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Wednesday, 12 August 2009 08:55

I-CAR serves up mostly positive economic forecasts and news for its 30th anniversary

If there was a recurring theme at I-CAR’s celebration of its 30th anniversary this summer it was perhaps a perceived rebound after several tough years.

That was the message conveyed not only about I-CAR staff at the event, held in late July in Washington, D.C., but also about the nation’s overall economy. The event’s keynote speaker, Dr. Martin Regalia, (photo below) chief economist for the U.S. Chamber of Commerce, kicked off the conference with a cautiously optimistic forecast.

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“We see an economy that is pulling out of what has been the worst economic downturn since the Great Depression,” Regalia said, noting that this recession has lasted 19 months, more than twice the length of those in the mid-1970s and early 1980s. “We should be bottoming out at the end of the second quarter or early part of the third quarter. And then we’re going to see positive growth, I believe, in this third quarter, a little stronger growth in the fourth quarter, possibly averaging about 2 percent, and about that same rate of growth for the first half of next year.”

Regalia cited a number of reasons for his optimism. First, he said, price declines have boosted American’s real incomes enough to spur some growth in consumer spending, which accounts for two-thirds of the nation’s overall economy. Second, the “freefall” in the housing market appears to have bottomed out, with housing starts and home sales stabilized even if not yet improving. Though not thriving, the banking and financial markets, thanks to government intervention, averted a complete melt-down.

“People are only now starting to realize how close we were to the edge of the abyss: The entire capital market was dysfunctional,” Regalia said. “Had it stayed that way, we would have gone from the worst economic downturn since the Great Depression, to setting a new standard for ‘depression.’”

So while the economic outlook is generally not too bad, Regalia, said, don’t look for a quick return to boom times. One analyst said a graph of the recovery may look like the tail-end of the Nike “Swoosh” logo.

“It’s going to be slow by historical standards,” Regalia agreed.

He pointed to a couple of factors that will play into that recovery. First, since the end of 2007, the nation has lost 6.5 million jobs.

“Those are big, big numbers,” he said, adding that the potential loss of even more jobs was one of the reasons the Chamber supported the auto industry bail-outs. While the numbers of new unemployment claims appeared to be leveling off this summer, the unemployment rate will likely continue to rise until the end of the year or early in 2010, he said. He predicted it could be four or five years until the country surpasses its prior peak of employment numbers (compared to a 3.5-year recovery after the 2001 drop).

The other key concern as the economy recovers will be controlling inflation, Regalia said, which for the next 12 to 18 months doesn’t appear to be a concern. But the fiscal and monetary policy now in place to stimulate the economy would likely lead to steep inflation, high interest rates and perhaps a “double-dip recession” if it’s not pulled back at the right time, Regalia cautioned. Timing is challenging, he said, because ideally the change is made before it’s clear it is needed, which can make “political pariahs” out of those controlling federal monetary and fiscal policy.

“But if it doesn’t happen, we’ll see inflation like in the 1970s and 1980s when it was up to 10 percent,” Regalia said. “In short, we’ve got an economy that is past the worst and is improving for a variety of reasons. We’re likely to get an economic recovery that starts in the next month or two, but it’s going to be slow by historical standards, and it’s not going to be quick enough to generate rapid declines in the unemployment rate. So we’re still going to be dealing with some economic problems even as we improve.”

In response to a question from I-CAR CEO John Edelen (photo left), ImageRegalia said training and education can be a key to the gains in productivity that are a fundamental measure of growing economies.

That plug for training was no doubt welcomed by organizers of the I-CAR’s 30th anniversary conference, especially given the tough times and financial losses reported at the two previous I-CAR annual meetings. While 2009 is far from shaping up as a banner year for the training organization, Edelen was focusing on the positive. He said that as of mid-year, I-CAR's revenue was only about 2 percent below budget despite a largely anticipated 15 percent drop in student count compared to the first six months of last year.

But staffing cuts and "judicious management of expenses" over the past year have I-CAR "scaled appropriately," Edelen said.

"The short-hand version of what I reported to the board earlier this week is that revenues are down, profits are up," he said. "We do need a very strong finish to the year. But my view is we have more and better product going into the marketplace."

That “product” will include six new classes a year, I-CAR has said. In addition to new classes on waterborne paint and cycle time introduced earlier this year, I-CAR is also shifting toward offering more automaker-specific training. Its two newest classes, introduced at the conference in Washington, cover specific repair procedures for seven of the highest-selling vehicles, and new technology and trends on 2010 vehicles. (A similar course covering the upcoming year's vehicle models will be developed each year).

Jason Bartanen, (photo left) Imagetechnical director for I-CAR, said that at this year’s International Autobody Congress and Exposition (NACE) in Las Vegas in November, I-CAR will introduce a new damage analysis course on advanced vehicle systems such as electronic stability control and blind-spot collision warning systems.

As part of its effort to be more responsive to industry needs, I-CAR is seeking more input from all industry segments, and is measuring everything it does, according to Jeff Peevy, director of field operations for the organization. As an example, he showed survey findings that show instructor approval ratings and overall student satisfaction with I-CAR classes is improving, and that a lower percentage of students are saying course material is outdated. Still, there has been some decline in students’ overall impression of I-CAR, something the organization is working to address, Peevy said.

He said I-CAR also is developing a matrix showing job-specific training path recommendations, and has been rolling out a "Training Manager" system to help companies track what I-CAR training employees have completed and may need.

“It allows a shop owner or manager to have visibility into their employees’ student records,” Peevy said, saying the system is first being implemented for I-CAR Gold Class shops. “Businesses and individuals will have the ability also to affiliate themselves with various programs in which they are involved in, or with those they have some sort of business relationship with, so that those program managers have visibility (into training records) as well.”

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