Upstate business leaders’ confidence declines in 2017

CEO confidence across upstate New York fell last year from the high level reached in 2016, according to a new survey.

The Upstate New York Business Leader Survey, conducted by the Siena (College) Research Institute (SRI) mostly in late 2017, measured CEO confidence at a reading of 97.1 last year, down nearly 7 points from 103.8 in 2016 when it rose to its “second highest rate” of the survey, which is now in its 11th year. The breakeven point of the survey is 100 points, representing the level at which optimism and pessimism are balanced.

Overall CEO confidence in Syracuse dipped to a reading of 100.0 in 2017, down 1.4 points from the prior year. Syracuse’s index had the second highest reading of the four upstate regions measured. 

“Not that that’s tremendously meaningful, but I think it’s the first time that we’ve seen an exact 100 [in] any region in 11 years [of conducting this survey],” says Donald Levy, director of SRI, who spoke with CNYBJ on Jan. 22.

The current CEO confidence in Syracuse is 96.3, up 8.8 points from last year and one point higher than the Upstate level of 95.2. Future confidence in Syracuse, measured at 103.7, fell by nearly 12 points but remains well above 100. It is almost four points higher than the Upstate number and the second highest of the four regions.

“[An index level of] 103.7 is better than breakeven, but they don’t feel as bullish looking to the 2018 year as they did a year ago,” says Levy.

The Business Council of New York State, Inc. sponsored the survey, which SRI researchers conducted between Oct. 10, 2017 and Jan. 4, 2018.

“This year’s survey shows the dramatic impact specific policies have on upstate business leaders and highlights their ability to recognize the difference between actions in D.C. and those by the state,” Heather Briccetti, president and CEO of the Business Council of New York State, Inc., said in the Siena survey report. “Despite a strong national economy, survey respondents know that upstate is in many ways being left behind. Increased state-level mandates and regulations are clearly having an impact on employers’ outlook and their ability to create jobs, and this survey demonstrates that changes are needed before upstate New York employers will be willing to expand their workforce.”

Siena interviewed a total of 462 CEOs of private, for-profit companies, including 68 in the Syracuse region.

In the Syracuse area, 29 percent of the CEOs work in the service industry, 25 percent in engineering and construction, 21 percent in manufacturing, 9 percent in retail, 9 percent in wholesale, 6 percent in the financial sector, and 1 percent in the food and beverage industry.

Across Upstate, 36 percent of the CEOs interviewed work in the service industry, 17 percent in engineering and construction, 19 percent in manufacturing, 10 percent in retail, 8 percent in wholesale, 6 percent in the financial sector, and 3 percent in the food and beverage industry.

Syracuse CEOs on index questions

The four questions that comprise the index query CEOs on their current assessment of the state’s economy, its impact on CEOs’ industry, their view of the future of the state’s economy, and their industry prospects.

The survey found 29 percent of Syracuse–area CEOs indicating that New York state business conditions have improved over the last six months, 28 percent say that they have worsened, and 43 percent say that conditions are about the same.

Looking forward, 41 percent expect improvement in the state economy, while 34 percent anticipate worsening, and 25 percent expect conditions to remain the same.

While more expect improvement than decline, the findings in this survey are “not as bullish a tone as CEOs expressed a year ago,” SRI said of the Syracuse CEO views.

Within their industry, 22 percent say the conditions have improved and 36 percent expect conditions to get better in 2018. The survey found 31 percent say the conditions have worsened and 36 percent expect conditions to deteriorate in 2018.

CEO expectations/plans for 2018

The survey found 42 percent of Syracuse CEOs expect their revenues to increase this year, down from last year’s 47 percent and below the 49 percent rate across the rest of Upstate. In addition, 16 percent expect to see revenues decrease, up from 11 percent a year ago.

The survey found 42 percent of area business leaders plan to see profits increase, 32 percent expect profitability to remain constant, and 25 percent anticipate a decline. Those figures compare to 39 percent expecting profits to increase, 40 percent anticipating no change, and 21 percent expecting decline in the 2016 survey.

