Global Slowdown Creates Tensions

Threats to the export community in the United States come from many directions. In the past, the exporter has dealt with all of them, but they rarely came all at once. Today, the onslaught of problems has been nearly overwhelming. What’s worse is that there is no recognition on the part of Congress that its policies are not helping and are actually adding to the crisis. The issue with the Export-Import Bank is just one example.

There has not been a new trade deal signed since Obama came to power, and it is not for lack of effort on the part of the White House. The push to get the Trans-Pacific Partnership (TPP) signed has been intense and was to be the centerpiece of the president’s trade policy. It would be easy enough to assert that its failure was due to the enmity felt between the Republican Party and the president, but in this case the opposition to TPP is coming from the president’s own Democrats, while many members of the GOP would support it. The new pact with the European Union is even further off. The fact is that nothing has emerged from Congress to promote trade and exports in the years since the recession, and many inhibitors have appeared that have only made export expansion harder.

This might not have been enough to throttle exports were it not for other factors. The truth is the U.S. has never been good at promoting itself as an export nation. The majority of the business community does quite well with just the U.S. market. After all, the country is really made up of states that are as big as nations when it comes to their GDP. California compares to France and Texas to Canada. Dallas all by itself has a GDP comparable to Argentina. The U.S. market is nearly $18 trillion and is clearly the largest in the world. It is entirely possible for the U.S. business community to thrive without that global connection, but there will be many companies that can’t rest on the U.S. system alone.

The biggest challenge of late has been the strength of the dollar as compared to other major world currencies. The fact is the U.S. should be seeing a weaker currency given all the effort to stimulate the economy through low interest rates. The problem is the rest of the world is employing the same tactic and their currencies are weaker than is the U.S. dollar. The fear within the export community is that eventually the interest rate will rise, and when that happens, the dollar will respond swiftly. Nobody is expecting the debacle of the 1980s when very sharp hikes in the interest rate were employed to take on inflation. This was the Volcker policy; it worked as far as inflation was concerned, but in the process of beating back these higher prices with a radically higher interest rate, the dollar became immensely strong and for several years the U.S. manufacturer could not sell a thing outside the U.S. This was the period that nearly killed off the U.S. industrial community and there are some who worry we might repeat that crisis.

The U.S. has been able to hang on to some of its recent growth, but it is clearly the last man standing in the world today. Europe was just starting to figure out what life after the Greek mess would be like when it was hammered by the exodus from the Middle East and North Africa. On top of that, the Greeks elected Syriza again, so that issue is far from solved. The Chinese slowdown is not new, but many assumed that by now the Chinese government would have taken steps to start that growth again. The reluctance to pull out all the stops is related to its concern over inflation, but it comes as a disappointment to those who assumed that China could pull the growth trigger anytime it wanted to. Japan is still struggling and the saga of the emerging market is truly over, as Brazil and Russia are hanging on for dear life. The upshot is a slowing of U.S. overseas trade. Even if there were not all of these other issues, the fact that global growth has slowed to a crawl would have been enough to slow U.S. exports. Add in politics and the dollar value and you have a very serious issue emerging.

-- Chris Kuehl, NACM economist

To read more of Chris Kuehl’s commentaries, visit FCIB’s Knowledge and Resource Center.

CMI Sneak Peak: NACM’s Credit Managers’ Index Continues Decline

Breaking away from the roller coaster ride seen over the last few months, the September report of the Credit Managers’ Index (CMI) from the National Association of Credit Management (NACM) fell from 54.2 to 52.9, resulting in the lowest combined index of the last year.

The index of unfavorable factors was mostly to blame for the overall drop with four of the six categories slipping below the 50.0 contraction zone. “When the unfavorable factors are showing stress, it is an indication that companies are feeling the pinch and may be starting a long downward trend,” said NACM Economist Chris Kuehl, Ph.D.

The index of favorable factors did not do too well either with three of the four categories dropping from the previous month—all remained above contraction territory, however. “Nearly all the readings are down from where they were a month ago and significantly down from a year ago,” Kuehl added.

Be sure to check out this Thursday’s eNews for a closer look at NACM’s CMI report.

