| Vince Kolber Quoted by ELA News November 25, 2003 |
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ELT E-News Daily News From ELA "What Lessors Are Saying About…The Impact of an Improved Unemployment Rate" The decrease in the U.S. unemployment rate that was announced earlier this month was heralded by the media as proof that we are no longer in a “jobless” recovery, and that economic growth is creating demand that will force companies to hire more workers. Particularly since the recovery was attributed to the service sector, which includes retailers, banks and other financial companies, ELA members were asked what impact they think the lower unemployment rate has on the leasing industry. Lessors’ sense of the significance of the unemployment figure on the leasing industry ranged from none at all to that of a general overall mood change in the economy from which leasing can benefit. For instance, Mike Powers, Suntrust Leasing, doesn’t see a direct correlation, at least not in his practice. Jeanne Early, Key Equipment Finance, took a wider scope of the potential impact of the lower unemployment figure and responded, “Good news! Stronger employment figures support those advocating the U.S. economy is expanding. This is yet another reason to boost the business sector's confidence that it is time to make those long-delayed capital investments.” Dave Churchill, Key Equipment Finance, said, “Companies are making capital expenditures and it has a reflection in people keeping their jobs.” He added that people are much more optimistic, albeit cautiously, than in July and August. The leasing market segment also appears to have an effect on lessors’ interest in the unemployment indicator and its significance for their business. Vince Kolber, Residco, commented that his markets, aviation and rail, are over supplied with capital, and jobs recovery isn’t going to put a dent in that for a year or more. Further, he added, “We shouldn’t get, or even want to get, to where we are pumping more capital into this situation so rental rates and existing portfolios take further damage. We need to get into a situation where we have more of a capital constraint so rental rates can recover enough to bolster rates that have been ravaged in the last 24 months.” John Morand, Relational Funding Corporation, replied that growth in employment and capital spending “bodes well for value-added lessors, which help customers maximize the long- term value of their assets. Spending in replacement products which bring increased efficiency will lead.” A number of ELA members expressed mixed reactions about lower unemployment figures having any impact or indication for the leasing industry. They demonstrated the cautious optimism that has become the prevailing attitude in the business community. Ted Brownrigg, Financial Pacific Leasing, LLC, said, “I don’t see any change. But it’s another of the signs that we’re starting to see that makes us feel good about next year.” Tom Howard, Eplus Group, said, “We’re starting to see some capital projects that had been delayed come back on the table.” But he believes that there needs to be continuing improvement since the economic indicators seen so far haven’t had an impact yet. He added, “It just isn’t there yet.” Carl Chrappa, Independent Equipment Company, seemed also to be seeing both sides of the picture that could easily sum up what the lower unemployment rate means to the leasing industry. He described talking to other people in the leasing industry who are having mixed results, but said, “The outlook is very positive and the overall morale is being cured as the rate drops. For us, it’s better times ahead.” |
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