm actually began last June and is expected to be complete later this spring. While Virginia has a goal of generating thirty percent of energy needs by wind before 2030, a goal for this farm is to determine how many turbines will be needed and whether offshore wind farms will generate more electricity than on shore. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. CoStar, the Richmond-based real estate data company that owns familiar brands like Apartments dot com, plans to double its workforce in Richmond, from one thousand to two thousand workers. Nearly five years ago, when the company first located in Richmond, they announced plans to hire seven hundred and fifty people, so this growth has been very rapid. The company will occupy a new building in the Navy Hill development in downtown Richmond, as part of a revitalization of that area. This is the same area where the proposed arena will be built. CoStar CEO said that without the Navy Hill project, this workforce growth would have gone elsewhere. In addition to the arena, plans include a convention center, retail and restaurants, housing and more. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. We talk a lot about diversifying our local economy, but people often overlook our strong and growing food industry. From peanuts and coffee to seafood and soybeans, we have a strong food industry in the 757. Now add olive oil. International olive oil manufacturer Acesur USA LLC purchased an eighty eight thousand -square-foot, two-story manufacturing facility in Suffolk for just over 5 million dollars where they will manufacture olive oil. They import the olives from Spain to make the oil and they have other another plant in NY. Acesur has been producing, packaging and marketing olive oil since 1840 and is headquartered in Dos Hermanas, Seville, Spain. It bottles olive oil brands such as Coosur and La Española and exports to more than 80 countries. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Zombies are the walking dead. Zombie companies are those unable to earn enough to cover their debts three years in a row. They’re already dead, but super low interest rates allow them to borrow money and walk around, sucking up labor and capital that could be better used elsewhere. Moreover, they tend to borrow from weaker banks, further draining the economy. But Denmark’s Central Bank has charged negative interest rates for nearly eight years where zombies have actually declined and the overall level is low compared to other countries. One reason is that there is little reason to stay in business if it’s failing; employees are well-taken care of and owners don’t retain the company debt there, which is so often the case here. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Federal taxes change in several ways this year. For example, for divorces taking place last year and into the future, the person paying alimony now has to declare it as income and pay taxes but the recipient does not. If you divorced before last year, there are no changes. Retirement savings have also changed. Max contributions have gone up for individuals and for companies, plus you can now contribute to your IRA no matter how old you are, as long as you have earned income. You also don’t have to take any out until you’re 72. There’s also a new shorter form for filing for seniors 65 and older. As always, though, consult a tax professional to see how these changes affect you. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Companies used to locate by natural resources – like steel companies near iron ore and coal mines. Now they locate where the workforce is. The Brookings Institute reports that 90 percent of all new STEM jobs were added in Boston, San Francisco, San Jose, Seattle, and San Diego, places already high in STEM workers. Their job growth constrains housing supply causing prices to rise. Infrastructure, like roads and utilities, can’t keep up either. Furthermore, these jobs that command high salaries, pricing smaller companies ut of the market for labor. You’d expect jobs to move to lower cost areas, but most of that is to offshore tech hubs. While secondary hubs can develop around strong STEM universities like ODU, it’s a long process requiring strong regional cooperation. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Huntington Ingalls, parent of Newport News Shipbuilding, saw a significant increase in short-sales during the first two weeks of December. Short sales are an investment where you borrow stock and sell it. When the loan is due, you have to give stock back, so you hope the price goes down so you can buy it back and repay the loan with lower-cost shares. Your profit is the difference. Buy a stock at ten dollars, sell at eight, and you make two dollars. Short sales increased over twenty percent in the first half of December for Huntington Ingalls, which means more people think the stock will go down. However, total short sales only represent about two point three percent of the outstanding shares. To find out more, visit odu.edu/business. This Strome Business Minute has been presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Over the holidays, the question I got asked the most was, “Can the stock market stay healthy in the coming year?” The answer is yes of course, but don’t expect an increase in the Dow of twenty-eight percent like last year. That increase came off a major decline in December 2018. But even the two-year increase in the Dow was pretty phenomenal. The real question isn’t whether stock prices will go up but whether earnings will. Unfortunately, predictors don’t look good. Manufacturing numbers are down, as is the Conference Board’s Consumer Confidence Index. Barring a trade war or a shooting war, the economy should grow slowly, which could mean greater stock price volatility as earnings vary, but relatively flat or modest overall market growth. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. If you own Dollar Tree stock, you don’t have to sell, though you may have gotten an offer from TRC Capital Investment at $89.88 per share, more than 4 percent below market value when the offer was made. They made a mini-tender offer, any offer for less than five percent of the outstanding shares of a company. It doesn’t mean that TRC wants to acquire all of Dollar Tree and there is no relationship between the two companies. So why do it? Sometimes, buyers want to catch shareholders off guard or create concern that the stock may fall and make a quick buck when shareholders sell at the offered price but if you have Dollar Tree, you don’t have to sell your stock. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Only a little more than twenty percent of America’s hospitals are for-profit, a fact that doesn’t seem to affect health care costs. In fact, hospitals account for more than four times the cost of health care than do prescriptions. President Trump’s administration just finalized a rule that requires all hospitals to provide greater pricing transparency, and no, hospital administrators are not happy. But such transparency is necessary for competition, and greater competition should drive costs down. Indeed, hospitals have been merging at an increasing rate to achieve economies of scale and stronger negotiating power with insurers, but these mergers have also created markets with little or no competition. Transparency by itself won’t matter if there are no competitors. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
The Navy is adding two carriers, at a time when many other countries are also making significant additions. China plans to have six, Japan is converting two destroyers to carry jets. It’s easy to see why – in Korea, carrier planes flew forty percent of the missions, in Viet Nam it was over half but in the Afghan war, it was three fourths. But while we have twice as many as China, some critics question whether these behemoths are the best option. Long vulnerable to submarines, many smaller ships are now carrying rockets and missiles that can not only go farther than planes, but as General David Berger wrote, increasingly place carriers at risk. It’s good that we also build submarines in our region. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. SVT, a robotics programming company, has grown significantly since I first met them as part of 757 Accelerate. 757 Accelerate is a program funded in part by Go Virginia that provides coaching and training to entrepreneurs who have started a company but need to accelerate their growth. The program was developed to keep start-ups here in our area, rather than leave to find help and funding in other cities. SVT just opened a six thousand square foot production facility in Ghent, sharing a building with Troopster, another 757 Accelerate graduate. SVT employs seven people locally and three elsewhere, and plans to double in twenty twenty, which is exactly the type of growth envisioned when 757 Accelerate was created. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Regrets, I’ve had a few, but I’m no Frank Sinatra. In a recent study, three out of four said they have at least one financial regret. No surprise, most of those with a regret said it wasn’t saving enough, and number one on the list is that they didn’t start saving for retirement soon enough, followed by those who just don’t maintain an emergency fund. Third among the saving regrets was not saving enough for college. The reason people don’t save enough is pretty simple – they spend too much. But many spend too much because they don’t know what the right amount is to spend, such as no more than twenty-eight percent to ALL housing expenses and no more than thirty-six percent toward all obligations. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The problems with Boeing’s seven-thirty-seven Max have proven to be much harder to fix than a simple software glitch it was first thought to be. Production has halted and JP Morgan says the company will burn through one billion dollars a month while shut down, mostly to support suppliers. Boeing is also paying customers like Southwest Airlines and American hundreds of millions in compensation as they cancelled thousands of flights that were depending on the new aircraft. While the compensation Boeing is paying is a secret, Southwest shared one hundred and twenty five million dollars with its employees as a year-end bonus. No word from American on their use of funds but they are still embroiled in a labor dispute with their mechanics. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Amazon closed last week on ninety five acres in Suffolk, close to Interstate six sixty four and the Port. While Amazon has confirmed the purchase, they won’t say what the land will be used for. Speculation, though, is that Amazon will build a fulfillment center there. After all, last summer, the Army Corps of Engineers entertained a proposal for a fulfillment center on that site, which requires a site plan permit approval. And a July report from the Hampton Roads Economic Development Alliance pointed to a fulfillment center coming that would result in one thousand new jobs. But what exactly is a fulfillment center? While it’s not a where you find personal fulfillment, it is a special kind of warehouse where Amazon fills orders. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. According to a study in the Journal of Consumer Psychology, a badly wrapped gift is more appreciated by someone if they already know and love you. If you don’t know them well, then the gift is more appreciated when wrapped perfectly. It seems our expectations of the gift itself are influenced by the wrapping. What a relief for sloppy wrappers like me! As we end our second year, I’d like to thank Rick Smith, studio engineer, Jeff Sandner, post production, and Chuck Doud, producer for all of their work to make this show a success. I’d also like to thank professors Michelle Carpenter and Ron Carlee for filling in as hosts from time to time throughout the year. Happy holidays to all of you and thank you for joining us on a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. According to the Wall Street Journal, investors have moved one hundred and thirty five billion dollars out of stocks and into bonds and ETFs, investments that are less volatile and safer than stocks. Beginning last year, the outflow has accelerated as global trade wars continue. In fact, recent signals that the war with China could reach some resolution led to five billion moving back to stocks in just one week, but any negativity will likely see it leave again. Most of the outflow has come at the expense of mutual funds, as it is the retail customer, the individual investor, who is most worried but corporate demand for stocks is also slowing. If this continues, expect more volatility but a flat market overall. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. When shopping online, people use reviews but how depends on the situation. Strome professor Yuping Liu-Thompkins says consumers rely on how many people say they like it when the objective is to gain something good but when the product is bought to avoid something bad, the actual rating score is more important. So a stock broker is selected by how many people like it while an insurance agent may be chosen based on the rating score. But can we trust reviews? Amazon reported blocking thirteen million bogus or fake reviews last year. Reviews matter, as Yuping says a ten percent increase in rating volume yields a three point five percent retail sales increase while a ten percent rating score increase doubles that gain. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Celadon, one of the largest companies you’ve probably never heard of, declared bankruptcy last week, throwing thirty-two hundred drivers out of work. Reaching one billion dollars in revenue in twenty fifteen, an investigation for accounting fraud certainly played a role in Celadon’s bankruptcy. But trucking companies have gone under at triple the rate this year over last, with six hundred forty shutting their doors. Trucking volume is down significantly, declining steadily all year. Manufacturing volume has also declined, meaning less to ship. These declines have also been felt by truck makers, with Cummins announcing layoffs for two thousand workers just before Thanksgiving, a startling reversal from a strong twenty eighteen. Used trucks from bankrupt companies will only make the problem worse. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Michelle Carpenter in the Strome College of Business at Old Dominion University and this is a Strome Business Minute. The State Council of Higher Education issued the Commonwealth Research and Technology Strategic Roadmap, which identifies research areas that will yield the greatest impact in economic development. The report says research and investment in life and health sciences; autonomous systems; space and satellites; agricultural and environmental technologies; cybersecurity; and data science and analytics will have the greatest impact. ODU is leading in all areas. ODU’s Cybersecurity Center is one of five designated by the federal government as a center of excellence, work with NASA includes numerous small satellite launches carrying ODU designed experiments, we have globally-recognized leaders in analytics, leading scholars in health sciences, and marine science and coastal resiliency efforts are yielding new approaches and technologies. To learn more, visit odu.edu/business. This Strome Business Minute is presented by Strome College of Business at Old Dominion University.
