WorldCity Business Magazine

(5) CEO roundtable - In a growth mode but a somber mood

by WC

We are in growth mode, declared Fernando Capablanca, President and CEO of Union
Credit Bank, a Chilean-owned community bank that has nearly doubled its business over the past 12 months. The bank is expanding its corporate lending activities and riding the wave of popular support for environmentally sustainable projects.

The bank proudly displays its green credentials, especially the fact that it is one of only nine banks in the United States, and the only Florida bank, to sign the United Nations Statement by Financial Institutions on the Environment & Sustainable Development. We are working closely with Mayor Manny Diaz, to make Miami a green city, said Capablanca.

Other participants at our CEO Roundtable breakfast, held at the Mandarin Oriental hotel, were also in growth mode.

India is driving our business, said William Nobrega, founder of Miami-based The Conrad Group, an emerging markets strategic planning firm with offices in Sao Paulo and New Delhi, and another soon in Mumbai. With hedge funds and other institutional investors rushing into India, the country has been a goldmine for The Conrad Group.

Nobrega expects a big boost to his business when his book Riding the Indian Tiger comes out in December (see excerpt pages 19-20). In the pre-launch phase of the book, the demand for speaking engagements has been incredible, said Nobrega, who expects to double his firms revenue from $12 million to $25 million next year.

Opportunities come not just from U.S. companies looking to get into India, but also Indian companies expanding abroad. Indian firms are now approaching us for entry strategies into the U.S. and Brazilian markets, said Nobrega. India is quickly developing world-class companies. They have a lot of capital and are making big deals. Promising sectors in South Florida that could attract Indian firms, he said, include biotech, medical devices, aerospace, shipping and cruise lines. In Brazil, the biggest play will be in biofuels, he predicted.

Oscar Garcia, founder and CEO of Interflight Global, an aerospace consulting firm, with offices in Quito, Madrid and one opening soon in Dubai, already sees Indian investment happening in South Floridas aerospace sector. One of his Indian clients, he said, recently set up a pilot recruitment center here, noting that South Florida is the third largest flight training center in the world.

Miami is a mecca for this industry and all the aerospace people know it, said Garcia, who as past-president of the Greater Mimai Aviation Association, spends a lot of time steering European and worldwide aerospace business to South Florida.

Mexican dotcom entrepreneur Leonel Azuela steered his way to Miami to set up his digital marketing firm, shortly after he and two colleagues at Harvard launched Quaxar in 2000. After surviving the dotcom bust of 2001 and gradually finte-tuning his business model, Azuelas company grew by 40 percent this year and he expects similar growth in 2008.

Growth is fueled by a greater emphasis at large corporations on database marketing and e-loyalty programs. Two years ago, about 7 percent of marketing budgets at Fortune 500 companies were dedicated to digital marketing, today it is over 10 percent and it could account for as much as 30 percent within five years, explained Azuela. That kind of momentum, will allow Quaxar, which recently opened a Buenos Aires office, to more than double its annual revenue to $5 million by 2009, predicted Azuela.

With companies like Quaxar, InterFlight Global, The Conrad Group and Union Credit Bank opening new offices and expanding their businesses around the world, no one is happier than the legal experts.

James Barrett, managing partner of the Miami office of the global law firm Baker & Mckenzie, said business has expanded by 36 percent in the past three years. Much of that growth is a function of lots of inbound investment, especially form Europe, and multinational companies based in South Florida expanding their businesses throughout the region and beyond.

But Baker & McKenzies business is also being driven by an increase in litigation particularly in the real estate sector, as condo developers abandon projects and condo owners try to get out of contracts. And thats where the discussion turned sour and the mood turned somber, as each of the participants began to contemplate the real and present danger of both homegrown economic crises and external shocks upsetting their optimistic growth plans.

Barrett was spooked by the prospect of a sharp rise in home foreclosures and the impact that might have on consumer spending. Today, some 5 percent of mortgages are in foreclosure. What happens, asked Barrett, if that rises sharply, as some predict, and 15 or 20 percent of the workforce are forced to sell their homes? Barrett predicted an economic slowdown. Its going to be difficult and it could come next year right at election time.

Azuela, too, was troubled by the U.S. economic forecast. It was not so much the prospect that companies would be forced to cut marketing budgets that troubled Azuela, but rather the impact of recession on Wall Street. As an entrepreneur, who has built a successful business, Azuelas goal is to eventually sell his company or take it public. An economic slowdown tends to escalate through the financial markets and that could delay my exit strategy, said Azuela, recalling that there were a lot of good companies in 2001 that simply dried up for lack
of capital.

For the others, however, the fears were of another nature. Its an external shock that worries me the most, said Fernando Capablanca. I have been in banking long enough to experience plenty of problems, like the current real estate crisis. Well survive that. Its the prospect of a U.S. terrorist attack that really scares me. William Nobrega joined in. What keeps me awake at night is the potential for a military strike on Iran. If that happens, youll see oil at $150 or $175 a barrel and that will put the kibosh on the Indian economy, the Chinese economy and
ours, too.

The thought of even more expensive oil was also on Oscar Garcias mind. The killer for our industry is fuel price, he said, emphasizing the need for massive investment in alternative fuels, not just for cars, but also for airplanes. He made a dire prediction: If we cannot find a power source that is cheap, clean and inexhaustible, the aviation-aerospace industry will be grounded within 20 years.