Rotary Club of Charleston

Defense Contracts Sustaining Small Businesses

March 23, 2010: Bill Crowe spoke to the club about gaining traction in small business during the current recession. Bill gained valuable experience spending several years running his own company, Aerotech, and in 1998 he retired and went to work for an IT company in Virginia. Recently Bill, accepted a position as the Vice President for the South East Region of the Copper River Native Association, an Alaska Native Corporation. Bill’s remarks focused on the utilization of government contracts as a stable source of income for small to medium sized businesses, his theories are based on the thoughts that follow.

In the tri-county area, Spawar, The Naval Weapons Station and the Air Force Base there are between six and eight billion dollars worth of defense contracts available to sustain local businesses and our economy by providing valuable jobs to our citizens. To illustrate this impact Bill shared this observation “North East Virginia is the hub of defense contracting and the employment rate in that area is less than 1%” this is a powerful statistic in this current recession.
Because 85% of small businesses fail within the first five years of opening, and bank financing is slim and private funding is expensive, Bill points out that consistent contracts are a way for small local companies to “gain traction”. In recent years there has been a noticeable shift in the thinking of contracting officers, as they realize that small businesses can team up with large corporation to fulfill their needs, and the agency works towards its quota to small disadvantaged businesses. There are additional benefits for companies denoted as service disabled veteran owned companies, and Alaskan Native Corporations.

In summary Bill stated the government is going to be the meal ticket as the country continues climbing out of this recession, and businesses in the lowcountry may as well take advantage.

Reported by: Elizabeth Wooten Burwell, Keyway Committee Chair

Investing in the Leaders of Tomorrow

March 16, 2010: A new charter school for gifted and talented students will help the area develop tomorrow’s leaders for the area, according to organizers of the Palmetto Scholars Academy.

“If you are not helping gifted students, you are holding them back,” said Rotarian Win Gasperson when introducing the meeting’s speaker, Dr. Shelagh Gallagher of Charlotte. “There is no middle ground.”

Gallagher observed that with big changes going on in the world, strong leadership is needed more than ever. For today’s students to turn into tomorrow’s leaders, they need a where they can learn to “sustain innovation, think historically, appreciate complexity, communicate clearly across cultures, respect diversity and practice ethically.”

But hundreds of talented students in the Lowcountry aren’t challenged enough to help them develop to their potential, in part, because current schools focus on bringing the bottom of classes up to the expense of those at the top, she said.

It’s a myth, Gallagher said, that these gifted students will be OK – that they’ll figure out how to be challenged. She asked members to think how a talented basketball player isn’t left to his own devices as less-talented ones are brought up in skill level. Instead, the talented player often gets extra help.

“If Michael Jordan had not had that kind of support, it’s very likely he would have become kind of bored,” she said. “Why can’t we do this for the areas of society that will actually develop our civilization rather than just entertain us?”

Gallagher said a school that targets gifted and talented students will help them to develop intellectually and become the leaders of tomorrow.

The Academy is seeking to open in August for students in grades six through eight. Eventually, it will run through high school.

“This school is going to be a national model in bringing the business and technology communities together to reverse this trend,” noted Stacey Lindbergh, a North Charleston Rotarian who chairs’ the group putting the new school together. More info: www.palmettoscholarsacademy.org
ALSO TUESDAY, the club welcomed a GSA group from the state of Parana in Brazil. In a short slideshow presentation, members heard from the five visitors – two educators, a business administrator and two dentists. Among the statistics they provided: Brazil has almost 200 million people. It takes up 47 percent of the land mass of South America. Parana has 84 Rotary clubs and more than 2,000 Rotarians .

Mark Smith gave the invocation and pledge. Tom Clymer provided information on the charity Duck Race. Sue Sommer-Kresse introduced the GSE team.
Reported by: Andy Brack, Keyway Committee

Come Laugh with The Charleston Riverdogs

March 9, 2010: Dave Echols introduced Mike Veeck, Owner and President of the Charleston Riverdogs, as our guest speaker.

Mike began by telling several Rotary jokes and a few jokes about Club Rotarians that he knows. He then told several jokes and humorous stories about his days in Chicago.

His theme was that for the past 14 years he’s been trying to make the people of Charleston laugh. He said that people love the sound of laughter. His goal is to try to make people laugh to bring them into the stadium to see ballgames.

Mr. Veeck’s presentation was a series of unrelated stories and humorous experiences he has had in life, particularly revolving around his career in working with several baseball franchises.

Mr. Veeck stated that he has been in Charleston for 13 years now and that attendance at Riverdogs games has increased every year that he has been here.

Mr. Veeck stated that these are not the worst of times but the best of times. Before his father died he told him to “be happy.” He said that he tries to share compassion and joy with others… that’s what life is all about.

In the question/answer period, he was asked what it would take to go from a single A team to a double A team. His answer was that they would like to become a double A team, however, to obtain that status, the Riverdogs would have to maintain a 300,000 per year attendance record. Currently the attendance is at 280,000 annually.

