Gary Barlow would like to spend $80,000 to $100,000 upgrading the fuel
dispensers at his family's truck stop in Chesapeake.
But rather than stash away cash for a major investment in Frank's Trucking Center, Barlow said, he's spent the past couple of years saving for a rainy day.
"We're really trying to save all our money just to make sure we get by day-to-day first," Barlow said. "I'm not really sure what's going to happen next year."
Since the economy tanked in 2008, businesses have been saving money in record sums, and capital expenditures have not yet returned to the pre-recession level of 2007, according to records from the Federal Reserve.
Local business owners and economists say a fog of economic and political uncertainty hanging over Hampton Roads and the rest of the nation has driven big and small businesses alike to save rather than invest.
"These are dollars that could be used to hire employees, to purchase new equipment, to expand, and right now, they're sitting on the sidelines," said Jim Koch, a professor of economics and former president of Old Dominion University.
The impact of that hesitancy on the nation's economic recovery is clear, Koch said: "It's slowing it down."
Last week's elections notwithstanding, issues like the 2010 national health care law, military spending reductions, potential tax increases, government regulation, unrest in the Middle East and European debt woes all have contributed to a general sense of insecurity about the future, business owners and economists said in recent interviews.
Nicole Riley, Virginia state director of the National Federation of Independent Business, said many small-business owners have been in "maintenance mode," particularly leading up to Election Day.
So what happens now?
President Barack Obama clinched a second term Tuesday. Democrats kept their hold on the Senate, and Republicans kept control of the House. There's potential for the political gridlock of the past couple of years to continue.
Economically, many local business owners predict more of the same: a slow and potentially perilous struggle to regain footing.
Frank's Trucking Center was built in 1939 near the intersection of Interstates 64, 264 and 664 in Chesapeake. Barlow's grandfather bought it from "a guy named Frank" in the mid-1950s.
Barlow is the general manager, and he works with his brother, Willie, and his mother, Patricia. They expanded their facilities in the early 1970s.
Recently, the only upgrades they've made have been out of necessity, such as when aging equipment breaks and must be replaced.
"It would be great if I had a ton of cash where I could upgrade everything now," Barlow said. "The past four years haven't made that possible."
Barlow said the economy pulled a one-two punch on his truck stop.
First, higher fuel prices forced some truckers out of business and away from his stop. Second, the sagging global economy led to a slowdown in shipping through the local port, which resulted in less traffic at his store.
Before the recession, Frank's Trucking Center employed more than 60 people. That's dipped to 45 now.
Barlow's stories are far from unique in Hampton Roads.
-- Many of the customers at Window World of Tidewater in the past would have replaced the windows in their homes all at once, said co-owner Josh Reed. Now, because they feel uncertain about the future, they'll opt to replace only a few at a time.
The company hasn't grown as fast as Reed had planned, so he hasn't had as much money to invest.
"In the past, we definitely would have had more expenditures going out than we do now," Reed said. "We are just wanting to make sure there's more of a reserve available -- just in case."
-- Before the recession, 10 to 15 architectural firms competed for jobs against his, but now it's not uncommon for upwards of 70 to vie for work because it's so scarce, said Nick Vlattas, chief operations officer of Norfolk-based Hanbury Evans Wright Vlattas + Company.
Sometimes, even after firms spend money chasing jobs, the work still falls through because clients are worried about having enough cash.
Vlattas said his firm cut nonessential expenses, such as training and technology, to avoid major layoffs. The firm employed about 85 workers before the recession and has about 80 now.
-- Business owners used to plan for future growth more often when they picked out a new location, said Mark Warlick, senior vice president/partner with Norfolk-based S.L. Nusbaum Realty Co.
They'd lease or buy more space than they needed with plans to sublease the surplus to other companies until they could fill it themselves five years down the road, he said. This doesn't happen anymore.
Uncertainty "has basically just put the brakes on the growth of commercial business in the Hampton Roads area," Warlick said. "People aren't as gutsy as they used to be three years ago."
Warlick and an industry cohort, Bill Throne, first vice president over industrial properties for Cushman & Wakefield -- Thalhimer, said commercial and industrial real estate activity has been declining for three or four years, and neither believes it has turned the corner.
Throne said he has been rebuffed lately when he knocks on business owners' doors.
"I'm out talking to them about trying to expand. 'Would you like to lease a new building? Would you like to buy a new building?' " he said. "They say, 'No, we're not doing anything because we're going to wait to see what shakes out.' "
Businesses across the country have been stockpiling cash, and they've been slow to return to pre-recession spending levels on capital projects, according to data from the Federal Reserve.
In 2007, U.S. nonfinancial corporate businesses -- that's any corporation that is private, for-profit, domestic and nonfinancial -- had $1.5 trillion in liquid assets. That dipped to $1.4 trillion in 2008, but it climbed steadily to $1.7 trillion in 2011.
Those same businesses spent $1.1 trillion on capital expenditures in 2007. That dropped to a five-year low of $765 billion in 2009, and clawed back to just over $1 trillion last year.
Perhaps surprisingly, consumers are growing more confident about the future. A survey released Friday by Thomson Reuters and the University of Michigan showed consumer sentiment rose in November to its highest level in more than five years.
But businesses aren't as optimistic.
In September, the National Association of Manufacturers and the National Federation of Independent Business released the results of a survey of 800 small-business owners and manufacturers.
