Upstate business leaders’ confidence little changed in ‘18

This is the 12th installment of Siena College Research Institute’s (SRI) Upstate Business Leader Study

CEO confidence across upstate New York in 2018 was measured at 96.6, down 0.5 points and “virtually unchanged” compared to 2017. That’s according to the annual Siena College Research Institute (SRI) Upstate Business Leader Study, which the school released Jan. 25. The survey, conducted in 2018, is now in its 12th year. 

Current confidence was up 2.1 points while future confidence fell 3.1 points. With all indexes just below 100, collectively, New York CEOs describe and predict a “stable economic marketplace,” SRI said.

The overall confidence reading in Syracuse was 96.7, “virtually identical” to the Upstate CEO confidence figure. The 96.7 index level fell 3.3 points from 2017 and 4.7 points from two years ago, but was still below the 100-point breakeven point at which optimism and pessimism are balanced.

“When you consider all the CEOs we spoke to, the collective sentiment is one of holding steady, of status quo,” Donald Levy, director of SRI, tells CNYBJ.

Current confidence in Syracuse was measured at 100.7 in 2018, up 4.4 points from a year prior and 3.4 points higher than the Upstate number (97.3). The current confidence in Syracuse is higher today than in 10 of the last 11 years, SRI said.

Future confidence in Syracuse, measured at 92.8, was down 10.9 points from a year before (103.7) and was 3.1 points lower than the Upstate number. The future-confidence reading in Syracuse illustrates leaders’ growing concern over future economic conditions.

“They say, right now, I’m okay, but they’re looking ahead and they express more concern,” says Levy.

The Business Council of New York State, Inc. sponsored the survey, which SRI researchers conducted between October 2018 and Jan. 4, 2019.

“We are seeing several significant recurring themes. While business leaders feel confident in how they are addressing factors within their control, and that they have benefited from some major federal policy initiatives, they still feel that a major burden is being imposed by New York State, with little expectation of relief,” Heather Briccetti, president and CEO of the Business Council of New York State, Inc., said in a Siena news release, unveiling the study results. “As an example, nearly half of upstate CEOs say that the state’s paid family leave mandate has negatively impacted their business, adding to the challenges of operating in New York. They are expressing concerns about other labor-law mandates and restrictions being considered in Albany. Moreover, their survey responses continue to reflect the reality of modest economic growth across upstate New York. Importantly, businesses are continuing to make capital investments in order to improve productivity, but most are projecting modest job growth, and moderate sales growth, for 2019. Not surprising, employers remain concerned about the availability to obtain skilled workers. To us, the message is clear — the state needs to both promote economic growth, and reduce self-imposed economic headwinds.”

SRI interviewed 427 Upstate CEOs of private for-profit companies, including 76 in the Syracuse region. 

In the Syracuse area, 25 percent of the CEOs work in the service industry; 16 percent in engineering and construction; 17 percent in manufacturing; 16 percent in retail; 12 percent in wholesale; 11 percent in the financial sector; and 4 percent in the food and beverage industry.

Across Upstate, 30 percent of the CEOs interviewed work in the service industry; 17 percent in engineering and construction; 20 percent in manufacturing; 13 percent in retail; 9 percent in wholesale; 6 percent in the financial sector; and 5 percent in the food and beverage industry.

Syracuse CEOs on index questions

The four questions that comprise the index seek CEOs’ input 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 26 percent (down from 29 percent a year prior) say that New York business conditions have improved over the last six months; 18 percent say that they have worsened (an improvement from 28 percent); and 55 percent say that conditions are about the same.

Looking forward, 22 percent expect improvement in the state economy, 23 percent anticipate worsening, and 55 percent expect conditions to remain the same.

“Except for about one-quarter of CEOs, it doesn’t say, hey, things are going to really take off this year,” says Levy.

Within their industry, 23 percent say business conditions have improved and 20 percent expect conditions to improve in 2019. The survey also found 29 percent say conditions have worsened and 34 percent expect things to deteriorate in 2019. 

