Members of Tampa Bay's business community don't need Treasury Secretary Timothy Geithner or anyone else to tell them the credit noose has tightened.
It emerged as one of the dominant themes in the St. Petersburg Times' annual business leaders survey.
More than a third (36 percent) of leaders said the credit crunch is the country's most pressing economic issue, even a bigger obstacle than rising unemployment and the housing crisis.
In a similar vein, 19 percent pointed to the credit squeeze as "the single most pressing problem'' facing the Tampa Bay business community. That's up from a mere 3 percent a year earlier and ranks the issue locally as second only to the ongoing slump in the housing market, which was cited by 36 percent.
"The banks are hoarding money; the banks aren't lending anything,'' said Jeremy Dixon, vice president and general manager of Brandon-based temporary staffing agency A1 Temps. The credit restrictions, Dixon believes, are fueling a vicious cycle.
First, companies struggling to expand find their credit lines either reduced or pulled. Scared business owners "feel like the world will not be better tomorrow than it is today (so) they typically retract,'' Dixon said. Cost-cutting translates to layoffs. Higher unemployment means businesses have fewer customers … so bankers tighten their credit. Repeat.
Typically, demand for A1's nearly 3,000 on-call temps falls off in January by 8 to 10 percent. This year, demand plummeted 20 to 30 percent. "Typically (companies) lay off the temporaries first,'' Dixon said. "A lot of those are back-office jobs that came here because of lower wages. That left us more vulnerable.''
Marty Traber, a partner with Foley & Lardner in Tampa, dissects the credit crunch from his multiple roles: as an attorney, as a community bank board member and as an investor in the recapitalized Gunn Allen Financial brokerage looking to grow.
The holdup, he says, is that loans are not being doled out based on the health of a company, but rather "the perception of what could happen. … It's the uncertainty.''
A year ago, community banks would have made a small loan to a company with decent credit to facilitate the hiring of 10 additional people at salaries paying $40,000 to $50,000 apiece. Now, they're reluctant, he said.
Brett Couch, Florida regional president of Regions Financial, disagrees that the credit crunch is pervasive. Yes, terms have tightened and commercial real estate loans, in particular, are down.
But based on its most recent statistics from February, Regions' Tampa Bay operation has posted double-digit increases in its small business and consumer loans from a year ago while commercial loans (outside of commercial real estate) are growing in the single digits.
"Our small business bankers, our branch managers and our commercial bankers … we're making more calls than we ever have,'' he said. "For customers that are interested in establishing a full banking relationship … and they have capacity to repay the loan requests, we are seeing they can get access to credit.''
With or without extra cash from their banks, companies are clearly looking to cut their way through the recession this year, according to the survey.
The most popular belt-tightening tactic that leaders intend to employ is reducing staff travel (64 percent) followed by a freeze or cutback in hiring (62 percent). Forty-seven percent said they planned to freeze or reduce pay.
Nearly 32 percent of leaders plan layoffs this year, up from just 9 percent in 2008.
Already, economists have warned that Florida's unemployment rate, now at 8.1 percent, may reach double digits this year. The bay area's unemployment rate is 8.3 percent, the worst major metro area in the state.
Just a few years ago, Florida led the country in job growth and was adding 1,000 people a day as a mecca for both retirees and job seekers.
Consider this measure of how the bay area's reputation as a job magnet has reversed. In the Times' 2006 survey, 17 percent of leaders pointed to growth management as the area's single most pressing problem. No one mentioned it this year.
Until the employment picture brightens, it will be tough for real estate prices and the economy as a whole to start climbing again.
"The key to any economic recovery is jobs,'' said Ray Sandelli, senior managing director of CB Commercial Real Estate in Tampa. "You could have the best interest rates and the best terms available so someone could buy a house, but if they don't have a job or are fearful of losing their job, they're not going to buy.''
Not every industry is ailing.
Raytheon Corp., which employs about 2,100 at three locations in Pinellas County — St. Petersburg, Largo and the Bardmoor area — is still growing modestly thanks to multiyear military contracts. Among other contracts fueling new jobs there, Raytheon last year won a $400 million air defense systems contract with the Navy.
"We're probably a little more insulated from this economic downturn,'' said Mitchell Lee, Raytheon vice president and site executive for St. Petersburg and Bardmoor. "In the real heyday of the dot-com companies, we didn't look all that attractive to a lot of people. We look pretty darn good right now.''
Raytheon was among just 17 percent of those surveyed who planned to increase their employee headcount this year; 25 percent predicted a drop.
Among other survey highlights:
• Roughly half (52 percent) will make fewer capital expenditures this year.
• A clear majority (62 percent) don't see the local housing market turning around until 2010; 19 percent said this year and 15 percent said 2011.
• There was a macro/micro disconnect, as only 16 percent predicted the economy would do better in 2009, while 34 percent saw their own business improving.
Most leaders thought Gov. Charlie Crist was doing a fair to good job after two years in office. Sixty-four percent gave him a "B" grade or higher. Only 7 percent gave him a "D" or lower. Those that viewed the governor highly gave him strong marks for tackling issues and keeping promises. Critics said he has done a poor job of addressing taxes and insurance, has been too focused on issues like popularity, marriage and a vice presidential bid, and didn't follow through with his agenda.
Survey takers unleashed a far more harsh critique of the federal government, with more than half (51 percent) giving the government a "D'' or an "F'' for its handling of the economic crisis.
If they could do one thing to improve the bay area, more than a fourth (28 percent) said improve infrastructure and transportation. Improving schools and creating jobs tied for second with 13 percent apiece.
It's a chilly climate for employees looking for a wage boost. Fifty-eight percent said their average employee's wages would stay about the same in 2009. But there are a few lucky workers out there. Out of the respondents who said their average wages will rise, 7 percent of them forecast a wage hike of 10 percent or higher.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.