Archive for Business
Boulder is following Colorado’s lead in making good headway out of the recession, local leaders said in a 2012 Economic Forecast, but both state and local economies still have several years to get back both jobs and revenues lost in the last four years.
Some of the numbers, especially new home building permits and perhaps even total jobs, may not be coming back at all as “significant” structural changes throughout the state’s economy take hold, predicted Richard Wobbekind, the University of Colorado economist who has tracked the state’s economic health for years at the university’s Business Research Division.
We might be starting to see the “new normal,” Wobbekind told local business leaders at the event organized by the Boulder Economic Council. And he cited several examples of what that “new normal” might look like.
As Colorado’s economy turns the corner, and already it’s ahead of other states tackling much tougher jobs losses, budget challenges and steep losses in home values, the state now is adding anywhere from 100,000 to 150,000 jobs a month. But the caveat is that Colorado, where in-migration from other states is on the rise again, needs around 125,000 new jobs just to absorb new workers in the marketplace. As a result, any reduction in the overall unemployment rate comes slowly.
There’s no “magic wand” out there, Wobbekind said, to repair damage inflicted by the deep U.S. recession. It could be at least 2015 or 2016, four years from now, to see Colorado get back to its “peak” employment numbers.
Another view of the “new normal” is reflected in the ongoing loss of actual manufacturing jobs. Boulder over the years has lost 35 percent of manufacturing employment as companies consolidate and jobs move overseas. But, Wobbekind noted, manufacturing output by GDP is now higher. The same is true for employment in the high-paying information sector, where employment across the state is down, but output is higher.
Technology is allowing fewer people to do more work, Wobbekind said. Employees may be working longer hours, he told me during the event’s networking, but many of those jobs simply are never coming back.
Many of the same phrases heard in forecasts of the last few years are still around: housing doldrums, lack of credit, and now “world economic slowdown.”
CU economic forecasters, Wobbekind said, “refuse to believe” that the current European debt crisis will spin into a new worldwide recession. The morning after the Boulder forecast, European economists said sharp slowdowns in December bank lending confirmed that a Euro-zone credit crunch was indeed under way.
If the European economies do stumble further, Wobbekind said trade patterns of the Western U.S. states like Colorado are more closely tied to Asian markets, and the Northeast is more vulnerable to Europe’s woes.
Anther “new normal” in Colorado’s economy will be a healthier but lower level of new building activity, especially in residential construction.
Wobbekind doesn’t expect the state to return to its building boom years, such as the 45,000 new home permits in 2005. Even in a much better economy than now, permits could total around 25,000, or maybe 30,000, he said. Through November, Colorado posted 12,758 single-family and multi-family permits, up 10 percent from all of 2010, the Census Bureau reported. Nationally, new home sales in 2011 tumbled to the lowest level in the 50 years that records have been kept.
A panel of four local Boulder leaders gave a fairly upbeat view of the city’s present and longer-term economy but emphasized that likely state and federal budget cuts hang over everyone’s head, from CU’s Boulder campus to the city’s base of nearly a dozen national research laboratories.
CU-Boulder has grown its enrollment some 15 percent over the past decade to nearly 30,000 students and overall revenue of $1.22 billion, said Rick Porreca, senior vice chancellor. But in an environment of dwindling state support, which “might go to zero in the next few years,” and the threat of federal cutbacks, graduate student fellowships and research faculty could be hurt. The university, which has cut about $35 million in operating cots, including 200 positions over the past four years, has to maintain “efficiency and self sufficiency.”
Lack of decisions on the U.S. budget and federal deficit reduction, especially in an election year, will keep all of Boulder’s research labs in cost-saving modes, said Cindy Schmidt, director of the Office of Government Affairs for the University Corporation for Atmospheric Research, or UCAR. “Flat is the new increase,” she said of budget decisions for 2013.
The good news is that R&D is still viewed as a long-term economic driver, she said, and the U.S. must keep up with other countries, including China, where research budgets have been increasing 20 percent a year.
Boulder recently landed the new National Solar Observatory, making it one of the best research locations in the country and attracting the higher-paying scientific jobs the labs create. Boulder’s labs, including the National Renewal Energy Laboratory in Golden, now contribute some 16,000 direct and indirect jobs, Schmidt said.