In addition, the survey found 56 percent intend to invest in fixed assets this year, up from 46 percent a year ago.

“Clearly that level of increase, as well as a majority saying that they’re going spend money on assets, clearly displays a level of confidence in the market, as well as commerce that’s going to take place if, indeed, they follow through,” says Levy.

The findings also indicate 35 percent intend to increase their workforce, which is up slightly from 33 percent a year ago. At the same time, 7 percent intend to reduce their workforce, a slight increase from 6 percent a year ago.

Again this year, a majority of CEOs intend to enhance profitability through increasing the demand for their product or service. The survey found 21 percent say that they will enhance profitability through price increases. 

“They may have put it off … but at the same time, they may say … it’s time. It’s time to increase prices,” says Levy. “The Syracuse CEOs are prepared to raise their prices at a greater rate than anywhere else across the four Upstate regions.”

Over a third of Syracuse CEOs, 34 percent, say that they will concentrate this year on technology innovation, up from 21 percent a year ago. 

Offered a list of potential challenges, over 50 percent say they are concerned with health-care costs (81 percent, down from 82 percent last year), taxation (69 percent, up from 53 percent), and governmental regulation (63 percent, down from 68 percent).

Syracuse–area workforce

Syracuse CEOs offer an overall “mixed assessment” of the local workforce. 

The findings indicate that 49 percent rate the local area’s workforce suitability as excellent/good but 48 percent rate it as only fair/poor. Last year, 39 percent of the leaders said excellent/good and 60 percent said fair/poor.

Syracuse CEOs’ rating of workforce suitability is similar to the rating of CEOs across Upstate. Against a backdrop in which almost four in 10 local CEOs intend to hire this year, it is “noteworthy” that across five specific aspects of their assessment of the workforce, majorities of CEOs see each as either a somewhat or very significant problem, the survey report stated.

“Here we see a little bit of a harsher assessment by CEOs of the workforce,” says Levy.

The survey found 70 percent or more see each of three of these issues as “somewhat or very significant” problems. The issues include their work ethic, their ability to express themselves both verbally and in writing, and how technically skilled they are.

CEO assessment of local market

When asked which single industry sector will have the “greatest positive impact on the economic vitality” of Syracuse in the next three to five years, CEOs “overwhelmingly” single out technology.

The survey found 32 percent indicating technology, with education ranked second at 16 percent, followed by the medical sector at 13 percent, and tourism and manufacturing — both at 12 percent.

In answering that same question about the sector most likely to improve their area’s economy, CEOs in the Buffalo, Rochester, and Albany areas cited the medical sector the most often at 29 percent, followed by technology at 24 percent, education at 12 percent, manufacturing at 11 percent, and tourism at 7 percent.

Syracuse CEOs rate local consumer confidence higher than last year, but the reading is the lowest across Upstate. The survey found 44 percent rate consumer confidence as either excellent or good, up from 32 percent a year ago but below the 55 percent across the rest of Upstate. 

Similarly, 50 percent rate Syracuse excellent or good as a place where consumers want to live, an increase from last year and eight points lower than the other areas. However, a majority, 69 percent rate the region only fair or poor as an area where businesses can succeed. 

“It just seems to be stamped so deeply into the upstate New York DNA that even when we have a breakeven overall confidence, we still have 69 percent … bemoaning the area as a place where it’s hard for a business to be successful,” says Levy.

Still, the findings also indicate a slight improvement on this question as those respondents indicating “poor” are down to 15 percent from 24 percent just a year ago.

The findings also indicate 29 percent give excellent or good grades to the region for local governmental support for business, up from only 19 percent a year ago. Still, 66 percent give local government only a fair or poor grade. At the same time, 89 percent grade the state government as fair or poor in creating a business climate for their companies to succeed.

“Once again, these CEOs’ feeling toward the state government in New York is terrible. There’s no way around that,” says Levy.

On a series of transportation-related issues, 38 percent of Syracuse CEOs rate taxi/car service as excellent/good; 36 percent rate ride-hailing service as excellent/good; and 35 percent rate the overall transportation infrastructure as excellent/good; only 28 percent rate the airline service as excellent/good.

