CEO Perspectives on the Global Financial Crisis
As forecasters predict a grim holiday season for retailers (AP) and the travel industry, U.S. companies are struggling to figure out how to survive. Three top U.S. business executives discussed the impact of the crisis and how the government should act in a Wednesday panel sponsored by the Chicago Council on Global Affairs and the Chartered Financial Analyst Society of Chicago.
Thomas Wilson, chairman, president and chief executive officer of Allstate Corporation and Allstate Insurance Company, said his auto and home owner insurance business is largely outside of the financial markets, and the company’s investment portfolio is in good shape. Still, he said, Allstate is preparing for a deep recession, and called for a “substantial” fiscal stimulus program.
Gordon Segal, chairman and founder of Crate & Barrel, predicted a major restructuring of the retail industry. He said the demise of small “mom and pop” and specialty stores is likely on the horizon. “If you’re not well diversified today in the field of retail, you really have a problem,” he said. Segal also said Crate & Barrel hopes to avoid massive layoffs. “We took 46 years to build all this talent,” he said. “You’ve got to be really careful in how you run your businesses today and makes sure that you use a scalpel, not an axe” when cutting costs.
Segal said he opposes another economic stimulus package. The last stimulus “Didn’t work at all,” he said. He described consumers as “dead scared,” and said if the government gives them another stimulus, “they’re going to put it in the bank account.”
Thomas Pritzker, chairman of Global Hyatt Corporation, said there has been a rapid deterioration in the global hotel industry on an unprecedented scale. Because there is no bank debt available for the hotel industry, he said, “You won’t see building [of hotels] in the United States for the foreseeable future.”
The CEOs also talked about whether or not the United States should bail out its auto industry. Wilson said the industry is entitled to some help with liquidity, but that they should not receive any capital investment from the government. Pritzker said he was not sure how to “reformulate” General Motors into a viable competitor.
Segal expressed concern about customer perceptions should the auto makers file for chapter eleven bankruptcy. “Consumers might not give them a chance and would just walk away from the big three dealers,” he said.