A recent study published by the Journal of Consumer Research finds that some people are more likely to be victims of investment fraud.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. If you’re a boomer who likes antiques, you may already know that millennials don’t. Prices for antique furniture and other forms of antiques are falling. Like one antique dealer said about antique sales, if it’s brown, mark it down. One thing about that furniture; it might be easier to dispose of than the retirement homes boomers have built. According to Laura Kasisto of the Wall Street Journal, boomers will vacate one out of four homes over the next two decades, more than the houses built over the past two decades, many that are in retirement communities complete with golf, shuffleboard, and other amenities millennials don’t want. Boomer homes may solve the affordable housing crisis, if we can locate places to work nearby. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Alarm bells are sounding over corporate debt. As I’ve pointed out before, companies such as AT&T, GM, and other well-known names have taken on significant debt but the current increases in corporate debt are primarily being taken on by weaker companies with higher risk. The debt comes in the form of bonds, many of which are considered junk or near junk. That shift in debt to weaker companies has been prompted, in part, by a lack of investment options with decent returns, so investors have been willing to take on the added risk. The fear, of course, is that if interest rates rise, we’ll see a bubble that bursts much the way consume credit did in two thousand eight, leading to our last recession. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Kissinger recently likened trade wars to the Cold War, anticipating long lasting warfare. While many are looking for a short-term resolution, ODU professor Shaomin Li is forecasting long term effects of the trade war on China. He notes surveys that indicate companies are either foregoing planned investments or considering moving operations to other countries, a shift he says had already started but accelerated due to the trade wars. Japanese and American firms are moving their operations to South Asia and Mexico, according to his study just published in the Chinese Leadership Monitor. Prior to tariffs, rising wages, a challenging political economy, and other factors were causing businesses to reconsider China; tariffs have just pushed them to act, and it’s these actions that will have long-lasting effect. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. I honestly thought Lord and Taylor was dead and gone but it’s not. Bought by a clothing rental company, Le Tote, in August, the deal included free rent for three years and closing five stores. One of the closures before the sale was the company’s flagship in New York City, which was nearly seven hundred thousand square feet. Lord & Taylor’s previous owner, Hudson Bay, sold the eleven story building to WeWork, a company struggling financially. Let’s hope they got paid in cash. Lord & Taylor’s new owners are now launching a new New York City store, a tiny twenty four hundred square feet or less than one percent of the old store’s footprint. Perhaps this type of reduction is the direction all retailing will take. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.
In honor of the 18th anniversary of Enron’s bankruptcy, let’s take a look at the 6 largest bankruptcies in American history. Enron’s was notable for its impact on Pacific Gas & Electric which also filed for bankruptcy due to Enron’s manipulation of energy prices, the same PG&E which filed for bankruptcy again earlier this year due to the catastrophic California wildfires in 2017 and 2018. Like Enron, WorldCom, one of the biggest US telecom providers, was a house of cards built on illegal accounting manipulations, and like Enron, saw its CEO go to prison. GM, Washington Mutual, CIT and Lehman Brothers round out the group, all of which went down in the 2008 recession. GM and CIT both recovered while the rest are all memories.
MasterCard released its third annual study of women entrepreneurship and noted that for the first time, the US ranked first, narrowly edging out New Zealand. Other top countries included Canada, Israel, Poland and the Philippines, countries with very different histories, which signals the possibility for progress. At the bottom are middle-eastern countries which restrict women’s freedom. African countries are most likely to exhibit a gender balance in actual entrepreneurship. Other factors that make up the index include market factors such as labor force participation and financial market inclusion, education, and cultural inclusion. Mexico, Sweden, and Saudi Arabia saw the biggest declines year over year, but the study was created to encourage and mark improvement, such as France, Taiwan, and Indonesia.
Recently, we noted that strong consumer confidence bodes well for the holiday retail season and into 2020. But consumers are only part of the overall economic picture and as we’ve noted before, the two types of spending that really drive an economy are the higher dollar purchases, such as durables and new construction. The Construction Confidence Index was just released and while it shows that construction companies expect continued growth, the index declined due to supply cost pressures and challenges in finding labor. The Associated Builders and Contractors Association conducts the survey and reports that sixty percent of companies expect sales growth in 2020. These national results mirror what I hear from local contractors – lots of work but margin and labor pressures.
General Dynamics Electric Boat division and Huntington Ingalls’ Newport News Shipbuilding just closed a joint twenty-two billion dollar deal with the US Navy to build nine Virginia-class submarines. The contract is the largest ever awarded by the US Navy, some 50% larger than the 2 carrier deal awarded earlier this year, and includes an option to buy a tenth submarine. The first submarine under this contract will be delivered in 2025; the Navy already has eighteen of the fast attack subs in the fleet with more on the old contract. Newport News Ship and Electric Boat both had to double production to two subs per year in order to win the joint contract, which includes a version with three times the Tomahawk missile capacity.
Last week, Xerox offered to buy Hewlett Packard. Which they turned down saying it was too low. Xerox countered, saying that if the HP board didn’t meet with them by the 25th, then they will begin a hostile takeover. HP again said no, daring Xerox to act. I suspect this is just negotiating. Meanwhile, Charles Schwab offered to take over TD Ameritrade. The market loved this, with the stock prices of both companies surging on the news. Schwab and other brokerage houses aren’t making any money since trade fees are low or nonexistent. Ameritrade brings complimentary business lines and the possibility of cutting overhead in half. One challenge is forty-three percent of Ameritrade is already owned by a Canadian bank.
