Strome Business Minute With Dr. Jeff Tanner

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Downtown Norfolk is just a little more than a year away from losing its largest tenant, Norfolk Southern, but their building will likely have a new owner soon. Towne Bank, the largest bank in the 757, has said that it will not move to Norfolk from its campus in Suffolk; rather, I expect that the Corporate Banking team, brought over from SunTrust after the merger with BB&T, will locate there, along with other employees serving the Norfolk area. TowneBank released statement that negotiations to purchase the building are ongoing, and the final point seems to be a transfer of the parking agreement with the city at an adjacent garage. With 21 floors, TowneBank won’t fill it up but the sale is good news. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Up for discussion in the General Assembly is the right to work law, which allows workers in a unionized company to work without joining the union. Repeal of the law forces all workers in unionized companies to join and pay dues. According to George Mason professor Jeffrey Eisenach, a comparison of states with right to work to states without right to work indicates negative outcomes in states without right to work. Between 2001 and 2016, right to work states enjoyed lower unemployment, more than double job growth in the private sector, more than ten percent higher income growth, and significantly greater growth in per capita output and in manufacturing output. Further, companies are more likely to locate in right to work states. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Several bills to raise the minimum wage over time to fifteen dollars are being presented in our General Assembly. Other places have already done so with these results. Fast food employees will make ten to twenty percent more but over ten percent will lose their jobs. In Seattle, the net effect of a minimum wage hike was a reduction in earnings as hourly workers had their hours cut. Another likely effect is increased automation, as it becomes cheaper to replace people with machines. The federal government expects ten percent of affected workers to lose their jobs, but the tight labor market may reduce the impact. Wages have already risen for some but wage hikes without stronger upskilling programs may leave many workers unemployed. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Norfolk mall MacArthur Center will lose three more stores by the end of the month, J Crew, Fossil and Brighton. This mall is actually a good traffic mall during the year but the holiday season didn’t seem to go well as the mall was empty just before Christmas. The broader question being debated is whether there is a future for malls while the local question is what to do with MacArthur. What some call the death of traditional retail is really just normal comings and goings as fashion tastes change and companies fail to keep up. That’s my sense of all three – they have problems in merchandise mix rather than how they market. But that doesn’t answer the question of what to do with the mall. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Google announced last week that it will phase out third-party cookies in their popular web browser, Chrome, over the next two years. The initiative, which Google calls Privacy Sandbox and was first announced in August, will affect more than half of all web users. The plan is designed to increase privacy for users of Chrome while still maintain an ad-supported web, though advertisers are skeptical. What’s a third party cookie? It’s a tracking device placed on your computer by a company that wants to know where you go on the web and is used to determine what ads you see. You can block cookies through your web settings, which is Firefox’s default setting but Google’s plan means that you won’t have to. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Cincinnati-based Bon Secours Mercy Health continues to acquire Virginia hospitals, buying Petersburg’s 300 bed Southside Regional Medical Center, the 105 bed Southampton Memorial Hospital in Franklin and the 80 bed Southern Virginia Regional Medical Center in Emporia. All three were purchased from Community Health Systems, a Tennessee-based company operating hospitals in 17 states. With the sale, Community Health exits the Virginia market, while Bon Secours now operates forty eight hospitals in seven states and Ireland. A Robert Wood Johnson study found that when consolidation of hospitals concentrates market power, price increases and quality decreases. It’s unclear whether these changes concentrate market power any further but it’s basic economics: Without competition, there is less incentive to provide higher quality care and to maintain lower costs. To find out more, visit odu.edu/busi

