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Rochester was the only market among four in Upstate New York in which the confidence of business leaders dropped in 2013, a survey released today shows.
Overall confidence among some 190 business leaders in the Rochester area responding to the RBJ-Siena Business Leaders Survey, a component of the Siena College Research Institute Upstate New York Business Leaders Survey, measured 85.7 points, down 6.1 points from 91.8 in 2012.
“If you go back three years ago, Rochester was far and away the strongest of the four areas,” said Donald Levy, the research institute’s director. “Rochester’s numbers three years ago were well above 100 and considerably higher than everybody else.”
Confidence among business leaders in the Capital Region, including Albany, measured 110.4, the institute’s seventh annual study/survey found. Syracuse business leaders measured 97.4 and those in Buffalo 91.3.
The four markets combined, based on the Index of Business Leader Confidence, showed a confidence rating of 94.6, up 5.7 points from 88.9 in 2012 and the first overall increase in three years.
The break-even point at which optimism and pessimism are balanced is 100, Levy said.
“The expectation level of the CEOs we interviewed at that point (three years ago) was that things had improved and their expectation was that things were going to get better,” he said. “Now we’ve seen three years in a row where the confidence of Rochester’s CEOs has steadily declined.”
Current confidence in the Rochester area measured 83.3, up from 82 in 2012. Future confidence, however, dropped 13.5 points, to 88.1 in 2013 from 101.6 in 2012.
The survey took place from Oct. 21 to Dec. 31. SRI interviewed 651 business leaders, including nearly 190 from the Rochester area.
He was struck by Rochester’s pessimism. Part of the problem might be its lack of a dominant industry sector, Levy said.
“Both Buffalo and the Capital Region had one industry that just jumped off the page,” he said. “In Buffalo, it was the medical field; in the Capital Region, it’s overwhelmingly technology.
“In Rochester, what we saw was a little bit of this and a little bit of that, especially medical and technology but at equal rates and no industry standing out.”
In Rochester, 25 percent of the business leaders surveyed said medical-related fields would have the greatest impact on economic vitality in the area over the next three to five years. Another 22 percent said technology would have the greatest impact, with 19 percent picking manufacturing, 11 percent education and 10 percent tourism.
“In Rochester, it feels like there isn’t one wagon that’s pulling everybody along,” Levy said. “I know there are tremendous success stories in Rochester, but for the rank-and-file CEOs we interviewed, they don’t see one industry jumping out, saying, ‘That’s the one that’s going to pull us out of this.’”
Some 58 percent of local business leaders think technology will have a positive impact on economic vitality in three to five years. Some 56 percent chose medical-related fields, 48 percent chose education, 44 percent chose manufacturing, 35 percent chose tourism and 23 percent chose green and sustainable energy.
Only 8 percent described the general business climate in their county and adjacent counties as improving, compared with 15 percent from the four markets combined.
Some 62 percent in Rochester said the climate is unchanged, and 27 percent said it is worsening.
The repositioning of Eastman Kodak Co. in 2013 after its bankruptcy and the August 2013 acquisition of Bausch & Lomb Inc. by Valeant Pharmaceuticals Inc. likely influenced the Rochester executives surveyed, Levy said.
“I think it plays into their thinking even if it’s somewhat unconsciously,” he said.
Some 7 percent of Rochester business officials think the climate in their particular industry is improving, compared with 13 percent in the combined upstate markets.
Some 23 percent in Rochester plan to increase their workforce, compared with 28 percent in the four markets combined.
Some 22 percent locally plan moderate increases in employment, and 1 percent plan substantial increases. Some 63 percent plan to stay about the same, and 13 percent plan to reduce their workforce.
“Over half of Rochester’s CEOs say they plan to acquire fixed assets,” Levy said. “The manufacturing sector is strongest there, with the greatest likelihood of reinvesting. That’s a tremendously strong indicator.”
Some 54 percent in Rochester plan to acquire fixed assets this year, compared with 52 percent for the four markets combined, the RBJ-Siena Business Leaders Survey shows.
“This survey has shown, year after year, that those businesses that say the most important thing is to cut costs are the ones that are the most negative,” Levy said. “They’re the least likely to invest in themselves and the least likely to invest in their people.
“Unfortunately, only one in four businesses in Rochester is optimistic. If you work there, you’re not walking around talking about gloom and doom. There are just fewer of them in Rochester than in some of the other markets.”
Rochester executives also lagged behind the three other upstate markets in assessing improvement in the general business climate in their geographic area, with only 8 percent saying the climate in Rochester is improving compared with 15 percent throughout upstate.
Rochester business leaders gave higher grades than those in the other markets to the local workforce, to the transportation infrastructure and as a place consumers want to live.
Health care costs tied with governmental regulation as the greatest challenge facing Rochester CEOs, at 20 percent each. Taxation and adverse economic conditions tied at 15 percent.
“The CEO attitude toward government is just terrible,” Levy said. “It’s worse towards federal than the state, but surprisingly low towards the contribution of the state at a time when the governor is trumpeting what he is doing, has done and plans to do for upstate.”
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