Waiting for full recovery

Virginia CFOs reflect on economy’s ebb and flow.

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Print this page by Gary Robertson

In a jittery economy, it pays to have good neighbors to help you avoid pitfalls.

Or, at least that’s the conclusion you might draw if you had a conversation with Robert Toye, chief financial officer of Foxhole Technology in Fairfax, a 3-year-old Internet technology and engineering consulting firm.

When Toye joined the firm in 2008, amid a continuing plunge in the economy, he was still able to secure financing and thought all was well —  until he had a conversation with one of his neighbors, a mortgage banker.

The neighbor told Toye that his lender had a lot of bad real estate loans on its books and urged him to take a closer look. “That bank had issues and was going down,” Toye says. “We had to switch [lenders] very fast.”

Chief financial officers across Virginia all have stories of how they and their companies responded to the recession. Now, they’re hoping the recovery is real and long lasting.
Since 2006 Virginia Business has examined the trials and achievements of the chief financial officers in presenting the Virginia CFO Awards.

This year, 41 CFOs were nominated in five categories: small nonprofits/government agencies, large nonprofits/government agencies, small private companies, large private companies and publicly traded companies.

The awards were presented at a June 23 banquet at The Jefferson Hotel in Richmond. The winners are profiled in the following pages.

Virginia Business asked several nominees how their companies coped with the deep recession and what signs of hope and caution they are seeing in the slow economic recovery.
Toye has a lot of reasons to be optimistic. “We’ve grown 100 percent in the past year,” he says, alluding to the company’s strong showing in its primary business, government contract work.

His company is a small business whose principal owner is a disabled veteran. A substantial amount of its revenue comes from jobs subcontracted by larger companies.
Since its founding, Foxhole has grown from three employees to 48, and additional hiring is planned.

But Toye sees challenges ahead. He is concerned that federal budgets could dip precipitously, as the public becomes more concerned about the national debt.

Another challenge is coming from competitors who offer deep discounts to snare government business. “The problem is you can’t get quality people at the prices they’re quoting,”

Toye says. “You have to wonder what kind of work the government is actually buying.”

Video conferencing soars
Companies slashed travel budgets during the recession. That trend hurt the hospitality industry but it boosted business at The Whitlock Group in Richmond, an audiovisual and technology company employing 490 workers.

“At a corporation or company, video conferencing saves people having to travel,” says Mark Baker, Whitlock’s CFO. “We’re expecting 25 percent more business over last year, and we’re adding staff to handle the growth. We’ve hired about 60 people in the past six months.”

Nonetheless, he adds, there’s still a lot of uncertainty in the market, and prospective customers are taking longer to make a decision.

No layoff pledge
The recession was especially brutal for the commercial real estate industry. But Dawna Ellis, CFO of Norfolk-based Harvey Lindsay Commercial Real Estate, says her company took extraordinary steps to show support for its 85 employees.

“At the end of 2008 when you could see the handwriting on the wall, we made a promise that no one was going to be laid off — even if it meant that the owners had to put in their own money,” she says.

The company also set up an emergency fund so that employees who suffered a setback — a job loss by a spouse, for example — could apply for a $2,000 grant, with no repayment necessary.

“We treat people well and train them well, and we do things that help build teamwork,” Ellis says.

This year Ellis said the company is forecasting an increase in sales and leases.

She points to the longstanding and successful partnership that her company has with Newport News for City Center at Oyster Point.

City Center encompasses a community of luxury apartments, condominiums, town houses, office buildings and retail shops. “The original project was for $250 million in construction investment. To date, we have over $300 million in there, and over a million square feet.”

Ellis says private investment and funding from state and local governments have driven most of her company’s biggest projects.

“When we talk about huge projects, [the financing] is not coming from local bank funding. I think it will be awhile before banks loosen credit or the amount they will take a risk on,” she says.

If there are any dark clouds on the horizon for the Hampton Roads region, they likely will be the result of federal Defense Department budget cuts, she says, because a sizeable part of the local economy is dependent on military spending.

Best year yet
Meanwhile, Jo-Kell Inc. in nearby Chesapeake is enjoying its best year ever, says CFO Cathy Cherry. “The past 18 months, everything seemed to click,” she says.

Jo-Kell is an electrical commercial and marine engineering company founded in 1977.  The company, which has 58 employees, plans additional hiring. Because of the highly competitive job market for applicants, the company can be selective about its choices.

Cherry says the most immediate challenge to her company is possible government health-care requirements on small businesses.

“That could really take a big chunk out of dollars that we have to put into research and development, marketing and training,” she says.

Restoring consumer confidence
During the darkest days of the recession, the automobile industry was a poster child for what was wrong in the economy.

Sarah Irby-Goad, controller for BMW/Mini of Sterling, says she’s seen improvement in the market. “But people are still very nervous about spending their money. It’s not that they don’t have it. It’s just that they are very cautious.”

A dealership she had worked for in Richmond closed after not showing a profit for 15 to 17 months. But in Northern Virginia’s buoyant economy, Irby-Goad’s current employer has a lot going for it in the luxury car market niche. “We’re getting ready to build a new building,” she says.

Irby-Goad, who has a background in marketing and accounting, says auto dealers are looking for new ways to reach customers.

“It used to be the only method of advertising in the car business was radio, television, the newspapers,” she adds.  “Now, we’re doing less of that — and more e-mail and the Internet.”
Irby-Goad believes the greatest challenge for a full recovery in the auto industry is the restoration of consumer confidence.

“The consumer needs to have confidence in our government,” she says. “They need to know they have job security.”


List of Nominees

2011 Virginia CFO Award Winners:

PUBLICLY TRADED COMPANIES, Mark F. McGettrick, Dominion Resources

SMALL PRIVATE COMPANIES, Michael P. Wilkerson, Richmond Group LLC


LARGE NONPROFIT/GOVERNMENT AGENCIES, Terry Hurley, Community Residences Inc.

SMALL NONPROFIT/GOVERNMENT AGENCIES, Donna J. Boxer, Virginia Railway Express


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