Upstate New York CEOs “seemed more poised and ready for the beginnings of a recovery” following another tough year for businesses across the region as the COVID-19 pandemic continued.
A “strong majority” expect their business to continue in New York for at least 10 years. Growing numbers plan to increase revenue and profit in the year ahead. A majority will invest in fixed assets and nearly half are looking to hire.
That’s according to a fact sheet on the 15th annual Upstate New York Business Leaders survey that the Siena College Research Institute (SRI) recently released.
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“Our index of business-leader sentiment, a measure that considers both current and future assessments of CEOs, is up to 94.4 from last year’s 68.7 and 2019’s 75.3,” Don Levy, director of the SRI, said. “CEOs display signs of recovery but still fall short of a score of 100 which indicates equal levels of optimism and pessimism. In other words, the road to recovery stretches out for quite a ways.”
The Upstate New York Business Leaders survey found nearly half (45 percent) of respondents have seen the pandemic increase demand for their product or service and most firms have brought their employees back to their facilities, SRI said.
A third of companies expect to emerge from COVID “stronger than ever before” while over half say that they expect to “pick up where they were prior to the pandemic.”
However, the Upstate business leaders also have concerns about several components of business operations.
Most do not think New York has an “ample” supply of trained workers and a large majority are having trouble recruiting workers. The survey also found 36 percent plan to increase prices while 70 percent of respondents say rising supplier costs have been a problem. Those surveyed also believe “all signs point to inflation.”
And with the ongoing war in the Ukraine, SRI believes that the 47 percent that noted energy costs — and the 20 percent that cited global political instability as concerns —would be much higher if companies were surveyed today.
SRI also noted that the pandemic that is becoming an endemic is “welcomed” by upstate CEOs but the uncertainty in eastern Europe will “weigh heavily on costs and consumer confidence.”
“This survey shows employers still see challenges ahead, especially concerning workforce needs, and fear a continued slow recovery process even as the pandemic becomes less severe,” Heather Briccetti, president & CEO of the Business Council of New York State, said in the SRI survey report. “Fortunately, New York is in a reasonably healthy financial position as it works on the state budget, so there is an opportunity for the legislature to provide additional assistance to businesses and avoid harmful taxes and mandates.”
The SRI conducted interviews with 611 CEOs of upstate New York companies between Nov. 10, 2021 and Feb. 11, 2022. CEOs were from industry sectors that included service (39 percent); manufacturing (18 percent); engineering and construction (14 percent); retail (11 percent); wholesale/distribution (7 percent); food and beverage (6 percent); and financial (6 percent).
CEO sentiment
The survey found 39 percent of respondents saying that economic conditions in New York state today — as compared to six months ago — are either a little (23 percent) or considerably (16 percent) worse. In addition, 29 percent say conditions are better (6 percent considerably better, 23 percent a little better) today than six months ago.
A year ago, 80 percent of CEOs said that conditions had been worsening (2020-2021), while 9 percent thought that economic conditions had been improving.
When asked the same question about conditions in their industry, slightly less (37 percent) say that economic conditions in New York have worsened for their industry and slightly less (28 percent) say they are better.
Looking forward from today through the balance of 2022, 36 percent of respondents expect economic conditions in New York to be either a little (31 percent) or considerably (5 percent) better, while 41 percent expect economic conditions to grow worse in 2022.
CEOs assess their industry prospects for the rest of 2022 “slightly better” than the overall conditions as 37 percent expect improving conditions while fewer (34 percent) anticipate further worsening. Retail (44 percent worsening) and food/beverage (40 percent worsening) are the most pessimistic industries.
The survey also found 59 percent of CEOs think that their company will continue to be in business in New York 10 years from today, 14 percent think it will not be, and 27 percent don’t know. CEOs in the financial sector are most optimistic, while those in manufacturing, retail, and wholesale and distribution are least optimistic, SRI said.
At present, only 18 percent think that the general business climate in their local area is improving, while 50 percent see it remaining the same, and 32 percent think it is worsening. The Capital Region (22 percent) and Central/Mohawk (21 percent) CEOs are the most optimistic about their immediate area seeing improving business conditions.
Nearly one-quarter of responding CEOs say that technology will be the industry sector to have the greatest impact on the economic vitality of their area in the next three to five years. At the same time, 17 percent say tourism and 15 percent believe it will be medical, the survey found.
When asked about the national economy, 39 percent of CEOs think it very likely (23 percent) or almost certain (16 percent) that the U.S. economy will be in a recession between now and the end of 2022. An additional 35 percent think a recession is somewhat likely while 26 percent think it either not very (24 percent) or not at all likely.
The Impact of COVID-19
When asked to name both their areas of concentration and challenges for the coming year, the responding CEOs say dealing with COVID-19 is 3rd behind typical growth strategies, such as expansion of existing markets and growth in existing markets.
