“Black people have known a recession was underway for a long time,” said Dorothy Gourdine, one of a handful of African Americans attending the Memphis Economic Summit on Dec. 2 at St. Mary’s Episcopal School.
Presented by Sovereign Wealth Management and the Memphis Business Journal, the seminar and panel discussion focused on the state of the economy and its projected impact on Memphis. Terry Hollahan, MBJ’s managing editor, served as moderator.
Panelists included Kevin Adams, CEO of CB Richard Ellis Memphis affiliate office ; John Bobango, managing partner for Farris Bobango Branan PLC; Lane Carrick, Sovereign chairman and CEO; Michael Glenn, executive vice president for market development and corporate communications at FedEx; Bryan Jordan, president and CEO of First Horizon National Corp.; Kevin Kane, president and CEO of Memphis Convention and Visitors Bureau; John Moore, president and CEO of Memphis Regional Chamber, and Philip Trenary, president and CEO of Pinnacle Airlines. 
The Memphis Economic Summit was held Tuesday in the Rose Theatre at St. Mary’s Episcopal. Those attending included (r-l) B. Lane Carrick, Chairman & CEO Sovereigh Wealth Management, Inc.; Michael Synk, Inner Circle for the Mid-South; Jonathan Cross, CEO of 3PM Music Group, and Sherrye Cross. (Photo by Earl Stanback)
Attendee Jonathan Cross II, 3PM Music Group’s CEO, said the information he absorbed will help him as he positions his company for future growth.
Cross noted, as one speaker said, that it was more economical in some cases to purchase a company than to build one since company assets are currently so devalued. And, the downturn has produced some aggressive negotiations on real estate leases.
Gourdine, a human relations consultant and former National College of Business career center director, said she was impressed by the Kevin Adams’ listing of companies seriously affected by the downturn and those that are doing well.
“Fred’s is doing well financially in this area and so are a dozen other companies headquartered in Memphis,” she said. “Low gas prices are helping us and have helped companies who buy lots of fuel like FedEx.”
Business Department chair for National College and an entrepreneur herself, Patrenna Hancock, said, “As a fellow CEO of YPA Services, I can truly appreciate the different commentaries from each industry. For instance, Kevin Kane gave an update on the hospitality industry. We all know Memphis is known for its tourism dollars. It is good to know, although hotel occupancy was down, that we are still fairing well in comparison to other larger cities during the same week. Kevin Adams of CB Richard Ellis shined new light on the multi-family housing industry. He also gave an update on commercial leasing which is still a viable option, with subletting being the best route. 
Patrenna Hancock
“This is good news for me as I think along the lines of expanding my business. John Moore of the Memphis Regional Chamber of Commerce was truly optimistic about new business ventures for 2009. As a fellow Chamber member, this assures me the economy will recover and we will just have to prepare ourselves accordingly until it does,” said Hancock.
A real estate expert, John Bobango explained that the current housing market has created opportunity for buyers as well as turmoil. He said the development community is “trying to wash through” the housing situation. Currently, he said, there are no building projects underway in Memphis and no employment because no one is building houses. Also, zoning changes have slowed in Shelby County.
Company marketing executive, Michael Glenn said that FedEx began to see softness in the economy a year ago. In September, it announced 200 layoffs nationally in its FedEx Office operations, formerly FedEx Kinko’s.
Glenn said the economic forecast for FedEx is negative for the fourth quarter of 2008, negative for first quarter 2009 with positive forecasts for the remainder of 2009. Even so, 2010 still will be below trend levels.
“Recessions caused by financial stress tend to be long and deep,” said Glenn.
First Horizon’s Bryan Jordan said the $700 billion bailout has brought stability but has not started to soak up bad assets. “Tennessee will do better than a lot of places in the country,” said Jordan.
Likewise, tourism chief Kevin Kane said that the hospitality industry in Memphis is the top performer for the Southeast region. He said hotel occupancy, which was 66 to 68 percent in 2007, was at 58 percent through the end of October 2008.
And, although the city’s largest convention, the Church of God in Christ, was off by 18 percent, with hotel occupancy rates declining from 82 percent last year to 64 percent this year, Kane said Memphis once again led the Southeast in U.S. occupancy rates.
He said 2009 is projected to be Memphis’ busiest convention year based on the number of conventions already scheduled. He also said he expects the drop in fuel prices will spark leisure travel this coming spring and summer.
Staying power
How does Memphis manage to stay ahead even during bad economic times? Chamber CEO John Moore said it has to do with unique advantages that he calls the Four R’s: River, Railroad, Roads and Runways.
He said the Chamber is currently working on 37 projects that involve expansions or relocations of new businesses to the area.
And while the decision-making process on some projects has slowed because of the economy, the plans are still on the table. He also said that there are still companies with internal access to capital that they are not using because of the current market.
“The four strategic assets make Memphis strong,” said Moore, who sees Memphis, “America’s Distribution Center” re-positioning itself to be “North America’s Logistics Center.”
Pinnacle’s Phil Trenary said that more airline consolidations are expected and that the Delta-Northwest merger has created the largest global travel network in the world.
Capacity, he said, has been the industry’s biggest challenge with an 8-10½ percent reduction in seats. This summer’s fuel crisis served the industry well, encouraging greater collaboration with regional airlines.
The airline industry is now leaner and better able to deal with current times with decreased fuel prices. Trenary explained that a one penny change in the price of fuel has a $100 billion impact on the industry. He said use of regional jets and FedEx make the long-term outlook for Memphis “look very good.”
As the old saying goes, tough times don’t last but tough people do. Gourdine said that she has cut back on eating out and wishes more young people knew how to spend their money wisely.
She believes that, thanks to church food pantries and community agencies, there are plenty of resources to help the beloved community weather current conditions. She said, while some people see cutting back as choosing lesser cuts of meat, some in the African American community will return to the days when meals were primarily beans, rice and potatoes with little meat.
Attending the workshop, she said brought home one key fact: “We’re all in the same box, economically.”