CEO confidence across upstate New York fell last year from the high level reached in 2016, according to a new survey.

The Upstate New York Business Leader Survey, conducted by the Siena (College) Research Institute (SRI) mostly in late 2017, measured CEO confidence at a reading of 97.1 last year, down nearly 7 points from 103.8 in 2016 when it rose to its “second highest rate” of the survey, which is now in its 11th year. The breakeven point of the survey is 100 points, representing the level at which optimism and pessimism are balanced.

Overall CEO confidence in Syracuse dipped to a reading of 100.0 in 2017, down 1.4 points from the prior year. Syracuse’s index had the second highest reading of the four upstate regions measured. 

“Not that that’s tremendously meaningful, but I think it’s the first time that we’ve seen an exact 100 [in] any region in 11 years [of conducting this survey],” says Donald Levy, director of SRI, who spoke with CNYBJ on Jan. 22.

The current CEO confidence in Syracuse is 96.3, up 8.8 points from last year and one point higher than the Upstate level of 95.2. Future confidence in Syracuse, measured at 103.7, fell by nearly 12 points but remains well above 100. It is almost four points higher than the Upstate number and the second highest of the four regions.

“[An index level of] 103.7 is better than breakeven, but they don’t feel as bullish looking to the 2018 year as they did a year ago,” says Levy.

The Business Council of New York State, Inc. sponsored the survey, which SRI researchers conducted between Oct. 10, 2017 and Jan. 4, 2018.

“This year’s survey shows the dramatic impact specific policies have on upstate business leaders and highlights their ability to recognize the difference between actions in D.C. and those by the state,” Heather Briccetti, president and CEO of the Business Council of New York State, Inc., said in the Siena survey report. “Despite a strong national economy, survey respondents know that upstate is in many ways being left behind. Increased state-level mandates and regulations are clearly having an impact on employers’ outlook and their ability to create jobs, and this survey demonstrates that changes are needed before upstate New York employers will be willing to expand their workforce.”

Siena interviewed a total of 462 CEOs of private, for-profit companies, including 68 in the Syracuse region.

In the Syracuse area, 29 percent of the CEOs work in the service industry, 25 percent in engineering and construction, 21 percent in manufacturing, 9 percent in retail, 9 percent in wholesale, 6 percent in the financial sector, and 1 percent in the food and beverage industry.

Across Upstate, 36 percent of the CEOs interviewed work in the service industry, 17 percent in engineering and construction, 19 percent in manufacturing, 10 percent in retail, 8 percent in wholesale, 6 percent in the financial sector, and 3 percent in the food and beverage industry.

Syracuse CEOs on index questions

The four questions that comprise the index query CEOs on their current assessment of the state’s economy, its impact on CEOs’ industry, their view of the future of the state’s economy, and their industry prospects.

The survey found 29 percent of Syracuse–area CEOs indicating that New York state business conditions have improved over the last six months, 28 percent say that they have worsened, and 43 percent say that conditions are about the same.

Looking forward, 41 percent expect improvement in the state economy, while 34 percent anticipate worsening, and 25 percent expect conditions to remain the same.

While more expect improvement than decline, the findings in this survey are “not as bullish a tone as CEOs expressed a year ago,” SRI said of the Syracuse CEO views.

Within their industry, 22 percent say the conditions have improved and 36 percent expect conditions to get better in 2018. The survey found 31 percent say the conditions have worsened and 36 percent expect conditions to deteriorate in 2018.

CEO expectations/plans for 2018

The survey found 42 percent of Syracuse CEOs expect their revenues to increase this year, down from last year’s 47 percent and below the 49 percent rate across the rest of Upstate. In addition, 16 percent expect to see revenues decrease, up from 11 percent a year ago.

The survey found 42 percent of area business leaders plan to see profits increase, 32 percent expect profitability to remain constant, and 25 percent anticipate a decline. Those figures compare to 39 percent expecting profits to increase, 40 percent anticipating no change, and 21 percent expecting decline in the 2016 survey.

In addition, the survey found 56 percent intend to invest in fixed assets this year, up from 46 percent a year ago.