The 3-point drop in Syracuse’s index resulted from a decline in percentage of CEOs that are optimistic about the state’s economy over the coming year. A year ago, 41 percent were optimistic about the state’s prospects, compared to only 22 percent in this survey. Many did not move to being pessimistic, but rather expect conditions to remain the same as they are now. In fact, the percentage that anticipate statewide economic decline has fallen from 34 percent to 23 percent. 

Simultaneously, considering all four index questions — current, future, the overall economy, and within industry — SRI identified 24 percent of Syracuse’s CEOs as being positive about business conditions, 20 percent as negative, and 57 percent as holding steady. Across Upstate, those numbers were 28 percent positive, 22 percent negative, and 50 percent holding steady. 

CEO plans for 2019

Syracuse CEOs expect their revenues to increase at the rate of 52 percent this year, up from last year’s 42 percent and just above the 50 percent rate across Upstate. The survey also found 10 percent anticipate that revenues will decrease, down from 16 percent a year ago. Another 38 percent expect revenues to remain about the same.

The survey also found 39 percent of CEOs anticipate an increase in profits, 37 percent expect profitability to remain constant, and 25 percent foresee a decline. In the 2017 survey, 42 percent expected an increase, 32 percent anticipated the same profitability level, and 25 percent foresaw a decline.

The survey also found 55 percent intend to invest in fixed assets this year, down from 56 percent a year ago and up from 46 percent two years ago. This rate is “one sign that CEOs are more confident” as they invest in equipment for their businesses, SRI contends.

In addition, 34 percent of Syracuse respondents intend to increase their workforce in 2019, “virtually unchanged” from last year (35 percent). The survey also found 5 percent expect to decrease their workforce, down from 7 percent last year. Across Upstate, 38 percent of CEOs plan to hire, while 8 percent plan to downsize.

Again this year, a plurality of CEOs (32 percent) in Syracuse intend to enhance profitability through increasing the demand for their product or service. Still, 23 percent, look to reduce costs to enhance profitability, which is “virtually unchanged” from last year. The survey also found 21 percent say that they will enhance profitability through price increases, also unchanged from a year prior.

Siena researchers found an increasing percentage of CEOs across Upstate that are now prepared to raise their prices. Across Upstate, 21 percent look to increase prices, representing the “highest rate” Siena has seen in the 12 years of this study. 

“One out of five now for the first time across all of Upstate feel as though they’re ready to raise their prices,” says Levy.

Profit-enhancement strategies in Syracuse are “little changed” this year, consistent with an overall sense of holding steady among Syracuse CEOs.

Offered a list of potential challenges, Syracuse CEOs say they are concerned with health-care costs (80 percent, down from 81 percent); governmental regulation (64 percent, up from 63 percent), and taxation (62 percent, down from 69 percent). 

Other issues — adverse economic conditions, rising supplier costs, and human resources — were mentioned by about 40 percent of CEOs and “now approach the big three challenges of health care, regulation and taxes,” per Siena’s Syracuse fact sheet for the survey.

State government

Syracuse CEOs gave poor grades to New York State government again this year. The survey found only 7 percent (down one point from 8 percent a year ago) say that state government is doing an excellent or good job of creating a business climate in which companies like theirs can succeed. At the same time, 90 percent (68 percent poor) give the state government either a fair or poor grade. 

These numbers “vary very little” across Upstate, and “essentially, CEOs’ negative assessment has not changed much for six years,” per the SRI report.

Looking to the future, 11 percent (down from 22 percent a year ago) are somewhat or very confident in the ability of state government to improve the business climate over the next year. Eighty-nine percent are either not very confident (39 percent) or not at all (50 percent) confident. 

The survey found the top three areas that CEOs would like to see Gov. Cuomo and state lawmakers focus on include spending cuts (61 percent), personal income-tax reform (57 percent), and business income-tax reform (55 percent). The two second-tier areas of focus, according to CEOs, are infrastructure (46 percent) and ethics reform (47 percent).

In addition, the survey found 48 percent of Upstate CEOs and 46 percent of Syracuse CEOs say that the new New York State Paid Family Leave law has had a negative impact on their business, while 50 percent across Upstate and 53 percent in Syracuse say that it has had no impact.