The organizations said 67 percent of respondents weren't willing to expand or hire new workers because there was too much uncertainty in the economy. And 55 percent said they would not have been willing to start a business at the time.
"It's safe to say the business community is operating cautiously today, but particularly in Hampton Roads, because of what we call the fiscal cliff," said Jack A. Hornbeck Jr., president of the Hampton Roads Chamber of Commerce.
Nearly half of the local economy is based on Department of Defense spending. If automatic spending cuts set to begin in January are not averted, this spells trouble for the region.
"You can't go very far into the economy of Hampton Roads" without finding somebody "affected in one way or another by DOD spending, directly or indirectly," Hornbeck said.
Bruce Thompson, CEO of Gold Key -- PHR Hotels and Resorts, sent a letter to his employees before the election warning them that Obama's re-election would bring about significant changes for the company that would "curtail or discontinue our plans for the future."
On Thursday, Thompson said his company has $130 million in projects under construction and $150 million planned for the future. He said he is putting the future projects on hold until he feels more confident.
"I'm not sure I'm as bullish on the region until some of these issues are settled," Thompson said of the health care law, sequestration, and possible changes in the tax code.
In Hampton Roads, as elsewhere, plenty of businesses still are investing.
The owners of Mannino's Italian Bistro weren't dissuaded by economic or political uncertainty when they decided to open a third location, in Portsmouth, earlier this year. The group opened its first restaurant in Virginia Beach about five years ago and launched a second in the Beach about a year later.
"We hoped that when the economy finally starts picking back up, we'll have a good, strong hold in the restaurant business over here," John Mannino, co-owner of the company, said recently from the Portsmouth location.
When the group of owners first came together, they originally planned to open a new restaurant every year, Mannino said. Their pace has slowed somewhat, but the group still plans to push ahead and aggressively expand their chain.
Gary Lisota, CEO of Beach-based defense contractor Valkyrie Enterprises LLC, also has found ways to expand.
His company, which provides a range of technical services, grew from 37 employees in 2007 to about 200. Valkyrie now has offices in 14 cities, and Lisota said the company would have been even larger had three attempts to buy other businesses not fallen through.
"I grew this company in the recession," Lisota said. "Even though there have been headwinds relative to a larger national economic picture, we've gone ahead and made major investments."
Lisota made some of those investments before the specter of sequestration began to haunt his dreams. If Congress doesn't act soon, automatic cuts to the Department of Defense could profoundly affect the military-dependent local economy and contractors like Valkyrie.
"I've had a lot of sleepless nights over the last six, nine months over sequestration," Lisota said. "Many times I think about ... these accolades (his company has received) and all this growth, but we could end up going bankrupt next year."
Lisota said the most recent acquisition effort he worked on for nearly a year cost the company $130,000 and left him weary. But he said he'll jump back into trying to acquire another company after the first of the year, while holding out hope that Obama and Congress can work together to avert automatic spending cuts.
"Standing on the curb and watching the traffic go by isn't the way to run a business," Lisota said. "You've got to get out in traffic and make your own luck -- even in hard times."
On a larger scale, Stihl Inc. abides by a similar philosophy.
The Beach-based manufacturer of hand-held power equipment has continually reinvested in the business, with the exception of a slowdown in 2009, said Bjoern Fischer, vice president of finance.
In August, the German-owned company opened a 55,000-square-foot addition to its accessories building, which cost $10.3 million. Stihl planned to hire 52 workers to staff the building. Stihl abides by a model of conservative and consistent growth, so executives do not react to periods of uncertainty, Fischer said.
Still, the company would be larger today if not for the recession, he said. It employed 2,325 workers in 2008, but it has 2,092 this year. The reduction came through attrition and a drop in the number of temporary workers.
Win, lose or draw?
Economists and business owners agree that the recovery will pick up steam when the fog of uncertainty burns off.
They disagree on exactly when that will happen and what it will take.
Lisota said a win by Republican presidential candidate Mitt Romney would have unleashed the "economic power that's sitting on the sidelines right now," but on the other hand, "just having some certainty as to what the future holds ... might make people breathe a little bit easier."
The election wasn't enough of a salve for investors, at least not initially.
The Dow Jones industrial average fell 2.4 percent on Wednesday, which was the fifth-worst one-day drop following a U.S. presidential election, The Washington Post reported. After another drop on Thursday, the stock market regained some of its losses on Friday.
Investors reportedly are looking ahead to the fiscal cliff and all that's riding on a compromise.
"We've had a Congress and the president not working well together," said Vlattas, the architectural firm executive. "Is that going to change now? I'm uncertain about that."
It has to change, or the recovery may falter, economists said.
Koch of ODU said the lame-duck Congress needs to work quickly to develop "some kind of grand bargain" before automatic spending cuts take effect.
Conciliatory rhetoric from Obama and House Speaker John Boehner following the election gave Koch hope that an agreement finally can be reached.
"Until action is taken to specifically deal with sequestration, the uncertainty will remain," said Greg Grootendorst, chief economist for the Hampton Roads Planning District Commission. "Perhaps the worst thing that can happen is this continued uncertainty."
When asked after the election if he feels any more certain about the future, Barlow, of Frank's Trucking Center, said, "Not yet."
He'll keep saving his money, he said, until he's certain any investment would yield a return.
"If the economy goes in the tank," Barlow said, "I have to use it to pay my bills."
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