General Russel Honore was deployed on the ground to oversee operations after Hurricane Katrina. He shifted from operating an army abroad to operating troops and volunteers within our own borders. His speech was poignant as the 10 year Anniversary of Hurricane Katrina will be later this year.
Honore enthusiastically reported on the state of New Orleans post-Katrina stating that there are now more hotels and restaurants in New Orleans than there were 10 years ago before the hurricane hit the region. He thanked the attendees at the International Factoring Association for being the kinds of finance companies dedicated to helping businesses overcome obstacles; the businesses who helped the region recover.
The key take away from Honore’s address was that disaster preparation needs to be a part of any company’s culture. Businesses need to have an evacuation plan, a weather radio, and need to know if the business is in a flood zone or downwind from a chemical plant. One realization that many New Orleans based businesses realized after Katrina hit was that having 10 days cash on hand of operating expenses was not enough. Workers were working inflated hours and payroll was a challenge for many businesses.
His recommendation for businesses operating in the current economic and political environment is to embrace technology, build a solid team, train them, and to build confidence and trust among the team. One way to achieve this is to incentivize innovation. He also warned that business leaders must be prepared to figure out which rules you are willing to break post-disaster and to anticipate man-made disasters that are certain to follow natural disasters.
One of Universal Funding’s own had the opportunity to win a signed copy of General Honore’s book titled “Leadership in the New Normal”.
The following morning the conference hosted Peter Ricchiuti, finance professor at Tulane University and former CIO for the state of Louisiana. Known as “the business professor you wish you had in college”, his frenetic energy and witty humor left the audience in stitches as he approached topics like record corporate earnings and tax evasion adding $3 trillion dollars to the national debt. On the topic of taxes, as a percentage of the GDP, Ricchiuti reported that federal taxes are at the lowest level since 1950. The yield on the 10-year Treasury note is 2% above the rate of inflation.
When comparing healthcare costs over the decades he noted that 50 years ago, food expenses were 16% of household income and healthcare expenses were 5% whereas now food accounts for 7% of household income spend and healthcare accounts for 17%. One attributing fact is that in 1960 every 1 farmer fed 25 people where today 1 farmer feeds 155 people.
Another hot topic discussed with the oil industry. With oil prices being down to $46 per barrel the five states that will be affected most are Oklahoma, Alaska, Texas, North Dakota, and Louisiana. The oil and energy industry will continue to see many changes as the United States continues to become more energy independent and no longer under the constrains of OPEC. Low gas prices mean better profits for U.S. manufacturers. The oil age will peak in the next 10-15 years and then the industry will be faced with demand issues as people are looking to alternative energy, drive less, become environmentally minded. The industry will run out of demand before it runs out of supply. This is highlighted by energy consumption trends shifting from oil to cheaper, cleaner, and readily available natural gas. Trends are already showing that energy production will continue to increase as the demand decreases.
Following the recession of 2008-2011, the US GDP has grown by 2% annually and the latest recession did not experience a double dip like most other recessions. Mr. Ricchiuti’s economic outlook focuses on looking at the age of the work force and the baby boomer generation. Over the next 30 years the population of working age people will increase in the U.S. where it will decline is most other industrialized nations in Europe and in China. Over the next few years the baby boomers will be retiring and businesses need to seize the opportunities created in that market.
The Universal Funding team would like to applaud Bert and his team at the IFA who continue to invite relevant and entertaining keynotes as well as industry experts like Bob Zaydek who keep factors abreast of recent legal and political endeavors that shape our industry.
About Universal Funding:
Since 1998, Universal Funding has been creating personalized invoice factoring financing solutions by examining each business, the climate of their industry, and the strength of their customers. They are committed to their clients and are able to offer scalable factoring that grow as their business grows. Based in the Pacific Northwest, Universal Funding is one of the country’s premier factoring companies financing for companies throughout the United States.
Company Name: Universal Funding Corporation
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