by Bekah Porter

CORRIDOR – Recovery is on the horizon.

And while economic stability might not be here quite yet, it will return to the Corridor, as long as area companies embrace the necessary changes.
Such was the message delivered by a host of key business figures to a crowd of nearly 550 at the Corridor Business Journal’s annual Economic Forecast Luncheon last week at the Cedar Rapids Marriott.

Here’s a look at what the speakers said:

Larry Zimpleman, president, chairman and CEO of the Principal Financial Group, and keynote speaker

Mr. Zimpleman started his talk with optimism.

“First, I do believe that we’re in a recovery,” he said.

But this recovery brings with it an interesting statistic.

This is the first financial crisis in 200 years to not be steered toward recovery by Europe or the United States, he said.

“Instead, it’s the emerging markets,” Mr. Zimpleman said. “It’s Asia, or more specifically, China, and I see this as very meaningful.”

He went on to say that when he is in China, the people there say that their role in the world’s recovery is a return to the way things should be.

“In 18 of the last 20 centuries, China has been the economic engine of the world,” Mr. Zimpleman said.

Additionally, studies have shown that emerging markets make up 37 percent of the world’s gross domestic product (GDP), and that China’s 8 percent growth is sustainable long-term.

The United States, however, is estimated to have 3.2 percent GDP growth in 2011.

“We’re building fundamentals for consistent growth,” Mr. Zimpleman said.

One of those foundations for the U.S. business future is to recognize that companies can no longer operate on just a local level.

“Employers today have to be globally competitive,” Mr. Zimpleman said.

And they need to become so soon if they want to catch a ride on the cash wave that could hit in the next decade.

Some 700 million people worldwide are expected to become part of the middle class in developing countries in the next 15 years.

“We need to be asking now what they are going to want relative to what we in America wanted in the ’50s, ’60s, ’70s and ’80s?” Mr. Zimpleman said. “They are going to want homes, cars, college educations, iPods, big screen TVs… This (incoming middle class) has possibilities for virtually all companies. You can put your products into that stream, which is going to carry you for many, many years. Somebody is going to take advantage of that, and in my opinion, it might as well be us here in this room.”

Sally Mason, president of the University of Iowa, and panelist

Ms. Mason said the Corridor can anticipate a steady march toward recovery, thanks to the educational institution’s dedication to rebuilding after the flood.

“The flood in Iowa City was unprecedented,” she said. “We are, in fact, the single largest entity FEMA (the Federal Emergency Management Agency) has ever had to deal with… In fact, if you take all the damage done to all the universities in Hurricane Katrina, it doesn’t even come close to the (flood) damage caused at the University of Iowa.”

The flood resulted in $1 billion in damage at the school.

“And that billion dollars worth of destruction means about a billion dollars worth of construction,” Ms. Mason said.

That guarantees an economic boost, she said. Specifically, she mentioned the university’s plans to build a performing arts space in the downtown and the impact that would have on the downtown area.

However, she said the road to recovery still has a few steps left.

“We are determined to fully recover from the flood by March of 2015 when we have our first performance in Hancher,” Ms. Mason said. “That’s when I’ll declare victory.”

Mike Gerdin, president of Heartland Express, and panelist

While many of the nation’s companies experience difficulties adding jobs, one industry plans to offer numerous jobs, although it’s difficult to attract the needed workers.

“If I asked you how many of you in this room are raising your children to be truck drivers, how many of you would raise your hands?” Mr. Gerdin asked, to a roar of laughter. “See, that’s our problem right there.”

However, a career driving trucks is expected to offer some serious financial incentives. Mr. Gerdin said already some truck drivers are making $60,000 to $70,000 and that in the next 10 years, that salary is expected to rise as high as $100,000.

“We need truck drivers,” he said.

This spike in need comes after a two year dip.

“It’s been rough,” Mr. Gerdin said. “A lot of truckers have gone broke. You notice there are less trucks on the road.”

