More than half say the economy has worsened More than half (54 percent) of Upstate New York CEOs surveyed say business conditions have worsened over the last year and only 19 percent expect improvement in the coming year — down from 36 percent a year ago. That’s according to 16th annual […]
More than half say the economy has worsened
More than half (54 percent) of Upstate New York CEOs surveyed say business conditions have worsened over the last year and only 19 percent expect improvement in the coming year — down from 36 percent a year ago.
That’s according to 16th annual Upstate New York Business Leaders survey that the Siena College Research Institute (SRI) released on March 10. It is sponsored by the Business Council of New York State, Inc.
“It’s impossible to sugarcoat the findings of this survey. CEO confidence is down dramatically from a year ago — once again reaching the low point we saw in 2020 and greater now only than during the Great Recession of 2008,” Don Levy, director of the SRI, said in the survey report. “Only about 1 in 5 CEOs now say conditions have been and will continue to improve while about half say the opposite — conditions have and will continue to worsen.”
The survey found that 23 percent of CEOs say the economy has improved in the past year and 54 percent see worsening conditions this year. That’s up from 41 percent last year.
The survey also found 38 percent of respondents (down from 47 percent last year) predict increasing revenue in 2023, while 26 percent (down from 34 percent) anticipate growing profit in the year ahead.
Still, unchanged from last year, more than half (55 percent) intend to invest in fixed assets in 2023. Meanwhile, 85 percent say inflation is having a “negative impact on profitability.”
One-third of CEOs (down from 44 percent last year) plan to increase the size of their workforce this year, but 82 percent say they don’t believe an ample supply of appropriately trained local workers is available.
The survey also found 75 percent of respondents are having difficulty recruiting for their open positions despite 72 percent offering increased wages and 53 percent providing flexibility with work hours.
By a margin of 61 percent to 5 percent, CEOs believe increasing the minimum wage to $15 an hour across Upstate would have a negative rather than positive impact on the economy. They oppose the increase by a ratio of 59 percent to 31 percent.
“We see the results of this poll showing that, as a whole, employers are still concerned about major policies the state is considering that will adversely impact their business while also being frustrated about the lack of assistance and relief being shown to the business community,” Heather Mulligan, president and CEO of the Business Council of New York State, said in the Siena report. “Employers continue to work hard every day to manage a fluctuating economy, a shrinking workforce, and policies that dissuade them from investing and growing in New York.”
The Siena College Research Institute conducted interviews with 530 CEOs of upstate New York companies/nonprofit organizations between Nov. 28, 2022 and Feb. 14, 2023. CEOs responding to the survey were from the following industry sectors: service (20 percent), manufacturing (17 percent), nonprofit (15 percent), engineering and construction (10 percent), retail (8 percent), wholesale/distribution (5 percent), food and beverage (6 percent), financial (8 percent), health care (4 percent), technology (4 percent), and tourism (3 percent).
CEO sentiment
The survey found that 23 percent of CEOs say economic conditions in New York state today, as compared to a year ago, are either a little (4 percent) or considerably (19 percent) better. A majority, 54 percent, say conditions are worse (20 percent considerably, 34 percent a little) today than a year earlier.
A year ago, only 39 percent of CEOs said that conditions had been worsening (2021-2022) while at that time, 29 percent thought that economic conditions had been improving.
Today’s assessment is more pessimistic than last year’s but still stronger than it was two years ago when only 9 percent saw improving conditions and 80 percent said conditions had worsened.
Asked the same question about conditions in their industry, slightly fewer (21 percent) say that economic conditions in New York have improved for their industry and 54 percent say they are worse.
Looking forward from today through the balance of 2023, only 19 percent of respondents (down from 36 percent last year), expect economic conditions in New York to be either a little (16 percent) or considerably (3 percent) better, while 54 percent anticipate economic conditions to grow worse in 2023.
CEOs assess their industry prospects for the rest of 2023 slightly better than the overall conditions as 23 percent (down from 37 percent a year ago) expect improving conditions, while 49 percent (up from 34 percent) anticipate further worsening. More than 50 percent of CEOs from retail, engineering/construction, manufacturing, technology, and health care expect economic conditions within their industry to worsen in 2023.
Each year, SRI computes an Index of Business Leader Confidence based on the four questions in which CEOs assess the economy of New York as well as conditions within their industry.
As SRI explains it, an index score of 100 represents a breakeven point at which optimism and pessimism are balanced. Last year, the Upstate index stood at 94.4. The index has now fallen to 68.8.
Today’s overall index is virtually equal to that of two years ago (68.7) during the pandemic. At that point, however, the current component of the index was 38.5, while today it is 68.3. Two years ago, the future index was at 98.9, but today it is only 69.3, SRI said.