Reported by: William K. Christian, III Keyway Committee

The Recession and It’s Impact on Community Banks

March 2, 2010: Robert E. “Chip” Coffee Jr., President and CEO of Tidelands Bank, spoke today regarding the recession and its impact on small banks. Mr. Coffee, a native of Camden, South Carolina and graduate of the Citadel, has been involved in banking along South Carolina’s cost for over 28 years. He began his career in the Management Training program with South Carolina National Bank in 1970 and furthered his banking education by attending The Stonier Graduate School of Banking at Rutgers University and The National Commercial Lending Graduate School at the University of Oklahoma.

Mr. Coffee began his Rotary presentation with reference to the recent Post and Courier article in which Tidelands Bank discussed their recent “informal memorandum of understanding” or MOU, with the South Carolina banking commission and the Federal Deposit Insurance Corporation. In the article, Mr. Coffee stated “the terms of the agreement are ‘mild’ and have no direct impact on the bank’s customers, deposits or day-to-day operations.” He explained the government’s use of “informal” MOU’s have become more common in the past year and noted that Bank of America operates under a MOU. The terms of the MOU agreement require Tidelands to:

* Submit a plan to regulators to increase capital on hand and maintain a key ratio at a minimum of 8 percent of the bank’s total assets, while maintaining its current standing as a “well-capitalized” institution. The ratio in question at Tidelands was at about 6.59 percent at the end of last year.

* Develop specific plans to cut delinquent loans and other troubled assets;

* Implement a strategy to reduce its exposure to commercial real estate loans; and develop a plan to improve liquidity.

To convey the gravity and impact of the past year, Mr. Coffee described the “great recession” as the “most difficult year in my career.” This paradigm shift and emphasis on the capital preservation has forced banks of all sizes to reevaluate their business practices. Mr. Coffee outlined the four categories of banks: Commercial, Large Regional, Shadow and Community, and the important role they play in our economy. Although different in size and role, the underlying theme that “capital is king” reigns true for all banks. With higher capital requirements, banks have two options: (1) raise more capital or (2) shrink bank to achieve an 8% ratio. He explained that the first option is not only very difficult but also produces diluted capital. In addition to capital preservation, Mr. Coffee noted the following critical issues for Community Banks: holding more commercial real estate, the impact of 2009 real estate drops, “Under water” mortgages, deposit premiums, liquidity improvement, and working with regulators.

On a national level, Mr. Coffee discussed the critical issue of job loss and surviving a “consumer-less recovery.” Without the creation of new jobs and security of current employment, our nation faces an uphill battle against recovery and return to normalcy. As our nation and local communities struggle to survive the current economic conditions, our banks struggle to comply with new regulatory standards while maintaining and attracting new customers. Mr. Coffee closing remarks convey the complexity of today’s banking and its regulatory practices: “We used to say ‘it’s not rocket science’ but I swear it’s getting close to rocket science!”

Reported by Teal Van Saun, Keyway Committee

The University of South Carolina; Where Business and Education Intersect

February 23, 2010: Harris Pastides, President of the University of South Carolina, addressed our club today, and shared with us the most recent updates from the University of South Carolina and his thoughts about where the institution is headed and how it effects leaders in business.

Just a year ago Pastides was quoted saying “it’s the best of times, it’s the worst of times” yesterday he laughed, saying “I don’t know why I said the best of times”. USC has experienced $75 million in cuts from state appropriations and there are more on the horizon, estimated to be another 20%. Reductions drop state funding to half of what it was just 20 months ago when Pastides became President, and only 10% of the entire budget is funded by the state. The University President quipped “in the beginning these institutions were state supported, then state assisted and soon they will just be state located”. The frustration is evident and real as the institution struggles with the best way to cope with diminishing funds, and there are multiple schools of thought on how to proceed.

Pastides addressed the South Carolina Assembly seeking a compromise of sorts, offering to keep tuition as low as possible (especially for state residents) in exchange for a commitment to increase funding to a level comparable with other southern, state supported schools, when the economy recovers. No promises have been made. That being said USC remains open, research is under way and in the presidents words “the student are our pillar”. Gamecocks raised $140,000 in a dance marathon for children’s health, and thousands of dollars for Haiti hosting a battle of the bands competition, in addition to spirit and character the average SAT score for admission into the University of South Carolina Honors College is 1420. The school was named #32 in Top Value Education by Kiplingers, and would have been closer to the top; the schools holding the first, second, and third position boast tuitions of less than half of USC’s and that is directly related to the large amount of state funds those institutions receive.

The circumstances above bring the University to a cross roads, even the trustees are divided on which way to proceed. Some believe that with less money from the state the school must do less. For example: if faculty cannot be replaced then fewer student should be admitted, another option increase tuition to offset the lack of state monies (calculations estimate that tuition would have to be increased 60% to make up the difference), or increase out of state admissions (leaving fewer spots for South Carolinians). The opposition says “don’t do that”, the University has been providing public education since 1805 before the states of New York or Massachusetts, yet we need more education. USC’s eight campuses will educate 43,400 people this year, 40% if in state students attend Carolina, but still, only 25% of adults in our state have a college degree. Pastides agrees with the second group, and has allocated $1,000,000 from athletics to academics these funds will be used to aid dedicated students in paying tuition that would otherwise be forced to withdraw.

Pastides will remain focused on the total student and the total education. A profitable work place starts with an educated work force.

Reported by Elizabeth Wooten Burwell, Keyway Committee