The state-funded study examining the economics of five resort-style casinos across the state is out. The report says seventy six hundred jobs will be created with a median salary of about thirty-three thousand dollars, meaning half will be well below livable wages. In addition, the study says that the Danville location will have the greatest out-of-state revenue, or about thirty-two percent. That means that the best case scenario still requires local consumers to be successful. In Norfolk and Portsmouth, nearly all of casino revenue will come from consumers shifting spending from other purchases to casinos, as reported by our State of the Region study done in 2015, so the high estimates of tax revenue are really just shifts from one source to another.
Disney signed up 10 million customers for its new streaming service, Disney Plus, on the first day. Home to the Star Wars series Mandalorian and the Marvel series, the channel is off to a great start. The question for investors is whether a highly-fragmented streaming market is sustainable. Imagine no cable TV or Netflix or Hulu that carries the most desired channels. Want sports? You have to subscribe, not to ESPN, but to the NFL channel, the MLB channel, and so forth. Each college conference could have its own channel. That extreme situation is unlikely. Disney and a few others might create premium content channels but whether they can generate enough premium content to sustain an audience over time is questionable.
Some folks love the electric scooters, others despise them, but the business model isn’t working for everyone. Lyft and Uber have both found themselves unable to make money in some markets. Both companies left the Atlanta market, and Lyft also exited Dallas, San Antonio, and three other cities. Uber’s Jump left San Diego because of problems with the city but they left Atlanta back in September due to low revenue. Eight companies have tried Atlanta so far but they’re now down to six. If you don’t like the scooters left lying around, imagine that times eight. Whether you are a fan or not, as has been the case with a lot of new technologies, the market is getting saturated but it will settle out.
Nike is dumping Amazon. Yup, Nike is leaving Amazon to sell direct to consumers. Amazon is estimated to control forty percent of the country’s online market, yet Nike is stepping away. The company said that the move is part of Nike’s focus on elevating consumer experiences through more direct, personal relationships.
Virginia Beach’s LifeNet Health acquired Samsara Sciences, a San Diego-based life sciences company. Samsara specializes in human primary liver and kidney cell isolation, research in primary cells that fits with LifeNet’s focus on regenerative therapies.
Commercial Property Accessed Clean Energy, or C-Pace, is a financing program for commercial property owners and developers to fund energy efficiency and storm water resiliency projects. A market-based program, C-Pace offers 100 percent private financing. Rather than a down payment, the lender is protected by a lien similar to a tax lien. Approved projects improve the building or property and often reduce operating costs – which helps attract and retain businesses, creates construction jobs, increases tax revenue through higher property values, and provide incentives to build to green and resiliency standards. Arlington, Loudoun, and Fairfax, and the City of Fredericksburg, have already enacted ordinances to establish C-Pace. It would make good business sense for Norfolk, Virginia Beach and other Hampton Roads cities to adopt C-Pace as well.
CoStar, the Richmond-based company with brands like Apartments.com, is both a platform for buyers to find properties and a data company. In fact, data is really the company’s bread and butter. The NASDAQ listed company employs about one thousand analysts in Richmond. They just announced plans to buy STR, a hotel data analytics company that provides reports monthly on the hotel industry to over one million subscribers. STR is located in Hendersonville Tennessee and employs three hundred seventy people in fifteen countries. It’s too early to know how many jobs will be relocated to Richmond. While the stock is off its high of six forty at about five fifty, it is still up over fifty percent for the year.
The Dow hit twenty eight thousand last Friday and the stock that has contributed the most to the run-up since last July is Apple. Just FYI, I sold my stake in Apple and missed most of this run-up. Apple has contributed forty-two percent of the last one thousand points. The increase is due to the strong sales of the iPhone Eleven and robust sales of Apple services. JP Morgan and United Technologies are up more than thirteen percent in the same period. At least I have some JP Morgan. Even Boeing is up, though only three point six percent. The American consumer is fueling a strong economy, with retail sales revised up in October. Barring trade war disaster, this market could continue to grow.