Federal government

The federal government receives “significantly higher” grades from Upstate CEOs than the state government. 

CEOs’ assessments of the federal government’s performance and their confidence in its contribution to the business climate are up “significantly” from last year when data collection took place both prior to and after the 2016 election that put President Donald Trump in office and up enormously from the 2012-2015 period while President Barack Obama was in office. 

Today, the business leaders see the federal government doing an improving job of creating a business climate where they can succeed, are more confident that the federal government has the ability to improve the business climate for them, and is headed to a greater degree on the right track than is the government of New York State.

The survey found 48 percent (up from 29 percent last year and up from 6 percent in 2016) say the federal government is doing an excellent or good job of creating a business climate in which companies like theirs can succeed. At the same time, 52 percent (down from 67 percent last year and down from 90 percent the year before) say the federal government is doing either a fair or poor job.

Company culture 

For the first time, SRI this year asked CEOs to comment on the state of their company’s culture by indicating how descriptive of their business is a series of 12 statements that seek to measure the degree to which companies are operating efficiently, collaboratively, responding to external conditions, engendering employee engagement, and achieving a shared purpose. 

Siena has been asking these same questions to entire staffs of selected companies. “So we thought we’d put them in with CEOs and see what sort of assessment of their own company CEOs would offer,” says Levy.

Overall, Levy thinks the grades are good. Syracuse CEOs scored their companies highest on responding to the needs of their customers, operating as a team, encouraging the personal and professional growth of employees, and receiving and acting on feedback. 

They were most critical of their level of innovation, departmental goal setting and assessment, and responding to market and societal change.

Scores between 70 and 80 that include employee love for coming to work, having a shared vision and a widely known strategic plan, always striving to get better, and making sure that all departments are working seamlessly together toward the same goals display collective strength but self-described room for improvement.

“Our hope with these questions was that the CEOs would take them, think about them, and perhaps even use them when they go back to their reports, their department heads, and say, ‘Do you see it the same way?’” says Levy.       

This is the 12th installment of Siena College Research Institute’s (SRI) Upstate Business Leader Study

CEO confidence across upstate New York in 2018 was measured at 96.6, down 0.5 points and “virtually unchanged” compared to 2017. That’s according to the annual Siena College Research Institute (SRI) Upstate Business Leader Study, which the school released Jan. 25. The survey, conducted in 2018, is now in its 12th year. 

Current confidence was up 2.1 points while future confidence fell 3.1 points. With all indexes just below 100, collectively, New York CEOs describe and predict a “stable economic marketplace,” SRI said.

The overall confidence reading in Syracuse was 96.7, “virtually identical” to the Upstate CEO confidence figure. The 96.7 index level fell 3.3 points from 2017 and 4.7 points from two years ago, but was still below the 100-point breakeven point at which optimism and pessimism are balanced.

“When you consider all the CEOs we spoke to, the collective sentiment is one of holding steady, of status quo,” Donald Levy, director of SRI, tells CNYBJ.

Current confidence in Syracuse was measured at 100.7 in 2018, up 4.4 points from a year prior and 3.4 points higher than the Upstate number (97.3). The current confidence in Syracuse is higher today than in 10 of the last 11 years, SRI said.

Future confidence in Syracuse, measured at 92.8, was down 10.9 points from a year before (103.7) and was 3.1 points lower than the Upstate number. The future-confidence reading in Syracuse illustrates leaders’ growing concern over future economic conditions.

“They say, right now, I’m okay, but they’re looking ahead and they express more concern,” says Levy.

The Business Council of New York State, Inc. sponsored the survey, which SRI researchers conducted between October 2018 and Jan. 4, 2019.