Aside from the pandemic year, 2020, the index today is the lowest SRI has measured since 2008 (39.0) during the Great Recession.
Looking to the next three to five years, CEOs expect several sectors to have a positive impact on the economic vitality of their geographic region. For example, 21 percent look to education to have a positive impact; 19 percent cite technology; 17 percent say tourism; and 15 percent mention manufacturing.
Despite the decline in CEO confidence this year, 67 percent (up from 59 percent a year ago) think that their company will be in business in New York 10 years from today. Between 75 percent and 80 percent of CEOs in the two higher index groups believe that they will continue in business in 10 years but a lower percentage, albeit a majority of 56 percent, of those in the pessimistic group believe that they will remain in business through the next 10 years.
Still, a majority of respondents, 53 percent, say that if they had it to do all over again, considering all factors, that they would locate their business someplace other than New York. That’s virtually unchanged from 55 percent last year. At the same time, 38 percent say that they would still locate in New York.
Prospects for 2023
As for the CEOs views on the upcoming year, 38 percent expect to grow revenue, down from 47 percent, a year ago. At the same time, 28 percent (up from 22 percent), anticipate declining revenue.
The survey also found that 71 percent of the most-confident businesses expect revenue growth while 49 percent of the most pessimistic believe that their revenue will decrease.
Only 26 percent (down from 34 percent) anticipate increasing profitability, and 37 percent (up from 34 percent last year) predict decreasing profitability.
One-third of CEOs say that they will focus on market and demand growth this year in order to enhance profitability while 30 percent (down from 36 percent last year) will focus on price increases.
About one-fifth of CEOs (22 percent) are focused on cost reductions, up from 15 percent a year ago, the Siena survey found.
Again, this year, 55 percent of CEOs intend to invest in fixed assets for their company designed to meet growing demand, reduce costs, or enhance profitability.
Despite declining confidence, “it is noteworthy” that CEOs plan to invest in their businesses at the same rate as last year. At least 50 percent of CEOs plan to invest from the following industry sectors: manufacturing (72 percent), tourism (60 percent), engineering/construction (58 percent), technology (57 percent), retail (56 percent), financial (55 percent), wholesale/distribution (52 percent) and nonprofit (50 percent).
Additionally, 17 percent will invest this year in fixed assets designed to respond to climate change. Last year it was 15 percent.
About one third (33 percent, down from 44 percent a year ago) plan to increase the size of their workforce this year.
When asked about the challenges that they face, at least 50 percent of all CEOs cited the following six challenges:
• Adverse economic conditions — 65 percent, up from 56 percent last year
• Governmental regulation — 63 percent, down from 65 percent last year
• Rising supplier costs — 60 percent, down from 70 percent last year but above 70 percent in food/beverage (87 percent), retail (77 percent), manufacturing (73 percent), and wholesale/distribution (73 percent)
• Health-care costs — 59 percent, up from 55 percent.
• Taxation — 57 percent, up from 56 percent last year.
• Energy costs — 54 percent, up from 47 percent last year and only 27 percent in 2020.
Focusing on one challenge, inflation, 85 percent of CEOs say that inflation is having either a moderate negative impact (52 percent) or a substantial negative impact (33 percent) on their company’s profitability.
In response to inflation, 73 percent of CEOs are raising their prices and 47 percent are cutting costs. One-third say that they are changing their business practices.
Asked about the Inflation Reduction Act, only 14 percent expect it to have a positive impact on their profitability while 39 percent believe the law will have a negative impact on their profitability.
“CEOs are struggling to maintain profitability in the face of inflation,” Levy said. “While governmental regulation, rising supplier costs, healthcare costs, taxes and energy costs all weigh on Upstate CEOs, many are raising their prices while still trying to cut their costs. Currently the solution to this Rubik’s cube is unclear to most CEOs. Is there a ray of hope? Sixty-seven percent of CEOs, up from 59 percent a year ago expect that their business will still be doing business in New York in 10 years.”
Workforce
The Siena survey also found 33 percent (down from 44 percent a year ago) plan to increase the size of their workforce this year.
Most (82 percent) CEOs say they don’t have access to an ample supply of local workers that are appropriately trained for their employment needs. Only 14 percent say the supply is ample. The figures are essentially unchanged (13-79 percent) from last year but considerably worse from two years ago when the numbers were 28-61 percent.
Three quarters of CEOs say they’re having difficulty recruiting to fill open positions. That measurement of having difficulty filling open positions is highest in health care (96 percent), retail (86 percent), engineering/construction (86 percent), and manufacturing (80 percent).