Boulder City Manager Jane Brautigam and Susan Graf, president of the Boulder Chamber of Commerce, both said the city has been fortunate with a local economy that was ahead of council expectations in 2011. Through November, the city’s sales and use tax rose 6.7 percent, Brautigam said. “We had a really good year last year,” she said.
The local economy’s strengths, Graf said, is directly tied to the high level of education of local residents and the region’s need for qualified employees in new high-tech and professional services ventures. Even the city’s accommodation, food, entertainment and recreation jobs, where salaries are not as high as technical positions, saw better numbers in 2011. Some 7,000 people now work in tourism-related jobs, Graf said.
“Quality of life” and residents’ love of the outdoors for hiking, biking, climbing and other sports still rank high for why some 2.2 million people visited Boulder last year, Graf said.
Helping put the city on the national business “map,” Graf added, have been tech giants like Google, which bought @Last software, and Microsoft, which bought Vexcel Corp., both online mapping technologies, and then continued to keep and grow operations in Boulder to hang onto skilled employees and attract new ones.
Maybe we all don’t all want to work at Starbucks, but I’m going to donate $5 to the Create Jobs for USA campaign currently in place at the world’s largest coffee retailer.
For $5 you get a red, white and blue wristband, which in my case will become a stocking stuffer for a niece or sister.
The simple fact is that community businesses now employ more than half of all private-sector jobs, and they’ve created 64 percent of all new jobs in the past 15 years. Unfortunately, new job creation isn’t keeping up with the layoffs from the long U.S. recession, with U.S. unemployment stuck at about 9 percent.
So Starbucks has teamed up with the Opportunity Finance Network, a group of community lending institutions financing local businesses. These CDFIs, or Community Development Financial Institutions, support urban, rural and native communities with loans to low-income, low-wealth and other underserved people. It’s estimated that for every $3,000 donated into this project, one new job will be created.
You can read more about this at createjobsforUSA.org or just pick up some information while buying your next coffee at Starbucks.
Starbucks CEO Howard Schultz is putting his money where his mouth is, committing $5 millon from his company to see the campaign. He’s a proponent of ending the gridlock in Congress but while not holding his breath on that, he’s also urging other CEOs to start spending some of the pile of cash they’re sitting on and start hiring or start some programs to create job growth.
Schultz also recently urged business leaders to stop campaign contributions to both the president and Congress until they reach a “fair, bipartisan deal” to reduce the federal debt. Hopeful thinking, but I liked it nonetheless.
So maybe skip that morning breakfast roll you stare at in the Starbucks case, and donate your $5 to help create a new job in your community. Your donation is worth seven times a such in new financing through these CDFIs, which gain the ability to acquire more financing from other sources.
So your $5 wristband is really worth $35!
Sometimes all it takes to get people buzzing is a new catchy phrase.
That happened this week when Foundry Group venture capitalist Brad Feld told attendees of the Boulder Economic Summit that he thinks Boulder has a really great “entrepreneurial density.”
Boulder, the city that whips itself into a frenzy in nearly any discussion of “growth,” has had more than its share of “density” debates, usually around downtown high-end condos or retail redevelopment.
But somehow entrepreneurial “density” suddenly sounded like a pretty good thing.
On an “entrepreneur per capita,” Feld said, “this place feels special.” The city’s “large enough to be interesting, but small enough to get your mind around,” he continued.
Feld is a Boulderite who, in blue jeans and loud shirt, keeps Boulder’s sport jacket and tie types (OK, yes, they are Jerry Garcia ties) wondering just what he’s going to come up with next. After all, it’s Feld’s business to invest in entrepreneurial ventures and try his best to make sure they succeed.
And the more innovative entrepreneurs Boulder breeds is good news for the network of lawyers, bankers, accountants, real estate brokers and financial advisers happy every time the entrepreneur’s ship does come in.