- Jennifer Lehman, NACM marketing and communications associate

Information to Help You Stay Scam Free

Between Oct. 1, 2013, and Dec. 1, 2014, nearly 1,200 companies lost a total of $179 million in so-called business email compromises, a sophisticated scam targeting businesses working with foreign suppliers or businesses that regularly perform wire transfer payments, according to the FBI. Scams are carried out by compromising legitimate business email accounts through social engineering or computer intrusion techniques to conduct unauthorized transfers, the bureau states in an Aug. 27 alert.

Fraudsters will use the method most commonly associated with their victim’s normal business practices such as wire transfers or checks. Although the transfers have been sent to 72 countries, the majority of them are going to Asian banks located within China and Hong Kong. Worldwide, the FBI said that the losses totaled more than $1.2 billion.

The incidence of commercial fraud is rapidly increasing in the commercial sector today. In May 2014, FBI Director James Comey stated that 1,300 of the 2,000 people hired in 2014 were assigned to combat criminal commercial fraud. According to the Association of Certified Crime Specialists, commercial fraud cybercrime rose to the top of most corporate compliance agendas in 2014.

Commercial fraud costs businesses an estimated millions of dollars each day, and the FBI reports that the instances of successful commercial fraud have increased 37% in the last several years. In July, 38 successful occurrences of commercial fraud were reported in one American city. In many companies, information technology, or compliance or governance departments have addressed fraud issues. Fraud risk, however, has been increasingly touching areas related to accounts receivables and customer payments.

An Oct. 5 webinar, “Mitigating Commercial Credit and A/R Fraud,” hosted by NACM will share pertinent information on how businesses can protect themselves from this type of fraud and how it impacts a business’s accounts receivables (A/R) risk and management. The webinar will focus primarily on the type of fraud risks that credit and finance professionals would be likely to encounter.

“Our presentation will talk about possible ‘blind spots’ that many of our member companies may currently have regarding potential exposure to A/R fraud,” said Bob Karau, manager of client financial services for law firm Robins Kaplan LLP. Michelle Killian, a security analyst for FRSecure will co-present.

Karau and Killian will discuss some of the most prevalent commercial fraud schemes preying on businesses today and will cover domestic and international scenarios. Topics will include where to find the most recent news on new commercial fraud schemes, safeguards and protocols to implement to combat this growing threat, and a list of best practices that many companies now follow to safeguard corporate assets. The duo will also discuss seven simple steps credit professionals can take when performing a new credit check to detect possible fraud.

- Diana Mota, NACM associate editor

To learn more about the webinar or to register, click here.

Coface Anticipates Company Insolvencies in Western Europe to Drop

Despite 10 out of 12 Western European countries showing improvement, current insolvency levels have yet to return to their pre-crisis state, according to a Sept. 8 report from Coface. The forecasting model, which includes variables such as business climate, investment and number of building permits issued, is predicting that company insolvencies in the Western European region will decline by 7% this year.

“Company insolvencies in Western Europe have experienced two successive storms,” the report states. “The subprime crisis, which made insolvencies jump by an average of 11% in the 12 countries studied, was unsurprisingly followed by further shock waves. … While insolvencies continue to increase in Italy and Norway, they are seeing the positive impact of the timid recovery in the eurozone in 10 other countries,” which are comprised of Germany, Belgium, Spain, Denmark, Finland, France, the Netherlands, Portugal, United Kingdom and Sweden.

Coface attributes the improved outlook to private consumption, noting that the eurozone’s gross domestic product increased by 0.3% in its second quarter. Economists anticipate growth to reach 1.5% in 2015. “The zone’s importing countries have also benefited from the depreciation of the euro and the fall in oil prices,” Coface said. “However, a close watch should be kept on risks linked to slower growth in emerging countries.”

- Jennifer Lehman, NACM marketing and communications associate

Syriza Party Continues to Lead Greece

Greece’s Prime Minister Alexis Tsipras won the snap election held Sunday (Sept. 20) by more than 35%—an outcome will keep his left-wing Syriza party in power. During the days leading up to the election, support increased for New Democracy, a political party described by NACM Economist Chris Kuehl as a “center-right and pro-European partner.” However, the opposing group only received 28% of the vote.

“The rationale for continued support of Tsipras is somewhat convoluted, but there is logic to it for the average Greek,” said Kuehl. “They have accepted the reality of an austerity plan; they fought the Europeans and they lost. The issue now is how far the EU [European Union] will be allowed to go and when will all that promised help come?”