In my early career, I worked for Xerox and watched as the company that invented the technology that made Apple computers possible, offered the first computer networks, and created artificial intelligence products fail to capitalize on any of these. The printing and copying company is now banking on a future that includes another faded glory, Hewlett Packard. Xerox offered to buy HP, which looks like the merger of two buggy whip makers. For the millennials, buggy whips are used to make horses go when they pull a buggy – all outdated technology. Yes, the new company will be seventy billion dollars in revenue, a huge printer and PC maker but these are commodities. The real challenge will be finding new products and services.
Southwest Airlines just cancelled all flights for the Boeing seven thirty seven Max through March, as Boeing continues to work on problems that led to two crashes. The software glitches were expected to be fixed in a matter of weeks but Bloomberg reports that flight simulations last June identified additional problems stemming from antiquated computer systems. Boeing hopes to have fixes in place and the plane certified to fly by the end of this year, but Southwest’s decision to pull flights through March is important. Southwest flies nothing but Boeing seven three sevens and their delay will likely be matched by other airlines. In addition, Southwest’s board ordered the company to look at buying alternative planes, a major shift in strategy.
Ferguson’s fiscal year ended this month with a solid 8 percent year over year growth in revenue and a slight improvement in margin. Earnings per share, though, grew over sixteen percent. These results mark the ninth year in a row for growth in all of the key areas.
Towne Bank announced earnings last week that beat Wall Street estimates but were down off a year ago. The Street had expected fifty-one cents per share but the bank came in a fifty-two, just below last year’s fifty-four cents per share. Revenues were one hundred and forty six million, right at the estimate and up more than five percent over last year’s one hundred and thirty-eight million. Towne Bank shares are up nineteen percent, just a little below the S and P 500. Towne Bank has been aggressive in snagging top talent away from Sun Trust and BB&T following the announcement of their merger. They also continue to be aggressive in growing through acquisition, with rumors of additional purchases outside of Virginia to come.
Dominion Energy just released a green energy plan that consumers can purchase. But big customers like Walmart are pushing back. The pushback stems from the fact that Dominion is packaging energy from four coal-based plants with eight solar and two hydroelectric sources and calling it renewable. State regulations allow that because some coal plants also burn biomass. According to the Virginia Mercury, Walmart’s Lisa Perry told state regulators that Dominion’s plan would stifle renewable energy investment and innovation. The Renewable Energy Buyers Alliance, which includes General Motors, Google and Amazon, opposes Dominion’s proposal, because if regulators approve the proposal, Dominion is granted a monopoly on renewable energy, effectively ending investment by potential providers.
The largest toy distributor in the world is McDonald’s. The first Happy Meal with a toy was sold forty years ago and now they sell one point five billion Happy Meals a year!
Henrico based Altria is writing down four point five billion dollars in its investment in Juul, the e-cigarette leader. Altria has nearly thirteen billion invested in the San Francisco-based company, which many saw as the future of smoking. But there have been almost forty deaths attributed to e-cigarettes, along with nearly nineteen hundred vaping-related cases of lung disease in the US. This type of write-down is called an impairment charge. The company has reduced its assets in the goodwill category, meaning there is no physical asset or cost associated with the write-down. The write-down is taken as an operating expense, reducing net income. Should the Altria sell its Juul stock, then there would be either income or losses based on the price of the stock.
The Federal Reserve cut the rate it charges banks for the third time this year. The last time there were three cuts in one year was 2007. The cut lacked the normal broad support among members of the Fed, but failure to cut the rate would have caused the stock market to stumble. Not a good thing right before an election.
Baltimore-based Under Armour is under investigation for possibly shifting sales from one quarter to another in order to create an appearance of better results. The investigation began two years ago shortly after the company first experienced major losses. As one analyst put it, the brand became just another in a sea of brands. Sales are down three percent this year and the stock fell ten percent in pre-market trading on this news. Founder and CEO, Kevin Plank, will step down January first and be replaced by Patrick Frisk, currently the company’s chief operating officer. While the replacement of Plank is probably more about getting the company turned around than the investigation, as one Bloomberg analyst said, where there’s smoke, there’s usually fire.
