MECHANICAL CONTRACTING BESCHLOSS BEAT
U.S. future exceptionalism reposes in privately-owned businesses
BY MORRIS R. BESCHLOSS CONTRIBUTING WRITER
corporate framework, I came to the inexorable conclusion early on that the creative climate of entrepreneurial exceptionalism is best nurtured in privately-owned businesses.
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This belief is underscored by the fact that two- thirds of America’s traditional employment has flourished effectively in a hands-on- managed business enterprise that operates within a specific sector, which a particular
...Increasing shortages in big city high rises as well as in suburban and rural areas [are] leaving many homebuilders and developers high and dry, while creating opportunities for contractors,
architects/engineers and builders to react to this rolling demand.
decision-maker has come to know well. Being part of a conglomerate for most of my years of
business experience, I had the good fortune of being totally involved in the valve business. The corporate board of directors and top management, which I eventually became part of, did not deter my total commitment to my original company and subsequent acquisitions that were compatible with the industry in which I gained my experience at all levels. This bifurcated involvement allowed me to experience
the advantages of developing stature within a particular industry, while also coming to grips with the bottom line obsession that pervaded the publicly-held parent company. It didn’t take me long to realize that such multi-faceted
corporations as GE, Gulf & Western, International Telephone and Telegraph, etc. that reached their peak in the latter part of the 20th century, were not oriented to the particular sector in which their companies operated. They were more interested in how well the mixed operations performed as a profit making and cash generation entity for its original investors and stockholders. Today, there is a swing back to what is euphemistically
known as “core businesses.” This has been facilitated by spinoffs, which have generated substantial cash for the
aving spent the bulk of my 55-year business/industrial career activities developing and orchestrating businesses within a larger
surviving entity. Due to the changing demand structure — such as the switch from home-owning to rentals — the surviving central structure has been faced with the need to reeducate itself in the business from which it originally emanated. Hopefully, this turn of events has enhanced focused
ownership and/or a management that is focusing on a particular industry sector’s production, engineering, distribution and marketing — the age-old factors that have made American business and industry the pride of the world’s greatest economy.
Shopping malls in downturn as online shopping reaches highest levels
For years, the fear of a switch from shopping mall
activities to online buying has hovered over the nation’s and local retailers. Prior to the current economic fragility, this concern
seemed to be unfounded, as computer shopping comprised a relatively minor percentage of red-hot consumer buying patterns. But now, shopping centers are feeling the dual pinch of
shrinking buyer intensity as well as the explosive expansion of Internet purchases. This has caught the major national chains, especially, flat-footed, although smaller suburban and rural malls are also suffering. American cities, heavily reliant on sales tax revenues to
support municipal budgets, are major victims of reduced shopping center revenues. In effect, this is another nail in the coffin of the cash cows that most municipalities depended upon to balance their budgets. With municipal sales tax receipts on the down-slide for
six of the past ten years, alternative money-generating potentials are seemingly impossible to come by. This will require further belt tightening in already strapped municipal expenditures. Another effect of this changing set of circumstances is
the vacancy rate of existing shopping centers and strip malls. Currently, vacancies are running at 9.1% for malls, the most since 1990. In the smaller outlets, vacant space has exceeded 10%. Although much of the development of shopping
centers came about during the expansion to suburban areas of practically all of America’s big cities, the pace of growth of these retail outlets far exceeded the presumptive purchasing power relating to the population surge of these new residential areas. Although a potentially long-term economic improvement may remedy the current shopping center crisis somewhat, online buying will temper whatever benefits such overall consumer activity brings.
Corporate cash accumulation reflects decreasing future confidence
The liquidity survey recently released by the Financial Professionals Association speaks volumes. Almost 40% of
e Turn to BESCHLOSS on p 72
phc august 2011
www.phcnews.com
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