A large percentage of the voting population does not trust a pro-European party to get the best deal possible, Kuehl explained, and during the days leading up to the election, Tsipras appeared determine to compromise on deals that satisfy both sides. “Throughout the campaigns waged by Syriza, there have been consistent themes and one of these has been Greeks are being punished for the sins of others,” Kuehl said. “It was not the current government that got Greece in this mess and it is unfair to blame them. Furthermore the Greek people are not to blame for the idiotic decisions made by their leaders. This is why the draconian demands made by the EU are unfair.”

The big question now is what happens next? Kuehl cites three fundamental steps: First, calm the current situation down and return to a sense of normalcy; second, Greece and Europe must work together to rebuild the Greek economy and invest in developing industries; and third, taxes must be collected.

- Jennifer Lehman, NACM marketing and communications associate

Finding a Lawyer Takes Planning

Construction credit has often been referred to as unique because projects involve layers of interested parties who depend on money trickling down to them. If things don’t run smoothly, you could find yourself in need of legal support. Under any circumstances, hiring a lawyer can seem like a daunting task, but when it comes to a construction project, you want to make sure you have a lawyer that understands the process.

On Wednesday (Sept. 23), NACM is offering a webinar, “How to Find, Hire and Manage a Lawyer: 10 Questions You Need to Ask,” from 3-4 p.m., that will provide some tips on what to look for when choosing a lawyer. Alexander Barthet, Esq., a mechanical engineer board certified in construction law by the Florida Bar Association, will lead attendees through a series of topics they should follow when looking for a lawyer: questions to ask or not ask; how to reduce legal fees and costs; overcoming disputes with outside counsel; and how to switch from one lawyer to another.

Barthet has served as a speaker at NACM’s Credit Congress as well as All South affiliate events. His articles have appeared in the Construction Lawyer, American Bar Association Journal of the Forum on the Construction Industry; Building Florida; Southeast Construction; Construction Executive; and Florida Home Builder. He also sits on the Miami-Dade Council of the Florida East Coast Chapter of Associated Builders and Contractors.

For more information about the webinar, click here.

Despite Positive Growth, Economic Problems in Turkey Remain

Gross domestic product in Turkey grew by 1.3% in its second quarter, surprising analysts who expected the increase to be not as strong, according to a Sept. 10 report from Wells Fargo. The better-than-expected outcome is attributed to domestic spending with growth in real personal consumption expenditures increasing to 5.6% from 4.6%, and fixed investment growth spending sharply rising to 9.7% from 0.4%. Turkish exports, however, fell 2.1% and imports rose 1.6%, causing net exports to subtract 1.1% from the country’s overall growth rate.

“Weakness in Turkey’s exports reflects a sluggish economic growth in some of its major trading partners,” states the report. “Turkey is a long way from the supercharged growth rates that the economy racked up prior to the global recession and few analysts see a return to those growth rates anytime soon. Moreover, the country has a host of problems that are reflected in the nosedive in its currency.”

Over the past two years, the lira has fallen by about 40%. As recently as Monday, the lira dropped to a record-low against the U.S. dollar and as of Thursday, its value began rising slightly, according to several media sources. “The lira’s problems are more extensive than simple contagion from other emerging currencies,” explains Wells Fargo, citing the country’s account deficit, inflation and political uncertainty as major factors affecting its economy. “The good news is that GDP growth was stronger than expected in Q2. The bad news is that Turkey still has a long way to go before it is back to ‘normal.’”

- Jennifer Lehman, NACM marketing and communications associate

Fed Rate Holds

Economists have at least one more month to debate when the Federal Open Market Committee (FOMC) will vote to raise the Fed rate for the first time in nearly a decade.

FOMC committee members once again decided to hold the target range for the federal funds rate between zero to 0.25%--where it’s been since late 2008.

The announcement came at the end of FOMC’s two-day meeting to assess the state of the nation’s economy. Though economic activity continues to expand at a moderate pace since the committee’s July meeting, “inflation has continued to run below the committee's longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports,” it said in a statement. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term.”