I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Have you see the new Coors Light commercials promoting the brand as the official beer for breakfast, the official beer of playing golf just to drink beer, and the official beer of being done with wearing a bra? Maybe it’s just me, but other than the no bra at the end of a workday, these promote irresponsible beer consumption.
While the economy seems to be slowing, Virginia is adding jobs. Virginia’s unemployment rate is at the lowest in eighteen years, two point seven percent, compared to three point five percent nationally. Hampton Roads unemployment is about the same as Virginia at two point eight percent. The number of Virginians working, four point four million, is the highest ever. If a slowdown results in job losses elsewhere, Virginia should remain employed, if skills can match the needs of Amazon and Newport News Shipbuilding. Americans are less likely than ever to move from depressed areas to new locales to find work, so we may have to grow our own, something we should be able to do between our colleges and transitioning military personnel.
Hampton Roads is a hot residential real estate market! Okay, maybe it’s not like San Francisco but home sales are way up. Homes under contract jumped thirty percent last month, and closings were up thirteen percent. The median price of a home was up over six percent to two hundred forty nine thousand, and distressed sales, or sales of homes that have been foreclosed, was at its lowest level in over a decade. New home sales in the four hundred thousand range have been selling very quickly over the past couple of years, and it now appears that the entry level market is catching up. Inventory has also declined, good news for folks who want to sell or trade up.
Last week, Strome College invited marketing industry experts to share their expertise during Marketing Week, a joint event sponsored in part by the American Marketing Association Professional Chapter in Hampton Roads. Our keynote speaker for the week was Jaclyn Ruelle, the new Managing Director of Cultural Impact and Brand Communications at the Martin Agency. Ruelle shared how too many brands have become complacent. The best brands know how to get noticed and tell the story – they do it by finding some tension in what they’re talking about and using insights or data points that make the brand edgier. A good example – the latest Land O’Lakes campaign who by changing one pronoun to “she” hit a home run and has inspired future female farmers and changed the way an entire generation sees farming.
Regular listeners know that we’ve been covering the opioid lawsuits for over a year, well before the story became mainstream. The proposed settlement in Ohio by McKesson, Cardinal Health, Teva Pharmaceutical and AmeriSource Bergen with the two counties who sued will close two of the first lawsuits brought and will trigger similar settlements in over two thousand more lawsuits. Henry Schein, another defendant, appears to have settled separately while Walgreens has refused to do so. Denying any culpability, this is the same Walgreens that is being sued by the state of Florida for allegedly selling 285,000 opioid pills per month in a town of 3000 people and another Walgreens sold 2.2 million pills a month in Hudson, Florida, population 12,000 in 2014.
Virginia just cut a deal with Dominion Energy to buy renewable energy. Most of the energy will come from Dominion’s solar installations, and we’re buying the equivalent of what’s needed to power one hundred thousand homes. Virginia has the potential to be the east coast leader in renewable energy, especially wind, but is way behind other states. The wind energy generated in this agreement is from an on-shore installation that has yet to be built. In fact, this would be Virginia’s first wind energy installation, as the Commonwealth is among only nine states without wind energy. Virginia, though, is kicking things off in a big way, as the National Governor’s Association says this is the biggest single contract for renewable energy by a state.
Straws can be made out of paper, as can cups, egg cartons, and even those rings that hold a six-pack of beer together. So Carlsberg beer is exploring whether cans of beer can be made from paper. Using a thin plastic film to create an interior bladder protected by a wooden fiber, or paper, shell, two different versions were designed. One uses recycled plastic while the other uses a bio-based plastic like you’ve seen in the corn-based coke bottles. University researchers from the Technical university of Denmark played a part in the design, leading to the creation of a paper bottle company that is also working with Coca Cola, Absolut, and L’Oréal. The question remains as to whether consumers will accept these products.
Virginia is one of the laxest states when it comes to payday loans, according to a recent Pew Research report. The report examined the effects of such loans and found that one in eight Virginians have a vehicle repossessed every year, one of the highest rates in the country. And four out of five repossessed vehicles are sold because the owner can’t afford to reclaim them. Virginia’s small loan laws are among the weakest in the country, with no limit on interest rates, which leads to three times the interest charged in other states. Other states like Ohio and Colorado have more stringent laws, reducing borrowers’ costs and protecting consumers who are unable to save sufficient amounts must borrow small amounts when emergencies arise.
