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Optimism fades among area's business leaders

Rochester Business Journal
January 29, 2016

The record high of optimism a year ago has eroded in Rochester—the most of any Upstate New York region, an annual survey’s results show.

The RBJ-Siena Business Leader Survey, a component of the Siena College Research Institute Upstate New York Business Leader Survey, interviewed 156 local business leaders to better understand the economic outlook of Rochester.

“I was a little surprised that we found as much of a decline as we did across all upstate but quite specifically in Rochester after last year’s numbers,” said Don Levy, director of the Siena College Research Institute.

The survey was sponsored by The Business Council of New York State and took place from October-December 2015. The four regions evaluated include Rochester, Buffalo, the Capital Region and Syracuse, and included a total of 531 business leaders.

Rochester CEOs recorded the lowest overall current and future confidence among the four regions this year, officials said.

“This year we saw a decline in Rochester of 24 points,” Levy said of the overall tally. “That says to me it’s got to be an effect both of an economic year that didn’t meet expectations and an ideological year in which they’re concerned about the direction of the state and the the country both politically and economically.”

The survey aims to help regions understand what area leaders are thinking. It also could help start a conversation around policy changes, officials said.

“It’s obviously disappointing to see some of the optimism metrics decline year over year, especially in Rochester,” said Heather Briccetti, president and CEO of the Business Council of New York State. “More than anything, this survey lays out the blueprint for the public policy changes necessary to improve the business climate throughout the state. The folks who responded to the survey are the people creating jobs, and lawmakers would be wise to listen to their recommendations.”

Each of Rochester’s measures registered below 100 points, indicating more pessimism than optimism.Overall confidence in Rochester is at 89.4—a 23.9 point drop—from 113.3 a year ago.

The report card of government officials and the government’s role in creating the business climate received even worse marks than last year.

“Last year when we talked about their view of the degree of support that they get from local, state and federal government, they were quite critical of the government’s role and you would say, ‘well, that can’t get any worse...well, it got a little worse,” Levy said.

The presidential race has had an impact on confidence levels.

“I think that the fall was a tumultuous time given the onset of the presidential election,” Levy said.

This year’s survey shows Rochester’s future confidence decreased 23.1 points from 117.3 to 94.2 this year. Current confidence is 84.6, down from 109.2.

Only 29 percent of upstate CEOs are optimistic—down from 39 percent the prior year; 47 percent—up from 44 percent—are status quo and 24 percent—up from 16 percent last year—are pessimistic.

For all of Upstate New York, 29 percent of CEOs—26 percent in Rochester—would start their business in New York again if they could go back to the start.

“We would hope that the people who live and work in Rochester, and throughout upstate, will remain hopeful that progress is being made and things are changing,” Briccetti said.

For 2016 plans, hiring, increasing revenue, profit projections and acquiring fixed assets have all diminished for Rochester, the survey finds.

Confidence is greatest in the engineering and construction sector at 121.3—down from 124.7 last year.

“The most positive industry sector is engineering and construction which is a good sign,” Levy said. “In many ways engineering and construction is a leading indicator.”

For some leaders, Rochester has worked out for their business and industry.

“We’re extremely confident between the economic development prize and the photonics—if it’s half as good as everybody’s saying. And just in general we’re growing our business and hiring more people all the time and doing a lot of work locally as well as out of the area,” said Victor Salerno, CEO of O’Connell Electric Co. Inc.

The future offers a bleak picture for others.

Just 13 percent—down from 18 percent last year and below the other three regions’ combined rate of 23 percent—of Rochester’s CEOs say the area’s general business climate is improving. Sixty percent of local CEOs say it is the same and 26 percent of area leaders say it is worsening.

“I am optimistic that Rochester will continue to find ways to allow for economic growth,” said Kim Vogt, medical day program director and corporate compliance officer for long-term care at Meadowbrook Adult Day Program at The Highlands. “I see many future challenges related to the health care industry.”

“I am not inclined to say that New York is a good place to start a business,” she added.

Some are still optimistic, but they are the quiet minority, Levy said.

“Rochester is an interesting place,” Levy said. “There is a wide assortment of businesses in Rochester. Thirty percent of Rochester CEOs are going gangbusters…it’s a different world for them.”

The pessimistic leaders are focused on cutting back expenses, he said.

This year’s results signal that the majority of Rochester leaders are worried due to the constant demands of a vastly changing business climate, Levy said.

“I always call these guys the CEO’s next door,” he said. “They’ve got to worry about health care. They’ve got to worry about minimum wage. They’ve got to worry about data security above and beyond just simply running their business. Clearly this year it weighed on them.”

1/29/2016 (c) 2016 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email service@rbj.net.


What You're Saying 

Barbara Carder at 10:04:52 AM on 2/4/2016
Perhaps I am naive, but is business' only purpose the 'bottom line'? Is there not a social/economic participation factor that makes business worthwhile in Rochester? Is everything simply profit? Seems like the survey that says leaders see the glass half empty are coming fro...  Read More >

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