While the committee sees risks for economic activity and the labor market as nearly balanced, it acknowledged it’s monitoring developments abroad. It also expects inflation to rise gradually toward 2% over the medium term as the labor market improves further and transitory effects of declines in energy and import prices dissipate.

“The committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2% objective over the medium term.”

The committee further anticipates “that economic conditions may, for some time, warrant keeping the target federal funds rate below levels the committee views as normal in the longer run.”

One dissenter, Jeffrey Lacker, supported raising the rate a quarter point.

- Diana Mota, NACM associate editor 

What Would Happen if the Fed Raises the Rate?

By a fairly narrow margin, a majority of economists now assume that the Fed’s Open Market Committee (FOMC) will elect to stay with the current policy of zero interest rates—perhaps until December and maybe not until sometime next year.

Within the minority that asserts a rate hike will still occur in September are those who would style themselves hawks and who have been calling for a rate hike for quite some time. Members of the FOMC have been appropriately vague regarding their intentions, but just prior to the blackout period when they elect not to comment any longer on their intentions, there was a sense of reluctance to hike at this time.

What would happen if rates were to rise this week? What is the mood of the investment community as well as the business community as a whole and the consumer for that matter?

If rates were to rise, the consensus view is the hike would be very small—no more than a quarter point. This is an extremely cautious move and realistically changes nothing as far as credit is concerned. Assuming that other rates moved accordingly, there would hardly be a reason for radical response, but there remains an outside chance the prime rate and other related rates would be pushed further than the Fed rate shift would justify. In other words, if there is a big reaction to a rate hike, it will be driven by perception and emotional reaction.

The markets should have priced in a rate hike long ago and to some extent this has happened, but the events of the last month or so has ratcheted up the tension. The expectation now is the Fed will not hike; and if they do, there will a negative response and a big market drop. Should this occur, it will not be a decline that lasts all that long as the markets have known this day was coming—although not quite when.

The dollar will strengthen immediately, and that is likely to be the most long-lasting impact. U.S. currency has been getting stronger anyway. This will just accelerate that process. The export sector has been feeling the pinch already, and this will certainly not help matters. On the other hand, a higher valued currency will make imports that much cheaper, and this will make for a better spending season.

The cost of borrowing will edge up, but few expect much given the state of the market now. It is not like demand for loans has been overpowering. The lenders will still be seeking out the good risks. A slight hike at the Fed is not going to interfere much. It was assumed that the threat of a rate hike would be enough to trigger borrowers and lenders to act before the costs grew, but thus far there has been no such surge as anybody who wanted to borrow already has. There is no sense of panic in the business community and little in the consumer sector either—both seem to have assumed that a rate hike was inevitable.

-- Chris Kuehl, NACM economist

To read more of Chris Kuehl’s commentaries, visit FCIB’s Knowledge and Resource Center.

September Fed Rate Hike Still in Play

The debate about whether the Federal Open Market Committee (FOMC) will raise rates at its Sept 16-17 meeting continues. According to Seeking Alpha, a recent survey indicates a majority of the economists polled believe the Fed will hold rates steady—however, many still consider the decision a toss-up.

Economists at Wells Fargo are some who think it could still happen. Although “inflation continues to run well below the committee’s 2% target … the Fed has made it clear it only needs to be confident inflation is moving back to target over the medium term, typically viewed as around two to three years,” stated the firm's Economics Group. “The Fed’s focus on longer-term drivers suggests a September rate rise is still in play.”

FOMC members have said they want to be transparent about when a rate increase would take place to mitigate disruptions to financial markets. And while many analysts were convinced it would happen this month, unexpected market ups and downs have shaken that resolve.

“A couple of weeks ago, I would have said they’ll raise rates in September if for no other reason than to stay consistent with market expectations and to calm all the speculation surrounding when the first rate hike will take place,” said Joseph Pickard, chief economist for the Institute of Scrap Recycling Industries. “But given the market volatility in recent weeks, I would lean more toward waiting until December as the Fed doesn’t want to be seen as adding to financial market volatility, especially given the still very low inflation levels.”

Financial instability in the emerging markets is expected to increase in the wake of the inevitable Fed rate hike, wrote Euler Hermes Chief Economist Ludovic Subran in the article "Fed Quake: Who Will Bear the BRuNTS?" in the September/October edition of Business Credit magazine. However, the impact most likely will not resemble the collective crash experienced after Fed rate increases in the 1990s, Subran noted. "There is improved resilience in the emerging markets.”

