Lee County Executive Business Climate Survey Report

Transcription

1 Lee County Executive Business Climate Survey Report Fourth Quarter, 2012 Prepared by: Regional Economic Research Institute Center for Leadership & Innovation Lutgert College of Business Florida Gulf Coast University November 14, 2012

2 Introduction This is the fourth Executive Business Climate Survey to be completed by a new partnership between The Horizon Council and Florida Gulf Coast University. The survey provides not only valuable insight into our Lee County economy, but also future trends and expectations for growth in our region. The survey is a tool that can provide information about key concerns and issues facing our businesses and our region. One of the new features of this survey is the calculation of an Executive Business Climate Index (EBCI). It will provide a summary number each quarter allowing one to quickly gauge whether the business climate in Lee County is improving or declining. In the future, we hope to expand the survey into a regional resource by including executives in Charlotte, Collier, Hendry and Glades Counties. This survey would not have been possible without the assistance of Jim Moore and Sue Noe, Lee County Economic Development Office, and Hudson Rogers, Dean of the Lutgert College of Business at FGCU. Russell Schropp of the Horizon Council provides editing and suggested questions for the survey. Dr. Arthur Rubens, the Associate Director for the Regional Economic Research Institute (RERI) at FGCU, helped manage the project and the survey process. In addition, Kristopher Jones and Luciano Torres provided valuable assistance as FGCU student analysts. The fourth Quarter 2012 survey results are very encouraging, showing that overall, business executives feel that the economy is improving but there remains some uncertainty in the timing and speed of the recovery. The survey also provides information on conditions that are limiting business expansion and the importance of new technology. Gary Jackson Dr. Gary Jackson Director, Regional Economic Research Institute Lutgert College of Business Florida Gulf Coast University FGCU Boulevard South Fort Myers, Florida gjackson@fgcu.edu Fourth Quarter, 2012 Page 2

3 Executive Summary The Executive Business Climate Survey provides a view of the local economy based on responses from senior executives representing a broad range of industries across the county. An invitation to complete the Internet survey was received by 498 executives in Lee County. Twenty-one percent of the executives completed the survey between October 23 and October 31, Three reminders were sent during the survey period. The survey provides a new economic indicator for Lee County, the Executive Business Climate Index. The fourth quarter survey (October 2012) value for the Lee County Executive Business Climate Index is 66, which indicates expected improvement in the local economy. This is an increase in expectations over the third quarter survey (July 2012) when the index was still positive but lower at 62. The index value can range from 0 to 100. An index number of 50 would be neutral or an expectation of no change in economic activity. Therefore, this quarter's index says that economic activity in Lee County is expected to improve but at a less than moderate growth pace. This index value will be computed each quarter and released to the public as a way to provide an established economic indicator on the state of the local economy. The index is computed using the two questions concerning current and future economic conditions and a third question about the expected industry economic conditions. The index is an average of the responses with "substantially better" equal to 100, "moderately better" equal to 75, same equal to 50, "moderately worse" equal to 25 and "substantially worse" equal to zero. The key findings of the Executive Climate Survey for the fourth quarter of 2012 are: The Lee County Business Climate Index increased from 62 for the third quarter survey (July 2012) to 66 for the fourth quarter survey (October 2012). The index for the second quarter (April 2012) was 69; 62 percent of executives stated that the current economic conditions have improved over last year; 77 percent of the executives expect the economy to improve over the next year; 57 percent of the executives stated that the current economic conditions for their industry have improved over last year and 24 percent stated that economic conditions remained approximately the same; 73 percent of executives expect economic conditions for their industry to improve over the next year; 40 percent of executives had increased employment at their organizations over the last year, while 12 percent had reduced employment; Fourth Quarter, 2012 Page 3

4 54 percent of executives expect to increase employment at their companies during the next year, while only two percent of executives expect to reduce employment; 55 percent of companies expect to increase investment next year and three percent expect to reduce their investment levels; The top three conditions limiting business expansion are limited demand/slow economy, regulatory uncertainty, and lack of qualified employees; 60 percent of companies indicated that keeping up with new technology was moderately or very important to their business; The top sources for learning about new technology included business partners, customers/client, trade organizations or associations, trade publications, suppliers, consultants, competitors, trade shows, account and sales representatives, and colleges and universities; Executives provided a range of comments, suggestions, and recommendations about the regional economy and their businesses. There continue to be concerns over lack of qualified employees, uncertainty, government spending, improving the school systems, and regulation; and The geographic client market had 27 percent of firms serving international markets and 41 percent serving the U.S. market. Fourth Quarter, 2012 Page 4

