MAHONING VALLEY Bank woos small businesses, citing economic upswing

The news is mostly good for the area, an economist says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
YOUNGSTOWN -- The chief economist for National City said an improving economy makes this a perfect time for the bank to launch its most intense small-business sales effort.
A farmer doesn't sow seeds in the fall, but in the spring, when growing conditions are improving, economist Richard DeKaser said.
He spoke with the press Wednesday in Youngstown as the bank was holding what it called its "Small Business Super Blitz" in Ohio.
Local and corporate executives visited more than 1,600 small-business owners in Ohio on Wednesday. In the Mahoning Valley, 25 teams were to visit about 175 businesses.
Thomas Hollern, area president for National City, said the teams asked about the health of the economy and the small businesses for a survey to be released in coming weeks, and informed business owners about bank loans and services.
The bank has never undertaken such a large one-day sales effort locally, he said.
DeKaser said he was skeptical when he first heard of the effort but learned similar one-day sales efforts in Pennsylvania and Michigan led to new banking relationships.
Economic timing
Now is a good time for the bank to recruit small-business customers because the economy is picking up, he said.
The gross domestic product, the value of goods and services produced in this country, went up between 5 percent and 6 percent in the third quarter, making it the best quarter since 1999.
The economy should continue to improve in the last three months of this year and in 2004, he said.
Businesses have held down inventories because they were uncertain when the economy would improve, he said. Now that the economy has picked up, they are being caught short and will be ordering more goods, he said.
Also, federal tax cuts will put more money in consumers' pockets next year, and businesses will make investments to take advantage of federal tax incentives that expire at the end of 2004, he said.
The local economy also should improve as the business cycle should finally begin to favor this area, he said. As businesses build up inventories, more orders will come to local manufacturers, he said.
Additionally, the value of the dollar on international markets has been falling for the past 18 months, which has made domestic products cheaper. From 1995 to 2002, the value of the dollar rose 30 percent, which badly hurt manufacturers, he said.
Imports still hurt
One negative will remain for the local economy, however. Area manufacturers will continue to be hurt by imports because the area specializes in steel and other products that are being challenged by foreign goods, he said.
DeKaser said he thinks stocks are now fairly valued or slightly undervalued after market losses in recent years. He thinks businesses are one year into a three-year trend for above-average growth in corporate profits.
shilling@vindy.com