On the other hand, even though some signals suggest a temporary delay, current U.S. macroeconomic numbers (retail sales, industrial production, housing) "more than trump the mild hysteria associated with China's recent currency 'adjustment,'" said Bob Garino, vice president of Houston-based Export Advisors. For that reason, Garino still believes the Fed will raise rates in September, absent further evidence of deflation.

And so the conversation goes. The end of the week, however, will reveal who’s correct about the September deadline as well as provide fuel for the next round of discussions about when, or if, FOMC raises rates.

- Diana Mota, NACM associate editor

Ludovic Subran will serve as the keynote speaker for FCIB's 26th Annual Global Conference in Miami, October 11-13. For more information about Subran's appearance and other educational sessions or to register, click here.

What Happens If Oil Prices Stay Down?

The postmortem of the oil sector, which has been well underway for months, has been focused primarily on what this means for energy producers. It is likely that the dire warnings will not quite pan out, but it is also pretty clear that the boom is over until there’s a return to global demand norms or a reduction in supply. At this point, neither of these developments seems likely—at least in the short to medium term. This means that other economic sectors are starting to react to the prospect of low fuel prices for an extended period of time. As far as the cost of energy is concerned, this may be the most important impact.

From the very start, this predicament has impacted the automotive sector because the government has tasked the auto sector with two somewhat mutually exclusive goals: create safe vehicles that meet fuel efficient standards to address issues of air quality and climate change due to the production of greenhouse gas. The way to address fuel efficiency is simple enough. The smaller and lighter the vehicle, the less fuel it uses. Addressing safety concerns is pretty simple as well. Make cars strong and heavy—lots of steel and lots of protection built in. One approach opposes the other, however.

For a while, consumers supported the fuel efficient approach as they wanted cars that sipped fuel—at least as long as the price per gallon was headed for $5 or $6. Now that $2 a gallon has arrived in some parts of the country, safer and bigger cars are back in vogue, and the fuel sippers are sitting on the lots. This makes the challenge for carmakers even tougher. If they are supposed to get their fleet mileage down, they need people to buy the small car. If the consumer continues to prefer the truck, SUV and big car, the mileage standards are going to be hard, if not impossible, to meet.

Other sectors will be affected as well. Airlines were starting to place a great deal of emphasis on acquiring fuel efficient aircraft, and they wanted to phase out their fuel gulpers as fast as possible. Now that driver is less than it was and orders for fuel efficient planes have started to slacken at the same time the fuel consuming aircraft are getting a reprieve from the graveyard. There is also less interest in fuel efficient trucks and trains although these industries are looking ahead and understand that at some point the price of fuel will go up again.

The real motivation for consumers to choose fuel efficiency is not some intense concern for the climate change patterns. It comes down to money and the costs of that fuel. This is one reason that some people are pushing hard for a steep hike in the gasoline tax. It would push prices back toward $4, and it would provide money needed to fix highways. From a policy point of view, that is a winning combination—from the consumer’s point of view it would be a very unpopular approach

-- Chris Kuehl, NACM economist

To read more of Chris Kuehl’s commentaries, visit FCIB’s Knowledge and Resource Center.

Bankruptcy Reform Effort Needs Input of Credit Professionals (Re: YOU)

To garner critical opinions on various potential bankruptcy reform platforms being considered by NACM’s Government Affairs Committee, we urge you to complete this month’s critically important survey at
http://www.nacm.org/nacm-monthly-survey.html. The monthly survey will close on Friday at approximately noon (PST).

NACM’s Government Affairs Committee has been hard at work for months investigating possible recommendations for changes to the U.S. Bankruptcy Code. The Committee comprises nearly a dozen veteran credit managers, one professional lobbyist, members of the NACM-National staff and two highly regarded bankruptcy attorneys. Support for or opposition against a particular issue truly can make a difference in convincing federal lawmakers to support altering the U.S. Bankruptcy Code, hopefully for the betterment of the entire trade credit industry.

- Brian Shappell, CBA, CICP, NACM managing editor and government affairs liaison
Don't miss your chance to be heard. Answer NACM's latest survey on bankruptcy reform
here. In appreciation for your participation in this critically important survey, you will earn .5 Roadmap points toward an NACM designation and a chance to win a FREE teleconference registration.