“Clearly that level of increase, as well as a majority saying that they’re going spend money on assets, clearly displays a level of confidence in the market, as well as commerce that’s going to take place if, indeed, they follow through,” says Levy.

The findings also indicate 35 percent intend to increase their workforce, which is up slightly from 33 percent a year ago. At the same time, 7 percent intend to reduce their workforce, a slight increase from 6 percent a year ago.

Again this year, a majority of CEOs intend to enhance profitability through increasing the demand for their product or service. The survey found 21 percent say that they will enhance profitability through price increases. 

“They may have put it off … but at the same time, they may say … it’s time. It’s time to increase prices,” says Levy. “The Syracuse CEOs are prepared to raise their prices at a greater rate than anywhere else across the four Upstate regions.”

Over a third of Syracuse CEOs, 34 percent, say that they will concentrate this year on technology innovation, up from 21 percent a year ago. 

Offered a list of potential challenges, over 50 percent say they are concerned with health-care costs (81 percent, down from 82 percent last year), taxation (69 percent, up from 53 percent), and governmental regulation (63 percent, down from 68 percent).

Syracuse–area workforce

Syracuse CEOs offer an overall “mixed assessment” of the local workforce. 

The findings indicate that 49 percent rate the local area’s workforce suitability as excellent/good but 48 percent rate it as only fair/poor. Last year, 39 percent of the leaders said excellent/good and 60 percent said fair/poor.

Syracuse CEOs’ rating of workforce suitability is similar to the rating of CEOs across Upstate. Against a backdrop in which almost four in 10 local CEOs intend to hire this year, it is “noteworthy” that across five specific aspects of their assessment of the workforce, majorities of CEOs see each as either a somewhat or very significant problem, the survey report stated.

“Here we see a little bit of a harsher assessment by CEOs of the workforce,” says Levy.

The survey found 70 percent or more see each of three of these issues as “somewhat or very significant” problems. The issues include their work ethic, their ability to express themselves both verbally and in writing, and how technically skilled they are.

CEO assessment of local market

When asked which single industry sector will have the “greatest positive impact on the economic vitality” of Syracuse in the next three to five years, CEOs “overwhelmingly” single out technology.

The survey found 32 percent indicating technology, with education ranked second at 16 percent, followed by the medical sector at 13 percent, and tourism and manufacturing — both at 12 percent.

In answering that same question about the sector most likely to improve their area’s economy, CEOs in the Buffalo, Rochester, and Albany areas cited the medical sector the most often at 29 percent, followed by technology at 24 percent, education at 12 percent, manufacturing at 11 percent, and tourism at 7 percent.

Syracuse CEOs rate local consumer confidence higher than last year, but the reading is the lowest across Upstate. The survey found 44 percent rate consumer confidence as either excellent or good, up from 32 percent a year ago but below the 55 percent across the rest of Upstate. 

Similarly, 50 percent rate Syracuse excellent or good as a place where consumers want to live, an increase from last year and eight points lower than the other areas. However, a majority, 69 percent rate the region only fair or poor as an area where businesses can succeed. 

“It just seems to be stamped so deeply into the upstate New York DNA that even when we have a breakeven overall confidence, we still have 69 percent … bemoaning the area as a place where it’s hard for a business to be successful,” says Levy.

Still, the findings also indicate a slight improvement on this question as those respondents indicating “poor” are down to 15 percent from 24 percent just a year ago.

The findings also indicate 29 percent give excellent or good grades to the region for local governmental support for business, up from only 19 percent a year ago. Still, 66 percent give local government only a fair or poor grade. At the same time, 89 percent grade the state government as fair or poor in creating a business climate for their companies to succeed.

“Once again, these CEOs’ feeling toward the state government in New York is terrible. There’s no way around that,” says Levy.

On a series of transportation-related issues, 38 percent of Syracuse CEOs rate taxi/car service as excellent/good; 36 percent rate ride-hailing service as excellent/good; and 35 percent rate the overall transportation infrastructure as excellent/good; only 28 percent rate the airline service as excellent/good.