“We are seeing several significant recurring themes. While business leaders feel confident in how they are addressing factors within their control, and that they have benefited from some major federal policy initiatives, they still feel that a major burden is being imposed by New York State, with little expectation of relief,” Heather Briccetti, president and CEO of the Business Council of New York State, Inc., said in a Siena news release, unveiling the study results. “As an example, nearly half of upstate CEOs say that the state’s paid family leave mandate has negatively impacted their business, adding to the challenges of operating in New York. They are expressing concerns about other labor-law mandates and restrictions being considered in Albany. Moreover, their survey responses continue to reflect the reality of modest economic growth across upstate New York. Importantly, businesses are continuing to make capital investments in order to improve productivity, but most are projecting modest job growth, and moderate sales growth, for 2019. Not surprising, employers remain concerned about the availability to obtain skilled workers. To us, the message is clear — the state needs to both promote economic growth, and reduce self-imposed economic headwinds.”

SRI interviewed 427 Upstate CEOs of private for-profit companies, including 76 in the Syracuse region. 

In the Syracuse area, 25 percent of the CEOs work in the service industry; 16 percent in engineering and construction; 17 percent in manufacturing; 16 percent in retail; 12 percent in wholesale; 11 percent in the financial sector; and 4 percent in the food and beverage industry.

Across Upstate, 30 percent of the CEOs interviewed work in the service industry; 17 percent in engineering and construction; 20 percent in manufacturing; 13 percent in retail; 9 percent in wholesale; 6 percent in the financial sector; and 5 percent in the food and beverage industry.

Syracuse CEOs on index questions

The four questions that comprise the index seek CEOs’ input 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 26 percent (down from 29 percent a year prior) say that New York business conditions have improved over the last six months; 18 percent say that they have worsened (an improvement from 28 percent); and 55 percent say that conditions are about the same.

Looking forward, 22 percent expect improvement in the state economy, 23 percent anticipate worsening, and 55 percent expect conditions to remain the same.

“Except for about one-quarter of CEOs, it doesn’t say, hey, things are going to really take off this year,” says Levy.

Within their industry, 23 percent say business conditions have improved and 20 percent expect conditions to improve in 2019. The survey also found 29 percent say conditions have worsened and 34 percent expect things to deteriorate in 2019. 

The 3-point drop in Syracuse’s index resulted from a decline in percentage of CEOs that are optimistic about the state’s economy over the coming year. A year ago, 41 percent were optimistic about the state’s prospects, compared to only 22 percent in this survey. Many did not move to being pessimistic, but rather expect conditions to remain the same as they are now. In fact, the percentage that anticipate statewide economic decline has fallen from 34 percent to 23 percent. 

Simultaneously, considering all four index questions — current, future, the overall economy, and within industry — SRI identified 24 percent of Syracuse’s CEOs as being positive about business conditions, 20 percent as negative, and 57 percent as holding steady. Across Upstate, those numbers were 28 percent positive, 22 percent negative, and 50 percent holding steady. 

CEO plans for 2019

Syracuse CEOs expect their revenues to increase at the rate of 52 percent this year, up from last year’s 42 percent and just above the 50 percent rate across Upstate. The survey also found 10 percent anticipate that revenues will decrease, down from 16 percent a year ago. Another 38 percent expect revenues to remain about the same.

The survey also found 39 percent of CEOs anticipate an increase in profits, 37 percent expect profitability to remain constant, and 25 percent foresee a decline. In the 2017 survey, 42 percent expected an increase, 32 percent anticipated the same profitability level, and 25 percent foresaw a decline.

The survey also found 55 percent intend to invest in fixed assets this year, down from 56 percent a year ago and up from 46 percent two years ago. This rate is “one sign that CEOs are more confident” as they invest in equipment for their businesses, SRI contends.

In addition, 34 percent of Syracuse respondents intend to increase their workforce in 2019, “virtually unchanged” from last year (35 percent). The survey also found 5 percent expect to decrease their workforce, down from 7 percent last year. Across Upstate, 38 percent of CEOs plan to hire, while 8 percent plan to downsize.

Again this year, a plurality of CEOs (32 percent) in Syracuse intend to enhance profitability through increasing the demand for their product or service. Still, 23 percent, look to reduce costs to enhance profitability, which is “virtually unchanged” from last year. The survey also found 21 percent say that they will enhance profitability through price increases, also unchanged from a year prior.