This year’s one-day Boulder Economic Council summit, titled “Boulder’s Innovation Economy,” just happened to coincide with Boulder Startup Week, a four-day event packed with seminars such as “The Mobile Web and Why It Sucks,” a bike ride up Flagstaff Mountain, happy hours and overall tweeting geek networking of mostly 20 to 30-somethings all hoping to be the next Mark Zukerberg, or, at least for now, to get onboard early with a fast-tracking Internet startup.
At a Boulder Startup Week kickoff party at Boulder’s Trada, Gabe Kongas, founder of Omaha-based startup Hollrback, marveled at how he was one of seven lucky geeks picked for a free plane ticket to Boulder and a place to stay “as long as you aren’t allergic to couches” to join the startup activities.
“I have no idea why I won,” Kongas smiled, “but Omaha looks up to Boulder as the big brother of what it’s trying to do.”
Kongas fits the profile of the hundreds of young entrepreneurs that duke it out every summer for a coveted spot at Boulder’s TechStars.
One of Boulder’s real success stories over the last few years, led by Boulder entrepreneur David Cohen, Feld and a slew of volunteers and business mentors, TechStars is a business incubator model that’s worked so well it’s now been duplicated in Boston, Seattle and New York City.
The competition for about 10 slots in the three-month Boulder summer program is intense among web and software startups from around the globe, with hundreds of competitors. Yes, they’re competing for the $17,000 in seed funding, but more importantly, they receive one-on-one access to a network of mentors and eventual introductions to angel investors.
“We figured out how to professionalize a system for angel investors,” Cohen told a panel on information technology at the summit. In the five years the program’s been maturing, nearly half of all the participating firms ended up staying in Boulder. And from the first 20 companies that went through the summer business camp, seven were acquired, an almost unheard of successful exit rate.
Boulder, a city of only 200,000 but with a mountain backdrop and biking, climbing, kayaking, brewpub-hopping and at least four Italian wood-fired gourmet pizzerias, has one crazy entrepreneurial eco-system that everyone loves to try and define. And it just seems be keep getting better — right through the recession.
Home-grown web and software companies like Agile and Trada compete for elbow room with startup clusters in natural foods, outdoor sports, biotech, info tech, aerospace and clean tech. There’s a few other software companies snagging computer engineers — Microsoft and Google, to name a few. Although the city’s local venture capital community is much smaller than Silicon Valley, good deals are never ignored, said VC Kyle Lefkoff with Boulder Ventures.
Colorado itself, CU economist Rich Wobbekind told the summit, is always in the top U.S. rankings for venture capital investments, number of patents and Small Business Innovation Research grants per capita.
“Capital is extremely portable,” said John Grubb, a managing partner with Boulder’s Sterling-Rice Group, a long-time Boulder-based advertising and marketing company that bucked the need to be in L.A. or New York but still attracts name-brand national clients.
Boulder is one of those places where business leaders are accessible, easy to meet for coffee (coffee shop density is intense, too) and serial entrepreneurs keep giving back. “Sometimes I’m having IM conversations at 1 or 2 in the morning,” said Robert Reich, a founder of OneRiot who launched the Tech Meetup in Boulder, an event that’s become so popular it attracts a standing-room only crowd to its meetings on the University of Colorado campus.
“Boulder is an open-door community,” where businesspeople in all sectors are willing to share their experiences and help each other, summit panelists agreed.
Silicon Flatirons Center is one more “connecting” point for entrepreneurs, said Brad Berthal, the center’s director. The University of Colorado law school center brings in national experts and facilitates discussions on telecommunications, IT and entrepreneurism.
Boulder’s thirst for networking fills up monthly open coffee club meetings, Entrepreneurs Unplugged speaker sessions, and wild Ignite Boulder meetings called “Geeky Goodness,” where presenters race through five minutes to teach something on any topic with 20 Powerpoint slides timed to 15-second intervals.
The list of challenges for Boulder’s entrepreneurs, discussed at the summit’s wrapup, revealed little that hasn’t been haggled over for years.
* The city’s lack of larger commercial space means that many fast-growing companies eventually will find larger and better-priced space outside of the city limits. But that’s good news for a healthy Boulder Valley-wide roster of high-pay employers in cities like Longmont, Louisville and Broomfield.
