Wednesday, October 17, 2012
Federal Reserve executive gets up close with region
The head of the Fed in Richmond learned about local business people and the landscape on his visit.
Photos by Rebecca Barnett | The Roanoke Times
Jeffrey Lacker (center), president of the Federal Reserve Bank of Richmond, discusses the economy with business owners Tuesday. The group met in Charter Hall in the Roanoke City Market Building. Among those joining Lacker were Joyce Waugh (left) from the Roanoke Regional Chamber of Commerce and Wayne Flippen (right) of the Roanoke Regional Small Business Development Center.
My Chung (second from left), CEO of Luna Innovations, discusses customers’ hesitancy to buy.
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When he reached Roanoke on Monday for two days of business meetings, Jeffrey Lacker initially thought Carilion was pronounced care-i-LON, as in "carillon," the word for a set of musical bells.
The president of the Federal Reserve Bank of Richmond left Tuesday much better versed about the local business landscape and its key players after his meetings and tours.
Lacker, who was based at the Hotel Roanoke & Conference Center during his stay, addressed a 110-person luncheon hosted by the Roanoke Regional Chamber of Commerce and saw the Virginia Tech Carilion Research Institute on Monday. The 57-year-old banker went to truck-related manufacturing operations of Altec Inc. in Daleville on Tuesday morning.
Then he met with nine business representatives for lunch Tuesday at Charter Hall, the meeting room at the City Market Building. Lacker said he and his colleagues digest reams of data, but to learn the why behind the numbers, he visits business people where they work and live. Although Lacker described his impression of the local economy as "pretty healthy," the conversation focused on the lingering sluggishness.
"The public's just scared to spend any money," Chad Amrhein of AmRhein's Fine Jewelry told Lacker.
Customers considering purchases at his jewelry store are hesitant, telling Amrhein: "We just don't know what's going to happen."
Gene Nervo, owner of Eagle Rock-based Wilderness Adventure, asserted that banks are too reticent to lend.
"It's like pulling teeth to expand," said Nervo, who wants to add a second lodge at his retreat and conference facility.
Lacker said many banks suffered losses during the recession that reduced capital, including in this region, and those impacted may still be operating cautiously to shore up operations to the satisfaction of regulators. But the climate appears to be improving in that "we see some daylight around," Lacker added. "A lot of banks have a lot of cash" and are competing for customers, he said.
"It pays to shop around for banking relationships," Lacker said.
Michelle Dykstra, who with her husband recently opened Six-Eleven Bicycle Co., said they relied on what she called "alternative" financing.
What did that mean? Lacker asked.
"Family," Dykstra said.
The company, which produces custom bicycle frames and components, then connected for a second round of funding with the Virginia Small Business Financing Authority, which lends to small businesses and nonprofit organizations.
One of the agency's newest products is "micro" loans of $10,000 to $25,000 lent without collateral as long as the borrower has a good credit history and signs a personal guarantee. The authority has closed 17 such loans since the program began in April, said Linda Kay Gilbert, the agency's project finance manager, who has an office in Roanoke and in Abingdon.
But a source of financial banking doesn't eliminate uncertainty, officials were told. Dykstra said Six-Eleven Bicycle needs to hire three people.
"I'm afraid to do it," she said.
Larger companies had their own stories of difficulty. My Chung, CEO of Roanoke-based Luna Innovations, told the meeting that his company is in the midst of a transition from grant-funded research to product sales.
"With the economy the way it is right now, customers are very hesitant to buy," he said. "It's not that companies don't have cash. They just don't want to spend it now."