However, he said the trucking industry is starting to pick up, but an anticipated hike in fuel prices could prove problematic for the industry.

“As the economy improves, the price of fuel goes up,” Mr. Gerdin said. “That $5 (a gallon) fuel price is simmering, just sitting there, waiting to happen. And it will happen. Inflation is coming.”

Other high costs have hit the trucking industry, as well, specifically in making trucks more environmentally friendly. It has reached the point, Mr. Gerdin said, that the spouts on the trucks are starting to act almost as air filters.

“When you think of a truck going down the highway, people have this picture of black smoke rolling out. But that’s all gone,” he said. “In some areas, the air that goes into the truck comes out cleaner.”

Yet this has resulted in a 25 percent spike in the cost of trucks in the last five years.

Barry Boyer, CEO and president of Van Meter Industrial, Priority One board chair and panelist

Recovery will come, Mr. Boyer said, and it can only be enhanced by regionalism.

“We’re looking to our neighbors in the south, in Iowa City, and in surrounding areas, and we’re asking how we can make one plus one equal three,” he said.

By banding together with others throughout the Corridor, and even the state, he said, more and more industries can be attracted to the area.

Specifically, he mentioned that Priority One, which is the economic development arm of the Cedar Rapids Chamber of Commerce, is working toward a goal of bringing 6,000 jobs into the Corridor.

Right now, he said, there are 23 different industries looking at the Corridor area with the potential for 1,500 new jobs.

This can be accomplished, he said, with the organization’s recent change in leadership. Last year, Dee Baird stepped to the helm of Priority One, replacing Mark Seckman.

“What I’m most excited about is the new leadership of Dr. Dee Baird,” Mr. Boyer said. “We’re reinventing ourselves.”

However, he cautioned that reinvention should not be saved merely for economic development organizations.

“As Iowans, we tend to undersell who we are,” he said. “We have national surveys that say we’re one of the best places to live in the country, yet we doubt it. Those surveys say we have some of the best education, yet we doubt it… We need to change how we sell ourselves.”

Then, he said, businesses can come to the area attracted to more than just the surveys. They can come attracted to the passion of the people in the area.

Andy Ockenfels, CEO and president of City Carton Recycling, and panelist

The recycling industry is another that could help the area recover from recession.

According to Mr. Ockenfels, some 60 percent of paper packaging domestically is recycled.

“That’s the low-hanging fruit,” he said.

The industry’s main concern, however, is getting that other 40 percent. Once that potential is realized, recycling companies can add workers, although most likely not on the processing side, which is growing more mechanical.

“However, we’re looking to add onto our shop facilities and have more maintenance techs for our trucks,” he said.

Additionally, if more recycling can be collected, more workers will be required to retrieve the recycled goods.

“Our goal right now is to get more materials out of the offices and businesses and get it into the recycling streams, which would increase staffing on the gathering side,” he said.

Kyle Skogman, president of Skogman Companies, and panelist

The housing market will play a large role in the economic future.

Absolutely, this industry has played out in the headlines, Mr. Skogman said, and the numbers have been drastic.

“(It’s important to remember that) when you read what the media is talking about with the national housing market, they’re referring to the 25 largest metropolitan markets, not the Corridor area,” he said.

However, those national numbers for those 25 markets remain troubling. About a month ago, Phoenix reported that 40 percent of housing loans were “under water,” meaning that the mortgage loan totaled more than the value of the house. In Las Vegas, that percentage rose to 60 percent. Additionally, there is more inventory than buyers, nationally.

“(But) the local market is a much greater picture than the national market,” Mr. Skogman said, “although it was quite a roller coaster (locally.)”

Specifically, he mentioned how sales were up 23 percent in the first six months of last year while an $8,000 federal tax credit was in place. When it ended, however, sales decreased leading to an overall 4 percent decrease in sales for the year in Iowa City and 6 percent in Cedar Rapids. Additionally, an eight to 10 month supply of houses priced at $300,000 and above remains.