* Boulder still doesn’t have its own space for small to medium-sized conventions that could handle meetings of a thousand or more. Frank Hugelmeyer, CEO of the Boulder-based Outdoor Industry Association, said if the city did have such a meeting facility, his group might try to develop its own “Thought Leader” center, bringing in leaders from an industry now valued at $289 billion.
* And Boulder business leaders, year after year, almost always ponder what seems like quite a bit of just plain good luck. “Boulder’s been fortunate, but a little too passive,” one panelist said, in branding its entrepreneurial innovation.
Maybe, heads of the panelists nodded in agreement, it’s time to talk more about “the highest density of entrepreneurs in the world.”
Marketers are starting to talk a lot about QR (Quick Response) codes, and on a visit to Louisville, Ky. for Kentucky Derby week, I ran across a very innovative QR use.
I’m seeing more QR codes starting to appear on everything from direct-response cards to magazine ads to newspaper stories, but the Kentucky Derby Festival organizers used a QR code to get Derby visitors to register their Pegasus pins, which gives attendees admission to Derby events.
The Pegasus pins themselves have become collector items, right alongside each year’s new Kentucky Derby mint julip glass. Some of the earliest pins from the early ’70s now sell for hundreds of dollars. I know because several years ago I sold a 1973 pin from the year that I worked at the Louisville Chamber of Commerce for $500.
From there, you could register your pin, allowing you to play some simple contests from sponsors to win different coupons. Sponsors included Kroger’s, Dairy Queen, Joe’s Crab Shack and others.
The key thing to think about with QR codes is once you do get a user to interact with you, what are you doing then? That’s why I liked the PegasusPins.com site. Each Pegasus pin package came with a scratch-off code that you could register to see if you were an “instant” winner. This year the pins, which sell for $4 each, came in five different colors, getting collectors to try and find each different one.
A QR code campaign needs to do more than just take the user to a web site. They’re great for a special contest or linking to a special product promotion video. But keep it fun … you’ve succeeded in getting someone to scan the code, now you’ve got to deliver something to them.
The Digital Media Symposium, or DiMe, returns for its second year in Boulder on Friday, Feb. 18 with a great lineup of national and local panelists weighing in on new digital media. Tickets at $50 are on sale at www.dimeboulder.com.
DiMe recently received a $25,000 grant from the City of Boulder’s Arts and Business Collaborative (ABC) grants program, and the funding will help support the expansion of the symposium into a multi-day event with workshops, digital art exhibits and opportunities for collaboration.
The DiMe, which starts at 1 p.m. at the St. Julien Hotel in downtown Boulder, takes place during the?Boulder International Film Festival, which runs Feb. 17-20. DiMe is an initiative of BIFF, the Governor’s Office of Creative Industries and the Boulder Convention & Visitors Bureau.
Two panels will fill the afternoon event covering “Digital Distribution and Monetization” and “The Future of 3D.” A full listing of panel members are on the DiMe site, but panels will include Andrew Steele, a TV and cable writer with “Funny or Die,” and Don Hahn from Stone Circle Pictures, a Los Angeles-based animation and 3D film producer.
DiMe is a great event not only to learn more about new digital media technologies, but following the event you can mingle at a cash bar reception starting at 5 p.m. with local leaders and artists in Boulder’s growing sector of film, broadcasting, gaming, mobile and other entertainment-based digital media.
Like a hammer driving down hard on the nail, the last few years of the recession have taken a serious toll on the state’s economy.
A new report just issued by Gary Horvath and his Broomfield-based company Business and Economic Research at www.garyhorvath.com examines the volatility of the construction sector, pointing out that its “peaks are often more exaggerated and the troughs more severe.”
Colorado’s construction businesses, including residential, commercial and non-building (infrastructure such as roads and utilities) now have suffered declines in employment from 2006 to 2009.
And when you realize, as Horvath explains, that even despite the recession’s effects, Colorado has a higher concentration of construction works (called the “location quotient” in economist speak) than other parts of the U.S., then the job losses have hit especially hard.
Colorado construction employment now has declined to 7.2 percent, or about 131,000 jobs in 2009, from 8.9 percent, or 167,647 jobs, in 2006.