5 Contents Introduction... 2 Executive Summary... 3 I. Current Economic Conditions... 6 II. Future Economic Conditions... 7 III. Current Industry Economic Conditions... 8 V. Hiring Over Last Year VI. Hiring Over Next Year VII. Investment Levels Expected Next Year VIII. Conditions limiting Business Expansion? IX. Importance of New Technology? X. Sources of Learning for New Technology XI. Other Recommendations for Economy or Business XII. Company Characteristics Fourth Quarter, 2012 Page 5

6 I. Current Economic Conditions How are the current Lee County economic conditions compared to one year ago? Most executives feel that the current economy is moderately better compared to one year ago. The percentage of executives indicating that there was improvement compared to last year increased from 54 percent last quarter to 62 percent this quarter. The survey results are shown in Figure 1 and Table 1. The number of executives reporting moderately worse economic conditions decreased from twelve percent last quarter to nine percent this quarter. Figure 1: Current Economic Conditions Table 1: Current Economic Conditions Number Current Economic Conditions of Responses Percent Substantially better 5 5% Moderately better 58 57% Same 29 29% Moderately worse 9 9% Substantially worse 0 0% Total % Fourth Quarter, 2012 Page 6

7 II. Future Economic Conditions What are your expectations for the Lee County economy one year ahead? Executives were more optimistic in the fourth quarter survey (October 2012) about the economy over the next year, as shown in Figure 2 and Table 2. A substantially better economy is expected by seven percent of the executives, compared to four percent in the third quarter survey (July 2012). The percentage of executives who expect a moderately better economy over the next year increased to 70 percent, compared to 57 percent in the previous quarterly survey. Figure 2: Future Economic Conditions Table 2: Future Economic Conditions Next Year Economic Conditions Number of Responses Percent Substantially better 7 7% Moderately better 71 70% Same 22 22% Moderately worse 1 1% Substantially worse 0 0% Total % Fourth Quarter, 2012 Page 7

8 III. Current Industry Economic Conditions What are the current conditions in your industry in Lee County compared to one year ago? Executives indicated some improvement in their industry's current economic conditions compared to one year ago, as shown in Figure 3 and Table 3. Forty-seven percent of the executives felt their industry is moderately better, compared to 40 percent in the third quarter survey (July 2012). Twenty-four percent of the executives felt that current industry economic conditions were the same as last year and twenty percent of the executives felt that current economic conditions in their industry were moderately or substantially worse. Figure 3: Current Industry Economic Conditions Table 3: Current Industry Economic Conditions Current Industry Economic Conditions Number of Responses Percent Substantially better 10 10% Moderately better 48 47% Same 24 24% Moderately worse 19 19% Substantially worse 1 1% Total % Fourth Quarter, 2012 Page 8

9 IV. Future Industry Economic Conditions What are your expectations for your own industry in Lee County one year ahead? Seventy-three percent of the executives expect conditions in their industry to be better next year, while 24 percent expect conditions to remain the same and four percent expect industry conditions to get worse, as shown in Figure 4 and Table 4. The moderately better response increased from 50 percent in the third quarterly survey (July 2012) to 60 percent in fourth quarterly survey (October 2012). The executives who expect next year's industry conditions to remain unchanged decreased from 34 percent in the third quarterly survey to 24 percent in the fourth quarterly survey. Figure 4: Future Industry Economic Conditions Table 4: Future Industry Economic Conditions Number Next Year Industry Economic Conditions of Responses Percent Substantially better 13 13% Moderately better 61 60% Same 24 24% Moderately worse 4 4% Substantially worse 0 0% Total % Fourth Quarter, 2012 Page 9

10 V. Hiring Over Last Year What has been your hiring trend over the last year? Hiring has been slow but positive over the last year. Forty percent of companies hired additional employees while 11 percent of the companies surveyed reducing employment. Only three percent of the executives indicated that their companies substantially increased employment. Forty-eight percent of the companies had little or no change in employment. Nine percent of companies have moderately reduced employment and three percent indicated that it had substantially reduced employment. The survey results for hiring over the last year are shown in Figure 5 and Table 5. Figure 5: Employment Changes Over Last Year Table 5: Employment Changes Over Last Year Number Hiring Over Last Year of Responses Percent Substantially increased employment 5 5% Moderately increased employment 36 35% Little or no change in employment 50 48% Moderately reduced employment 9 9% Substantially reduced employment 3 3% Total % Fourth Quarter, 2012 Page 10

11 VI. Hiring Over Next Year What hiring trends do you see for your business over the next year? Overall, 54 percent of companies expect to hire over the next year compared to 39 percent last quarter. Forty-four percent of the companies expect little or no change in employment. Three percent of the companies expect to substantially increase employment over the next year and two percent expect to reduce employment. The survey results for hiring over the next year are shown in Figure 6 and Table 6. Figure 6: Employment Changes Over Next Year Table 6: Employment Changes Over Next Year Hiring Over Next Year Number of Responses Percent Substantially increase employment 3 3% Moderately increase employment 53 51% Same or flat employment 45 44% Moderately reduce employment 2 2% Substantially reduced employment 0 0% Total % Fourth Quarter, 2012 Page 11