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. What’s Popeye’s favorite food? In the sudden death round of Family Feud Canada, Eve Dubois confidently replied, “Chickeeeen!” As her family groaned of dismay, she quickly realized she had made a ten thousand dollar mistake. In case you’re wondering, they meant Popeye the Sailor and his favorite is spinach. But Popeyes Louisiana Kitchen was thrilled with her response. So thrilled they gave her ten thousand dollars! Well, ten thousand dollars’ worth of chicken! The video of her response went viral and gave Popeyes the kind of exposure that you just can’t buy. Just as important, Popeyes’ marketing director Bruno Cardinali, noted that her response shows how strongly the brand is growing, even in Canada where they are relatively new. Maybe it’s due to their sandwich. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Back in October, Virginia signed a deal with Dominion Energy to buy renewable energy, including wind-generated. But Virginia is one of nine states that doesn’t yet produce wind energy. That’s about to change. Dominion announced the signing of a contract with Siemens Gamesa, a Spanish manufacturer of turbines, which will be installed on the Coastal Virginia Offshore Wind farm just off Virginia Beach. Construction on the wind farm actually began last June and is expected to be complete later this spring. While Virginia has a goal of generating thirty percent of energy needs by wind before 2030, a goal for this farm is to determine how many turbines will be needed and whether offshore wind farms will generate more electricity than on shore. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. CoStar, the Richmond-based real estate data company that owns familiar brands like Apartments dot com, plans to double its workforce in Richmond, from one thousand to two thousand workers. Nearly five years ago, when the company first located in Richmond, they announced plans to hire seven hundred and fifty people, so this growth has been very rapid. The company will occupy a new building in the Navy Hill development in downtown Richmond, as part of a revitalization of that area. This is the same area where the proposed arena will be built. CoStar CEO said that without the Navy Hill project, this workforce growth would have gone elsewhere. In addition to the arena, plans include a convention center, retail and restaurants, housing and more. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. We talk a lot about diversifying our local economy, but people often overlook our strong and growing food industry. From peanuts and coffee to seafood and soybeans, we have a strong food industry in the 757. Now add olive oil. International olive oil manufacturer Acesur USA LLC purchased an eighty eight thousand -square-foot, two-story manufacturing facility in Suffolk for just over 5 million dollars where they will manufacture olive oil. They import the olives from Spain to make the oil and they have other another plant in NY. Acesur has been producing, packaging and marketing olive oil since 1840 and is headquartered in Dos Hermanas, Seville, Spain. It bottles olive oil brands such as Coosur and La Española and exports to more than 80 countries. To learn more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Zombies are the walking dead. Zombie companies are those unable to earn enough to cover their debts three years in a row. They’re already dead, but super low interest rates allow them to borrow money and walk around, sucking up labor and capital that could be better used elsewhere. Moreover, they tend to borrow from weaker banks, further draining the economy. But Denmark’s Central Bank has charged negative interest rates for nearly eight years where zombies have actually declined and the overall level is low compared to other countries. One reason is that there is little reason to stay in business if it’s failing; employees are well-taken care of and owners don’t retain the company debt there, which is so often the case here. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Federal taxes change in several ways this year. For example, for divorces taking place last year and into the future, the person paying alimony now has to declare it as income and pay taxes but the recipient does not. If you divorced before last year, there are no changes. Retirement savings have also changed. Max contributions have gone up for individuals and for companies, plus you can now contribute to your IRA no matter how old you are, as long as you have earned income. You also don’t have to take any out until you’re 72. There’s also a new shorter form for filing for seniors 65 and older. As always, though, consult a tax professional to see how these changes affect you. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Companies used to locate by natural resources – like steel companies near iron ore and coal mines. Now they locate where the workforce is. The Brookings Institute reports that 90 percent of all new STEM jobs were added in Boston, San Francisco, San Jose, Seattle, and San Diego, places already high in STEM workers. Their job growth constrains housing supply causing prices to rise. Infrastructure, like roads and utilities, can’t keep up either. Furthermore, these jobs that command high salaries, pricing smaller companies ut of the market for labor. You’d expect jobs to move to lower cost areas, but most of that is to offshore tech hubs. While secondary hubs can develop around strong STEM universities like ODU, it’s a long process requiring strong regional cooperation. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Do