Consumers, like it or not, make choices based on CEOs. Recently, a school rejected a free lunch from Chick-fil-A because of the owner’s anti-LGBT stance. The company has tried to stay out of the fray over the owner’s conservative values, but the reality is the company is privately-held and reflects the owner’s values. But does a public company deserve consumer backlash? Public company Papa John’s lost sales over its founder’s racist comments. Dick’s Sporting Goods CEO ordered the removal of assault-style weapons from stores, destroying over five million dollars in inventory rather than allow someone else to sell them. Sales declined two hundred and fifty million dollars afterward as some consumers protested the move. Like it or not, consumers do make choices based on CEO actions.
The Regional Greenhouse Gas Initiative, or RGGI, generated $315,000,000 last year for 9 states from Maryland north to reduce greenhouse-gas emissions and fund resiliency. Companies purchase carbon allowances to offset their CO2 emissions and decide how to meet a regionally set cap. Quarterly auction proceeds return to the states. Joining RGGI could generate $50,000,000 annually for Virginia, money that could be used for developing clean energy while reducing greenhouse gases. Governor Northam has listed joining RGGI as a top priority for the 2020 General Assembly. Funds generated by it could be used to spur investment in offshore wind, helping Virginia become the East Coast hub for offshore wind production.
Costco is building a chicken processing plant to keep the cost of their rotisserie chicken to four ninety nine. Such a move is called vertical integration. Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains.
Virginia Business magazine reports that consumer goods company SRP is consolidating its distribution centers from Oklahoma, Philadelphia, and Utah to Virginia Beach.
Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains selling shares.
The UAW strike at GM is said to be costing the company 90 million dollars per day, but that's not the only strike. The BAE Radford Army Ammunition Plant here in Virginia is locked in a labor negotiation over jobs.
Virginia Business dot com reports that CEO’s of Virginia’s 40 largest companies enjoyed a 12.5 percent raise in earnings in 2018, averaging just over 8 million dollars in total compensation, including bonuses and stock options.
You may have seen that the ship that skims plastic out of the ocean finally seems to work after a number of engineering changes. That's good news, but now what do we do with all of that plastic?
Dollar Tree is planning to hire 25,000 temporary workers for the holiday shopping season nationwide, according to Bloomberg News. Sounds like a lot, but not when you realize that’s less than 2 people per store as the company has over 15,000 stores.
GOBankingRates released a report showing 5 cities in Hampton Roads with higher than average rates of underwater mortgages. A mortgage is said to be underwater when the value of the home falls below the amount still owed on it.
Johnson and Johnson made the raw opium used in opioid manufacture, and there are over 2,000 lawsuits regarding the epidemic with more being added. Last week, the company agreed to pay 20.4 million dollars to two counties in Ohio.
Hemp is the plant that provides CBD oil, which is being touted as the new wonder supplement. Hemp is in the top 20 farm products produced in Virginia. But up to now, hemp farmers cannot buy insurance.
California's new law allowing amateur athletes to retain their amateur status, while receiving financial benefits from the use of their name and image, is shaking the foundation of the NCAA.
Hampton Roads has finally begun to enjoy the type of economic growth that others have following the great recession.
The internet is clearly a marketplace for buying and selling, but it is also a marketplace where people can rent. Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, discusses more on sharing economy.
Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains quantitative easing, or QE.
Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains the Fed rate and repurchase agreements.
Three Chambers of Commerce just got back from an inter-regional visit, or IRV, to Raleigh Durham. Just what is an IRV? Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains.
You may recall a report earlier that Trian, a private equity firm that owns 6% of Ferguson, advocated that Ferguson sell its UK operations. Earlier this week, Ferguson made the announcement that it is going to do just that. Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, has more.
A Strome alum was describing his job at a hedge fund, where they buy distressed debt. They buy companies that are about to go under, turn them around and resell them. Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, explains more about hedge funds.
Jeff Tanner, Dean of the Strome College of Business at Old Dominion University, discusses inflation rates.