12 VII. Investment Levels Expected Next Year Do you plan to increase investment in your business during the next year? The response to the fourth quarterly survey (October 2012) is encouraging, Executives indicated that investment plans for next year are more optimistic than the results from the third quarterly survey (July 2012). Overall, 55 percent of companies plan to increase investment either moderately or substantially. The number of companies planning to reduce investment during the next year decreased from seven percent in the third quarterly survey (July 2012) to three percent in the fourth quarterly survey. There are still a large number of firms, 42 percent, which plan to keep investment the same during the next year. These results are shown in Figure 7 and Table 7. Figure 7: Expected Investment Changes Over the Next Year Table 7: Expected Investment Changes Over the Next Year Investment Expenditures During Next Year Number of Responses Percent Substantially increase investment 9 9% Moderately increase investment 47 46% Keep investment the same or flat 43 42% Moderately reduce investment 2 2% Substantially reduce investment 1 1% Total % Fourth Quarter, 2012 Page 12

13 VIII. Conditions Limiting Business Expansion Are any of the following conditions limiting your ability to expand your business? The limiting conditions to business expansion are ranked based on the sum of moderately and very important, as shown in Figure 8. The numbers in the bars are the number of executives that ranked that source of information as not important, not very important, somewhat important, moderately important, or very important. For the fourth quarter, the top three limiting conditions were the slow economy, regulatory uncertainty, and lack of qualified employees. The next three limiting conditions were access to financial capital, need to improve infrastructure, and limited cluster development. The last two limiting conditions for business expansion are lack of knowledge about national and international markets. Figure 8: Factors Limiting Business Expansion Fourth Quarter, 2012 Page 13

14 IX. Importance of New Technology Is the success of your company tied to keeping up with new technology? Executives indicated that 39 percent of the companies consider keeping up with new technology to be very important. Twenty-one percent consider it moderately important and 33 percent consider keeping up with technology somewhat important. Only seven percent of executives considered it to be not very important, as shown in Figure 9 and Table 9. Figure 9: Importance of New Technology Table 9: Importance of New Technology? Importance Number of Responses Percent Very important 40 39% Moderately important 22 21% Somewhat important 34 33% Not very important 7 7% Total % Fourth Quarter, 2012 Page 14

15 X. Sources of Learning for New Technology What are your sources for learning about new technology? The sources for learning about new technology are shown in Figure 10 and ranked by sum of responses as moderately and very important. The numbers in the bars are the number of executives that ranked that source of information as not important, not very important, somewhat important, moderately important, or very important. Business partners were listed as the top source for learning about new technology. Customers/Clients ranked second, followed by trade organizations or associations. The fourth highest source was trade publications, followed by suppliers, consultants, competitors, and trade shows. The ninth highest rank source for information about new technology was account and sales representatives, followed by the tenth highest ranking for colleges and universities. Figure 10: Sources of Learning for New Technology Fourth Quarter, 2012 Page 15

16 XI. Other Recommendations for Economy or Business Please indicate any other comments, suggestions, or recommendations you would like to make regarding the regional economy or your business. The following list shows the executive comments, suggestions, and/or recommendations: 1. The lack of qualified employees handicaps our company in moving forward. Example (transportation dispatchers, accounting/bookkeeping). 2. We are not adding staff but are trying to replace those that have left. Very difficult finding qualified employees and employees that we think will stay for more than two years. Far too many candidates have careers in our industry and they haven t worked anywhere for more than a few years. That's a red flag. 3. We manufacture bio products that are sold outside the county and sold nationally and international and do not do local business. 4. People are uncertain about the future and are still holding back. Property values are still down which will perpetuate low spending on institutional construction projects which continues to hurt many local commercial construction companies. 5. Limit government spending. 6. Continued outreach to second home and retiring people. 7. How much does anyone s business rely on local and regional real estate tax basis? 8. We need commercial property tailored to the needs of today's small high tech businesses and not just construction and service industry. Those with leases that include everything with no separate maintenance costs like heating and cooling, electric, etc. They need to have shared restrooms, conference rooms, etc. They need access to reliable high speed internet choice just plain do not exist and have an upgraded look. They need to be priced right for the market. Lee County needs to catch up with the rest of the country. We also need the colleges to start matching student education to better meet with local needs so we can hire local students and not have to open branch locations out of state to find college students that understand today's needs. 9. Due to the uncertainty of the economy, we see a lot of talk about improving business environment but little action or result. 10. I believe serious investment/ start up dollars for new business/ expansion of existing business is sitting on the sidelines to see election outcome and what that will mean to the business community. The constant barrage of negative campaign ads about the economy does not help! 11. First, make it a better destination for Families, e.g., Improved School System. And two, make it a better place to move to take a job and have career stability. e.g., if this job doesn't work out, will I be able to find another job? This happens with good marketing of the area as a place that is good to live and work in that industry. Fourth Quarter, 2012 Page 16