FCIB Survey Roundup: Risks of Doing Business in South America Elevated in Several Nations

Due to various political and economic factors, some South American countries are riskier than others. In an August FCIB (The Finance, Credit & International Business Association) International Credit and Collections Survey, credit managers doing business in South America shared their customers’ reasons for payment delays and gave advice on extending credit within the region. 

Argentina
Most of the survey respondents cited disputes and legal issues as the reasons behind payment delays in Argentina. Others listed the central bank’s limit on foreign exchange and poor cash flow. One credit manager advised, “[You] have to stay on top of them to get payments; whatever extra time you give them, they will take.”

Brazil
In Brazil, the primary reason for payment delays was poor cash flow. Credit managers also listed foreign exchange parity, failure to have correct paperwork requirements and exchange rate resistance, among others. When it comes to doing business, one survey respondent said: “We find that for the most part, our customers are very business savvy, understand their economy and are prepared to ride out the downturn. They have cut way back on all of their purchases and have very little long term debt.”

However, another one wrote, “use caution, set risk limits and do business only when a real relationship is established through visits; know the customer and build trust.”

Venezuela
With rampant corruption continually present in Venezuela, one credit manager said, “We do not sell directly into Venezuela, but rather we sell to two dealers who sell into Venezuela. One is on cash in advance and it works, and the other was placed on open account with N90 terms. They are now 150+ days past due because they have not been paid by the Venezuelan government.”

Full FCIB survey results can be found on the FCIB Knowledge and Resource Center. Next month’s survey will focus on Eastern Europe.

- Jennifer Lehman, NACM marketing and communications associate

Will Africa Suffer the Most?

Perhaps no region of the world gets less attention year after year than Africa, but it is not for the lack of trying. Every day, some report or statement asserts that Africa will be the “next big thing.” Some have noted that this continent is young, increasingly urbanized and better educated than in the past. It has also been pointed out that Africa has more than its share of political turmoil and violence as well as corruption and incompetent leadership. These are indeed problems, but they are hardly unique in the world.

The faith in Africa’s future lays rooted in the abundance of its natural resources and the demand for this bounty in the developed world. This has often been a curse as opposed to a blessing as the majority of who seek to get hold of these resources do nothing to build the local economy, a situation that goes back to colonial development.

About 20 years ago, the Chinese began developing a keen interest in Africa. Over those two decades, the continent’s future seemed to lay with the Chinese and their insatiable demand for its abundant resources. The recent collapse of Chinese demand is taking a toll on the African states that depended on China. When the dust of the Chinese decline settles, every part of the world will suffer some damage, but the majority of it will be minor. The U.S. has already felt its worst, and things have already started to return to some semblance of normal. The Europeans may actually come out of this in better shape than they were as the consumer in Europe can certainly use those lower prices. It will be those nations that supply China that will bear the brunt.

In general, three types of relationships exist between China and African states. The most common is one in which China is only interested in the commodity or raw material it needs. There is no commitment of any kind to the region, and the country behaves exactly as the European colonialists once did. The relationship between China and the Sudan/South Sudan is one example. The only reason China is engaged with either country is oil. China extracts the oil with its own people and pays as little as it can for it. The Chinese are isolated and disengaged other than in efforts to preserve access.

The second type of engagement is when there is some mutual interaction. China still wants the raw materials and commodities, but it views the country as a market for Chinese consumer goods. Nigeria is a classic example of this relationship as the population of that country is large and wants the goods that China produces. A number of Nigerian business people are in China at any given time as they work to bolster these contacts. The Chinese are still not putting a great deal of effort into developing these states, and they do not want to see the Nigerias of the world become rivals.

The third type of interaction is perhaps the rarest, and it is one where China wants a long-term relationship with political and economic legs. Only South Africa seems to fall into that category. The Chinese want to use South Africa as a platform for Chinese expansion—both in a business sense and in a political one. The problem is that everybody else wants to get engaged with South Africa for the same reason and that makes the competition intense.

-- Chris Kuehl, NACM economist

To read more of Chris Kuehl’s commentaries, visit FCIB’s Knowledge and Resource Center.