The Siena survey found 36 percent of respondents saying that dealing with COVID-19 will be a “major area of concentration” for their company in 2022.
The continuing impact of COVID-19 tied with rising suppler costs (70 percent) as the most cited challenge that concerns CEOs at a rate even greater than dealing with governmental regulation (65 percent), and adverse economic conditions and taxation (both at 56 percent).
In addition, the survey found 46 percent of CEOs saying the pandemic has resulted in decreasing revenue, 55 percent said lower profitability, and 28 percent of CEOs say the pandemic resulted in a drop in demand for their product or service.
However, 45 percent of respondents said that demand for their product or service is up, compared to 32 percent a year ago, and 36 percent have seen increasing revenue, up from 20 percent a year ago, while 26 percent have seen rising profitability, up from only 16 percent 12 months ago.
At the same time, 86 percent of CEOs say that COVID-19 has increased their cost of doing business, SRI said. Over 90 percent of CEOs in food/beverage, wholesale/distribution, and manufacturing say the pandemic has increased their cost of doing business. The financial sector is the only industry below 80 percent on that measure at 69 percent.
CEOs faced a variety of problems related to COVID. At least three quarters of responding CEOs reported that price increases from suppliers (88 percent), orders not arriving at their location on time (78 percent), and goods not being available (75 percent) were “at least a somewhat significant problem” during the pandemic.
|
Problem |
Significant |
Not Significant |
|
Price increases from suppliers |
88% |
13% |
|
Orders not arriving to them on time |
78% |
22% |
|
Goods not being available |
75% |
25% |
|
Clients/customers unwilling to accept price increases |
46% |
54% |
|
Receiving inferior quality goods/services |
32% |
69% |
Chart Source: Siena College Research Institute
The Siena survey also found 76 percent of CEOs reporting that supply-chain disruptions negatively affected their business, while 32 percent reported the pandemic created new profitable opportunities for their business.
Prospects for 2022
Despite the continuing impacts of COVID-19 when the survey was conducted, CEOs make stronger projections for their revenue, profitability, asset acquisitions, new initiatives, hiring and wages when looking to what’s ahead in 2022.
The survey found 47 percent of respondents anticipate growing revenue, 31 percent say revenue will stay the same, and 22 percent expect their revenue to decline. Last year, 34 percent expected an increase in revenue while 35 percent projected a decline.
In addition, 34 percent of CEOs expect to increase profitability this year, while 34 expect profit to decrease. Last year, 25 percent anticipated increasing profitability while 42 percent expected a decline.
This year, 36 percent of CEOs plan to increase prices in order to enhance profitability. The figure is more than double the past two years, at 16 percent last year and 17 percent in 2019, and the “highest ever reported,” per the SRI. And 15 percent plan cost reductions, “the lowest ever reported.”
The data also indicates 44 percent of CEOs plan to increase their workforce, 51 percent say their workforce will remain the same, and 5 percent plan to cut the size of their workforce. These plans show an improvement over last year when 27 percent expected to increase and 10 percent planned to reduce their workforce.
In addition, 55 percent of CEOs plan to invest in fixed assets designed to meet growing demand, reduce costs or enhance productivity, up from 41 percent a year ago.
The data also indicates 15 percent plan to invest in fixed assets designed to respond to climate change.
Workforce readiness
The SRI survey found only 13 percent of upstate New York CEOs say an ample supply of local workers has been “appropriately trained,” while 79 percent say that’s not the case. Last year, 28 percent said that the supply of local workers was ample, while 61 percent had said it was not.
CEOs’ perception of an ample supply of trained workers does not exceed 18 percent in any region or 17 percent in any industry group.
More than three-quarters of respondents (78 percent) report having difficulty recruiting, while 36 percent are having difficulty retaining employees. Only 18 percent report not having difficulty with either.
CEOs are looking for and have the greatest difficulty recruiting semi-skilled and skilled workers. That includes workers who are unskilled (44 percent, up from 28); semi-skilled (63 percent, up from 56); skilled (67 percent, up from 50); professional (48 percent, up from 34); sales/marketing (26 percent, not asked in 2020).
CEOs are having the greatest difficulty retaining semi-skilled and skilled workers, which includes unskilled (21 percent); semi-skilled (30 percent); skilled (32 percent); professional (22 percent); and sales/marketing (10 percent).
In order to recruit, 88 percent of CEOs have increased wages and 51 percent have designed flexible work hours. Eighty-six percent have increased wages in order to retain employees. Sixty-six percent designed flexible work hours and 58 percent offered bonuses.
The survey found 60 percent of CEOs report raising starting pay for entry-level employees has forced them to raise senior employees’ pay. Plus, 58 percent say they are paying new hires more and still can’t fill jobs.