Siena researchers found an increasing percentage of CEOs across Upstate that are now prepared to raise their prices. Across Upstate, 21 percent look to increase prices, representing the “highest rate” Siena has seen in the 12 years of this study. 

“One out of five now for the first time across all of Upstate feel as though they’re ready to raise their prices,” says Levy.

Profit-enhancement strategies in Syracuse are “little changed” this year, consistent with an overall sense of holding steady among Syracuse CEOs.

Offered a list of potential challenges, Syracuse CEOs say they are concerned with health-care costs (80 percent, down from 81 percent); governmental regulation (64 percent, up from 63 percent), and taxation (62 percent, down from 69 percent). 

Other issues — adverse economic conditions, rising supplier costs, and human resources — were mentioned by about 40 percent of CEOs and “now approach the big three challenges of health care, regulation and taxes,” per Siena’s Syracuse fact sheet for the survey.

State government

Syracuse CEOs gave poor grades to New York State government again this year. The survey found only 7 percent (down one point from 8 percent a year ago) say that state government is doing an excellent or good job of creating a business climate in which companies like theirs can succeed. At the same time, 90 percent (68 percent poor) give the state government either a fair or poor grade. 

These numbers “vary very little” across Upstate, and “essentially, CEOs’ negative assessment has not changed much for six years,” per the SRI report.

Looking to the future, 11 percent (down from 22 percent a year ago) are somewhat or very confident in the ability of state government to improve the business climate over the next year. Eighty-nine percent are either not very confident (39 percent) or not at all (50 percent) confident. 

The survey found the top three areas that CEOs would like to see Gov. Cuomo and state lawmakers focus on include spending cuts (61 percent), personal income-tax reform (57 percent), and business income-tax reform (55 percent). The two second-tier areas of focus, according to CEOs, are infrastructure (46 percent) and ethics reform (47 percent).

In addition, the survey found 48 percent of Upstate CEOs and 46 percent of Syracuse CEOs say that the new New York State Paid Family Leave law has had a negative impact on their business, while 50 percent across Upstate and 53 percent in Syracuse say that it has had no impact.

Federal government

The federal government receives “significantly higher” grades from Upstate CEOs than the state government. 

CEOs’ assessments of the federal government’s performance and their confidence in its contribution to the business climate are up “significantly” from last year when data collection took place both prior to and after the 2016 election that put President Donald Trump in office and up enormously from the 2012-2015 period while President Barack Obama was in office. 

Today, the business leaders see the federal government doing an improving job of creating a business climate where they can succeed, are more confident that the federal government has the ability to improve the business climate for them, and is headed to a greater degree on the right track than is the government of New York State.

The survey found 48 percent (up from 29 percent last year and up from 6 percent in 2016) say the federal government is doing an excellent or good job of creating a business climate in which companies like theirs can succeed. At the same time, 52 percent (down from 67 percent last year and down from 90 percent the year before) say the federal government is doing either a fair or poor job.

Company culture 

For the first time, SRI this year asked CEOs to comment on the state of their company’s culture by indicating how descriptive of their business is a series of 12 statements that seek to measure the degree to which companies are operating efficiently, collaboratively, responding to external conditions, engendering employee engagement, and achieving a shared purpose. 

Siena has been asking these same questions to entire staffs of selected companies. “So we thought we’d put them in with CEOs and see what sort of assessment of their own company CEOs would offer,” says Levy.

Overall, Levy thinks the grades are good. Syracuse CEOs scored their companies highest on responding to the needs of their customers, operating as a team, encouraging the personal and professional growth of employees, and receiving and acting on feedback. 

They were most critical of their level of innovation, departmental goal setting and assessment, and responding to market and societal change.

Scores between 70 and 80 that include employee love for coming to work, having a shared vision and a widely known strategic plan, always striving to get better, and making sure that all departments are working seamlessly together toward the same goals display collective strength but self-described room for improvement.

“Our hope with these questions was that the CEOs would take them, think about them, and perhaps even use them when they go back to their reports, their department heads, and say, ‘Do you see it the same way?’” says Levy.