LOUDONVILLE — More upstate CEOs are encouraged by business conditions compared to the last two years, according to the 15th annual Upstate New York Business Leader Survey by the Siena College Research Institute sponsored by the Business Council of New York State.
Twenty-nine percent say conditions are considerably or a little better than six months ago compared to nine percent who said the same last year and 17 percent two years ago.
On the flip side, 39 percent say conditions have gotten worse over the last six months. During last year’s survey, 80 percent said conditions had worsened over the last six months and 36 percent said the same two years ago.
Nearly three quarters of the business leaders, 74 percent, are concerned with a recession with 16 percent thinking it is almost a certainty, 23 percent think it is very likely and 35 percent think it is somewhat likely.
At the same time, 60 percent of CEOs expect conditions to stay the same or improve through 2022, up from 57 percent two years ago. One third, 32 percent, say they are emerging from the pandemic stronger and well positioned to be successful while 53 percent say they are in a position similar to where they were before the virus hit.
“On the one hand, CEOs are becoming more confident and many expect 2022 to simply be a better year as the pandemic’s effects abate. But on the other hand, they face a bumpy road of challenges including inflation fueled by increasing costs and the simultaneous need to raise wages,” Levy said. “And 36 percent, the highest we’ve ever seen, plan to increase their prices this year. Add in a war in Eastern Europe, and battling to recruit and retain workers, and CEOs face a challenging year.”
Forty-seven percent, up from 34 percent last year, predict increasing revenues in 2022 while 34 percent, up from 25 percent, anticipate growing profits in the year ahead. Over half, 55 percent intend to invest in fixed assets in 2022 as compared to only 41 percent who planned to invest in 2021. Forty-four percent plan to increase the size of their workforce, up from 27 percent a year ago while only 5 percent intend to downsize compared to 10 percent a year ago.
“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,” said Siena College Research Institute Director Don Levy. “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.”
Of the challenges business leaders face:
• 70 percent say rising supplier costs and the continuing impacts of COVID-19 are the top concerns
• 65 percent say government regulations are their top concern
• 56 percent say taxation and adverse economic conditions were top concerns
• 55 percent say health care costs are the major concern
• 52 percent say it is human resources
• 47 percent say it is energy costs
“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,” said Heather C. Briccetti, president and CEO of The Business Council of New York State. “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 surveys were conducted before the war started in Ukraine so Levy said the 47 percent who expressed concern over energy prices and the 20 percent citing global political instability would be higher today.
Workforce issues
Seventy-eight percent of CEOs say they are having difficulty recruiting to fill open positions and 36 percent say retaining employees have been difficult for them. Of those, nearly 90 percent have increased wages in order to attract or retain employees.
Just 13 percent of CEOs, down from 28% last year, say that there is an ample supply of local workers that are appropriately trained for their employment needs. Fewer, 8 percent of manufacturing CEOs, 10 percent of retailers and 10 percent of engineering/construction think percent of CEOs are not having difficulty either recruiting or retaining workers.
About two-thirds of CEOs are having trouble recruiting skilled and semi-skilled workers, nearly half are having difficulty recruiting professional workforce members and 44 percent cannot find unskilled workers. In addition to offering higher wages, 51 percent have designed flexible work hours, 39 percent offered bonuses and 36 percent offered referral bonuses to existing employees.
“Help wanted signs are everywhere as CEOs struggle to fill open positions with qualified applicants,” Levy said. “Nearly 60 percent say that they are paying new hires more and still can’t fill jobs while a third say that they’ve had to cut back on offering their product or service due to staffing problems. And the costs keep on coming as 60 percent say they’ve had to increase salaries for senior employees as they raised starting pay and 38 percent say they will do as much as they can to retain workers even if it hurts them financially.”
Government
Only 12 percent, unchanged from a year ago, think the government of New York is doing either an excellent or good job of creating a business climate in which companies like theirs can succeed. Over half would like to see the governor and Legislature focus on business and personal tax reform while between 41-48 percent call for spending cuts, infrastructure development, workforce development and business development incentives. Looking to the future, only 18 percent, down slightly from 20 percent a year ago, are confident in the ability of New York’s government to improve the business climate over the next year.
Sixty-two percent said that they were fully prepared for the HERO act adopted by the legislature in 2021 requiring employers to adopt a safety and health plan to protect employees from airborne infectious diseases. Still, 50 percent said that they suffered from a lack of information about their obligations under the HERO act, 24 percent had an inability to provide health screenings and close to one-in-five had difficulty providing training or maintaining adequate physical distancing within their workplace.
Sixteen percent, down from 24 percent last year and 39 percent two years ago, rate the job the federal government is doing to create a business climate in which companies like theirs can be successful as either excellent or good.
Similarly, only 20 percent today, down from 31 percent last year and 37 percent two years ago, are confident in the federal government’s ability to improve the business climate.
Fifty four percent would like to see the governor and legislature initiate business tax reform, 52 percent would like to see state government initiate personal income tax reform, 48 percent say they would like to see spending cuts, 44 percent would like to see infrastructure development and 43 percent would like to see workforce development.
COVID
Despite the lessening severity of the pandemic, 36 percent, down from 42% percent a year ago, say that dealing with COVID is a major area of concentration for their company through 2022 and 70 percent describe the continuing impact of COVID as a challenge that they face moving forward.
By 45-28 percent, improved from 32-51% percent, CEOs say COVID has increased rather than decreased the demand for their product or service. COVID’s negative impact on both revenues and profits has lessened this year compared to last. Revenue decreases lessened from 67 percent experiencing that negative fate to 46 percent and profits decreasing lessened from 66 percent of CEOs to 55 percent. But the percentage saying that an impact of COVID being an increase in their cost of doing business increased from 75 percent to 86 percent.
Fifty-four percent do say that clients or customers who are unwilling to accept price increases during the pandemic has not been a significant problem and 32 percent say that the pandemic created new profitable opportunities for their business.
“Despite lessening negative impacts of the pandemic, CEOs across upstate can’t wait to put this disease and the vast majority of its effects behind us. A third say that they are emerging stronger, about half are dusting themselves off and are ready to do business but unfortunately, about one of seven admit that it has exacted a terrible toll on their business,” Levy said. “In spite of inflation with higher costs, and increasing wages offset to some degree by price hikes, CEOs were ready to have a better year. Now, although masks are coming off, rising energy costs and a war may lengthen the road to recovery.”
This Siena College Poll was conducted from November, 2021 to February 2022 by mail and internet interviews with 611 business leaders from across upstate including the Capital District, Central/Mohawk Valley New York, the Finger Lakes region, the Mid-Hudson region, the Southern Tier, Westchester and Western New York.