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Huntington Ingalls, parent of Newport News Shipbuilding, saw a significant increase in short-sales during the first two weeks of December. Short sales are an investment where you borrow stock and sell it. When the loan is due, you have to give stock back, so you hope the price goes down so you can buy it back and repay the loan with lower-cost shares. Your profit is the difference. Buy a stock at ten dollars, sell at eight, and you make two dollars. Short sales increased over twenty percent in the first half of December for Huntington Ingalls, which means more people think the stock will go down. However, total short sales only represent about two point three percent of the outstanding shares. To find out more, visit odu.edu/business. This Strome Business Minute has been presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Over the holidays, the question I got asked the most was, “Can the stock market stay healthy in the coming year?” The answer is yes of course, but don’t expect an increase in the Dow of twenty-eight percent like last year. That increase came off a major decline in December 2018. But even the two-year increase in the Dow was pretty phenomenal. The real question isn’t whether stock prices will go up but whether earnings will. Unfortunately, predictors don’t look good. Manufacturing numbers are down, as is the Conference Board’s Consumer Confidence Index. Barring a trade war or a shooting war, the economy should grow slowly, which could mean greater stock price volatility as earnings vary, but relatively flat or modest overall market growth. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. If you own Dollar Tree stock, you don’t have to sell, though you may have gotten an offer from TRC Capital Investment at $89.88 per share, more than 4 percent below market value when the offer was made. They made a mini-tender offer, any offer for less than five percent of the outstanding shares of a company. It doesn’t mean that TRC wants to acquire all of Dollar Tree and there is no relationship between the two companies. So why do it? Sometimes, buyers want to catch shareholders off guard or create concern that the stock may fall and make a quick buck when shareholders sell at the offered price but if you have Dollar Tree, you don’t have to sell your stock. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Only a little more than twenty percent of America’s hospitals are for-profit, a fact that doesn’t seem to affect health care costs. In fact, hospitals account for more than four times the cost of health care than do prescriptions. President Trump’s administration just finalized a rule that requires all hospitals to provide greater pricing transparency, and no, hospital administrators are not happy. But such transparency is necessary for competition, and greater competition should drive costs down. Indeed, hospitals have been merging at an increasing rate to achieve economies of scale and stronger negotiating power with insurers, but these mergers have also created markets with little or no competition. Transparency by itself won’t matter if there are no competitors. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at

The Navy is adding two carriers, at a time when many other countries are also making significant additions. China plans to have six, Japan is converting two destroyers to carry jets. It’s easy to see why – in Korea, carrier planes flew forty percent of the missions, in Viet Nam it was over half but in the Afghan war, it was three fourths. But while we have twice as many as China, some critics question whether these behemoths are the best option. Long vulnerable to submarines, many smaller ships are now carrying rockets and missiles that can not only go farther than planes, but as General David Berger wrote, increasingly place carriers at risk. It’s good that we also build submarines in our region. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. SVT, a robotics programming company, has grown significantly since I first met them as part of 757 Accelerate. 757 Accelerate is a program funded in part by Go Virginia that provides coaching and training to entrepreneurs who have started a company but need to accelerate their growth. The program was developed to keep start-ups here in our area, rather than leave to find help and funding in other cities. SVT just opened a six thousand square foot production facility in Ghent, sharing a building with Troopster, another 757 Accelerate graduate. SVT employs seven people locally and three elsewhere, and plans to double in twenty twenty, which is exactly the type of growth envisioned when 757 Accelerate was created. To learn more, visit odu.edu/business. This has been a Strome Business Minute, presented by the Strome College of Business at Old Dominion University.

I’m Jeff Tanner, Dean of the Strome College of Business at Old Dominion University and this is a Strome Business Minute. Regrets, I’ve had a few, but I’m no Frank Sinatra. In a recent study, three out of four said they have at least one financial regret. No surprise, most of those with a regret said it wasn’t saving enough, and number one on the list is that they didn’t start saving for retirement soon enough, followed by those who just don’t maintain an emergency fund. Third among the saving regrets was not saving enough for college. The reason people don’t save enough is pretty simple – they spend too much. But many spend too much because they don’t know what the right amount is to spend, such as no more than twenty-eight percent to ALL housing expenses and no more than thirty-six percent toward all obligations. To find out more, visit odu.edu/business. This Strome Business Minute is presented by the Strome College of Business at Old Dominion University.