17 12. Uncertainty in the investment markets relating to tax codes, fiscal cliffs, healthcare burdens, foreign policies, national debt, and upcoming elections are keeping clients and prospects on the sidelines for now. 13. Our business is tied to the construction market and we are seeing a moderate rebound in Residential construction but commercial construction is very slow and continues to be so. In talking to both customers, suppliers and other players in our market there is some optimism that we will see an increase in commercial construction after the election and as we move into Homebuilding is picking up and commercial construction typically lags the homebuilders by 18 to 24 months, so while I think 2013 will be slow, I believe 2014 will start ramping up for commercial construction. 15. Our business is not tied to Lee or neighboring counties, the vast majority of our sales come from outside the area. 16. Stop investing in retail, tourism and construction. They will happen, it s like government breaks for the oil industry, its past it's time. Invest in what is needed and greatly reduce in what takes care of itself. We are creating entitlements. 17. Our regional economy remains tied to the national economy. Construction remains down and tourism could be more robust. Uncertainty is also impeding the movement of new businesses to Southwest Florida. 18. Must cease government over regulation of development. No more impact fees. Must reform the health care act. Must reduce all taxes. Must lift the moratorium on bank loans imposed by the regulators. Must cease federal EPA and ACOE restrictions and allow local agencies to govern. Must create work incentives for the entitlement programs. 19. Recommend that you focus efforts and resources on economic development associated with the Research & Enterprise Diamond. This area in South Lee County provides available industrial property; transportation benefits from the Airport/I-75 and intellectual benefit from FGCU to form a unique and compelling case to develop clean-tech and logistics oriented businesses where few markets could compete. 20. "We are lending". Commercial loan demand and growth is still anemic, although there are signs, especially in health care, of increasing demand. Existing owner-occupied commercial real estate is our primary focus. We are capable of reducing business expense, increasing profitability, and retaining employees in the health care industry by refinancing commercial mortgage debt, and reducing interest expense. The lack of commercial construction and thus financing is evident. Attracting industries that are likely to remain in demand is a private-public partnership need. Health care is one of those industries, and it is growing in importance as the baby boom generation requires more medical services. I believe the County incentives should be "surgically" focused on growth industries, including IT, bio-tech, health care, etc. A commercial underwriting analysis of financial statements is recommended when evaluating either new start-ups or expansion of businesses. If the business is unable to qualify for conventional financing, I would proceed cautiously. I don't believe the County should necessarily be in Fourth Quarter, 2012 Page 17

18 the venture capitalist business. More capital investment from the private sector is needed. Deferring, reducing, or eliminating governmental fees to attract established and successful businesses to SW Florida, makes financial sense, not necessarily grants that substitute for private capital. Limit the $25 million incentives to non-speculative, established businesses, willing to relocate to Lee County, and reduce the barriers to new business relocation or formation. 21. We're less regional reliant but for 6 months of the year, we're very Florida reliant. If Southwest Florida economy takes a hit, we'll feel it. Winter months are dependent on lift at RSW from major markets (Midwest, NE). Beach renourishment MUST receive proper funding from government before any expansion of amenities in Lee County. 22. Dysfunction and bickering by current Lee BOCC is a hindrance to the positive presentation of our area. The recent fiasco on the county manager contract is a case in point. 23. There seems to be an inordinate amount of tax dollars spent on needless roadway improvements. The I-75 interchange to the airport is not needed. Constant roadway work disrupts small business. 24. I am very concerned about the stability of County Government. Our County commission is in transition due to the elections...and the termination/change in the County Manager position send an uncertain message to the business community. 25. Refine regulatory practices to yield predictable results both in time and cost. Bring stability back to our elected officials, boards, and councils. Business loathes conflict and turmoil as much as unpredictability. 26. Things are improving. I think the results of the upcoming presidential election will play a role in how the economy grows. 27. City planners need to focus more on having businesses move to Lee/Collier counties to create more job opportunities. Fourth Quarter, 2012 Page 18

19 XII. Company Characteristics Each executive provided information about his or her firm in their response including: Business Type; Number of Employees; Company Location; and Geographic Client Base. The following figures provide an overview of general characteristics of the responding companies. Figure 17: Business Type Fourth Quarter, 2012 Page 19

20 Figure 18: Employee Size of Firms Responding to the Survey Figure 19: Company Location Fourth Quarter, 2012 Page 20

21 Figure 20: Geographic Client Base Fourth Quarter, 2012 Page 21