Fewer construction jobs, of course, also smacked a number of manufacturing sectors that produce materials for builders and contractors. These include everything from asphalt to paint to HVAC equipment. Colorado actually has five seasons, Horvath reminds us. Winter, spring, summer, fall, and “cone” season.
The headlines of Colorado bank failures often fostered by a heavy reliance on commercial lending prior to the U.S. recession remind us that numerous professional services depend heavily on the health of the construction industry. The list of those losing high-paying jobs goes on with insurers, real estate agents, appraisers and mortgage loan brokers.
The category of financial employment related to construction has lost nearly 8,000 jobs since 2006, Horvath’s figure show.
One anomaly is that the category architects and engineers, “thought to be a leading indicator of economic activity,” Horvath says, actually remained fairly steady from 2006 to 2009, reaching a high of 44,593 jobs in 2008 before flattening out to 41,560 jobs in 2009. The pattern was similar for both interior and industrial design jobs.
Overall, Colorado suffered a net loss of about 105,700 jobs between 2007 and 2009, and construction workers and workers in related sectors accounted for about 56 percent of those losing their jobs with 36,700 jobs lost in construction and 22,200 jobs lost in related sectors. That’s a very hard hit.
So where do we go from here? Can a surge in construction business help save the day?
With a population of 5 million people and population growth forecast at 1.5 to 2 percent, Horvath says, the need is clear for a strong construction sector to support new homes and buildings as the economy begins to grow. Colorado, however, may finally be bringing the percentage of construction industry jobs (again it’s the location quotient) back into line with other states.
That location quotient stat, Horvath says, is down to 1.29 in 2009 from 1.44 in 2001, and may very well need to revert to 1.0 for a healthy balance in the state’s economic outlook.
Different economic forecasts for overall Colorado job expansion this year range from growth of zero to 2 percent or completely flat to 44,000 new hires.
In Horvath’s November forecast, he expected some 15,000 new employees to be added this year, based on real GDP growth of 2.4 percent. Both of those numbers, he now says, “are likely to be revised upward.”
And that’s good news for all of the unemployed waiting for the hiring to begin.
University of Colorado economist Richard Wobbekind sees modest growth for Colorado in 2011 as the state continues to deal with high unemployment.
It was economic forecast déjà-vu this week as the University of Colorado’s top economist addressed Boulder business leaders.
I covered the same event – the Boulder & Beyond Economic Forecast organized by the Boulder Economic Council – a year ago and wrote about how Colorado’s population continues to grow despite continuing job losses and an “unemployment number that isn’t improving much.”
So as 2011 kicks into gear, what’s here to great us?
- A state unemployment rate that just inched up a notch to a record-matching 8.8 percent in November. A year ago we worried when it was 7.5 percent. Colorado hasn’t seen unemployment this high since the early ‘80s.
- A slow housing market that keeps dragging on, with foreclosures saturating the market and holding down both new construction starts and prices. The high-end market for homes above $1 million is especially tough.
- State and federal deficits that politicians seem unable to deal with as the slower economy puts a stranglehold on tax revenues. Colorado, with a projected $1.5 billion budget gap forecast for 2011, joins a crowd of other states in the same boat. Colorado now has debt of nearly $25.7 billion. Only four states, Alaska, Arkansas, Montana and North Dakota, predict they’ll be in the black. That’s almost peanuts, however, when compared to the U.S. debt, which just crossed the $14 trillion mark for the first time.
Go to www.usdebtclock.org to really see some scary numbers. When I clicked it, the debt level equals $45, 125 for each citizen. Of course the numbers constantly click higher.
So one has to wonder? Why does everyone seem so happy and optimistic at these 2011 forecasts when charts and graphs – and even a 9-Inning Scorecard that CU Economist Richard Wobbekind presented – still show all of these plunging red bars?
Wobbekind wasn’t alone this year with a fairly upbeat forecast. On another event panel, Denver economist Patricia Silverstein presented a study by metro Denver economic developers that listed 100 measures that keep Colorado competitive. On the list, the state’s 67 “strengths” easily outweighed the 33 “challenges.”
