Rochester’s business leaders recorded the highest overall and future confidence of the four upstate regions, a survey released today shows.
The annual RBJ-Siena Business Leader Survey, a component of the Siena College Research Institute Upstate New York Business Leader Survey, revealed overall confidence in Rochester is at 113.3—soaring 27.6 points from 85.7 last year. A year ago Rochester was the market in which confidence had dropped.
“These are the best numbers that we have seen in eight years,” said Donald Levy, director of the Siena College Research Institute. “We started it in the fall of ’07 right before the Great Recession. At that point about 58 percent of the CEOs that we spoke to were just hoping to survive.
“You can’t portray it as everybody’s whistling Dixie, but the change is dramatic,” he added.
The survey, with sponsorship from Gramercy Communications LLC, Ostroff Associates and the Business Council of New York State, was administered from Oct. 22 to Jan. 7.
Around 524 business leaders, including 147 from Rochester, of private, for-profit companies were surveyed in upstate regions—in Buffalo, Syracuse and the Capital Region, along with Rochester.
Rochester’s current confidence is 109.2, up from 83.3 last year. Future confidence increased 29.2 points from 88.1 to 117.3, the report states.
“I am very bullish on the future of Rochester,” said William Pollock, president and CEO of Optimation Technology Inc. and a participant in the survey. “The demographics of business profiles have evolved from the ‘big three’ to hundreds of small high-tech firms doing innovative development with cutting-edge technologies. Our future is very bright.”
Some 40 percent of local business leaders are optimistic, up from 24 percent a year ago.
Despite increased optimism in the Rochester region, 27 percent of the area’s business leaders say they would start their business in New York if given a do-over.
“New York is a poor place to start a business,” said Donald Chesworth, a partner of Harris, Chesworth, O’Brien, Johnstone & Welch LLP and a survey respondent. “We need to reduce the role of government in our lives and let people have the freedom to start new businesses without oppressive regulation and taxes.”
Even the most optimistic leaders across the survey prefer someplace other than New York at a rate of 54 to 43 percent, the report states.
“(There is a) continuing undercurrent of, ‘does it make sense to live and do business in Upstate New York?’” Levy said. “Only 25-30 percent said, ‘yeah, if I had to do it again I’d locate here.’”
Just under half of business leaders in Rochester—48 percent of them—expect to increase revenues in 2015, up from 42 percent who expected revenues to rise in 2014.
Rochester leaders—about 36 percent—project profit growth to increase while 24 percent expect profits to fall this year, the survey shows.
A plurality of area business leaders plan to increase profits more so by increasing their market share or demand for their product or services as compared with those advocating cost reductions—a good sign, Levy says, because area leaders are planning for the future instead of bracing for it.
“I think there is just a collective lifting of the spirits,” Levy said. “The anticipation is that we’re going to hire more people ... we’re going to have more profitability so it bodes for a much stronger year this year.”
The survey found 56 percent of business leaders in Rochester plan to acquire fixed assets in 2015.
The survey also found that nearly a third of upstate leaders are ready to hire in 2015. Thirty-four percent of Rochester leaders expect to increase their workforce, while 12 percent anticipate layoffs, the report states.
Engineering and manufacturing sectors have the most aggressive hiring plans, with 41 and 42 percent this year. The hiring-to-layoff ratio is the best seen in seven years at 3.5:1, but is still below the pre-recession ratio of 6:1 in 2007.
“These folks who run the small to midsize private businesses—they look at orders every day, they look at revenues every day and so they are truly a valuable leading indicator,” Levy said. “If they’re optimistic more business takes place.”
The biggest challenges business leaders believe companies face in Rochester include health care costs, governmental regulation and taxation; government regulation is the most significant concern.
“New York State has many times given lip service to creating and improving business climate, but most of these efforts have contributed little to the overall success of the business in the state,” Pollock said.
Despite these challenges, the biggest issue is creating change in Albany and Washington, Levy said.
“The one continuing piece of disturbing news is while confidence across the board has increased, the place where confidence has not only not increased but has slightly eroded is in the role that state and federal governments are playing in making the business climate more positive,” Levy said. “Their frustration with government has intensified.”
The survey shows a different Rochester. The past has helped position the city’s future, officials say.
“What strikes me most about Rochester is it’s sort of like Rochester has flipped a switch,” Levy said. “If you think of it graphically Rochester lagged in the doldrums a little bit longer, whether it’s the recovery from everything associated with Kodak or the transition to a variety of other industries, Rochester had sort of a double whammy. It had to reinvent itself.”
Rochester’s future business outlook rests on how its residents define the city, Levy said.
“I think Rochester needs to continue to do a good job of selling itself as that type of diversified economic system not reliant on one business,” he said. “Building upon this increased optimism and the growing network of diversified businesses is what Rochester needs to sell itself on as a good place to do business.”
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