Turns out, Silverstein said, Colorado continues to rank very high in everything from venture capital investments, stock IPOs, renewable energy sources, number of patents filed, high school ACT & SAT scores and finally, the lowest level of obesity in the country. Smiles all around.
And it’s reports like these that continue to get people packing their U-Hauls or jumping on the next flight (another stat is that Denver International Airport hit a record-breaking 52 million passengers last year) for the “gold” in them thar Colorado hills.
Only one small problem. Colorado lost 140,000 jobs in 2009 and 2010, and although Wobbekind is now calling for “moderate” growth, that translates into only 10,000 new jobs this year. The recession essentially gave Colorado a zero net gain in jobs for the past 10 years, Wobbekind pointed out.
So you ask, where’s the good news? With cheap capital, businesses are busy making investments, but mostly in equipment, computers and software – not new employees. Economists see an 8 to 9 percent increase in business fixed investment for 2011, a good long-term sign.
Consumers, the real engine behind the GDP, somehow have finally reduced their debts and saving rates look stable at around 5 percent. As a result, retail sales are actually getting back to pre-recession levels. Consumer spending on cars, clothes, food and other items now accounts for about 70 percent of gross domestic product.
Wobbekind is calling for U.S. GDP growth of about 3.5 percent in 2011, but he admits the majority view among economists is closer to 3 percent or lower.
Both businesses and consumers seem to be a pretty confident bunch all of a sudden. The CU Leeds Business Confidence Index just got back to 54.8 in the first quarter – just a little under the 54.9 in the second quarter of 2007 and up from 48.6 percent last quarter. U.S. consumer confidence hit an 8-month high this week, according to the Conference Board.
While some job recovery is taking place in the private sector, Wobbekind said it’s offset by a loss in federal jobs – not your typical scenario. “There’s an awful lot of repair that needs to be done at this point,” he said, describing the job picture.
Boulder itself, Wobbekind said, is faring better than most of the state. The latest unemployment rate for Boulder and Broomfield counties dropped a bit this week to 6.5 percent. Colorado home price appreciation turned negative in 2010, down 1.7%, but that beats Nevada’s downturn of 10 percent. Boulder may end up a percent or so.
Construction jobs in both residential and commercial sectors have taken “the biggest pounding,” Wobbekind said. Manufacturing jobs, in a slow decline for many years, will continue to shrink. On the upside, Wobbekind is forecasting a 15.7 percent growth in professional, scientific and technical services jobs. Depending on if your in an up or down jobs sector, wages might actually begin to increase this year.
So are economic forecasters just putting a happy face on rather dismal economic figures that still look much better when compared to the past few recession years? Or will 2011 surprise everyone with a better turnaround than expected. The real answer, you see, will come at the 2012 economic forecast.
The new Bart's Music Shack is located at 236 Pearl St., several blocks west of the prime Boulder downtown Pearl Street mall but worth finding the location for good vinyl and used CDs.
It's not real easy to find unless you know where it's at, but the reborn Bart's Music Shack at 236 Pearl St. is worth discovering if you like vintage vinyl as well as used CDs and music DVDs.
Bart Stinchcomb is back selling vinyl at this small outlet off Pearl Street, but now you can watch for the yellow sign on the street directing you in. The one-room store is located in the parking lot behind Borg Real Estates, and when I visited, music was being quietly piped outside, where there's also a few seats if you want to browse but maybe take along your lunch. A large CD sign sits outside as well.
The owner of Bart's CD Cellar, Value Music Concepts, closed one of the city's best music shops earlier this year, and that prime downtown site is being renovated for a new coffee shop by Ozo's Coffee, which has a popular coffee shop east on Arapaho Avenue.
The new store is not nearly as big as the former CD Cellar, but still well organized with vinyl and CDs listed by music category and artist names. Prices seemed reasonable for several of the albums I looked at, although I didn't notice a "bargain bin" with lower-priced possibilities.
Boulder still has Albums on the Hill near the CU university and the newer Absolute Vinyl, which shares space with Little Horse Books, on North Broadway. And the Beat Book Shop also carries some vinyl on East Pearl.