2004 is looking good

Results for the fourth-quarter TEC Confidence Index are in. This survey, with more than 1,000 CEO responses nationwide and an additional 100 TEC CEOs in Wisconsin has, historically, proven to be a relatively accurate barometer of future economic and global conditions.
The index, now reported in the Wall Street Journal and other national and regional publications, is also a useful tool for business planning purposes. The bottom line on this quarter’s index results is that the consensus for the next 12 months is indeed positive.
To be specific, 70% to 75% of those surveyed believe that economic conditions have improved compared to a year ago. The outlook for the next 12 months is even better, with 80% of both the US and the Wisconsin sample expecting the economy to be even better.
Close to 60% of TEC US and TEC Wisconsin members expect to add employees in 2004. A scant 4% expect to cut their present employee count. Commitment to increased capital expenditures is nearly identical: one-half of both groups expect a greater commitment and 40% expect no changes.
Eighty-two percent of both groups expect sales to rise over the next 12 months. Interestingly, 2.5% of the Wisconsin group expects sales decreases, compared to 4.1% of the TEC US sample. In terms of profitability, 76% of the Wisconsin group and 73.8% of the US sample expect improvements. About 5% of both groups expect declines in profitability from a year ago.
Regarding the US dollar, 63% of the Wisconsin group sees no change compared to 53% of the US group. More than one-fourth of both groups see a weaker dollar in 2004. As for Alan Greenspan, chairman of the Federal Reserve board, two-thirds of both groups indicate he is doing a good to excellent job.
Even though perceptions of significant economic improvement characterize the overall tone of this survey, about half of both groups rate President’s Bush’s performance as "pretty good but not excellent." The Wisconsin group is slightly more critical of him than the US group.
In terms of the greatest threat to the economy over the next 12 months, both groups remain most concerned about terrorism. A distant second and third is "weak business investment" and "weak consumer spending."
Since our last TEC Confidence Index, the mutual fund trading scandal has dominated the business pages of most newspapers. More than half of both groups feel this has had no effect on their investments and only 3% of both groups plan to move their mutual fund holdings.
The No. 1 and No. 2 issues dominating next year’s elections? Fifty-five percent of both groups rank the economy "No. 1" and the war in Iraq/terrorism "No. 2." More than two-thirds of both groups favor the current postwar policy outlined for Iraq. Interestingly, about 75% of both groups rate President Bush’s handling of the Iraq situation since he declared an end to major fighting as pretty good to only fair. Nearly 80% of both groups favor keeping the same number of troops in Iraq or sending more if needed.
Here is an atypical survey question in the Index. "Have European companies who have adopted 35-hour work week and five-week paid vacation plans for their employees created a competitive disadvantage in the global marketplace?" More than half of both groups think this is definitely the case and another quarter of them think it has "somewhat." We’ll see.
The last few questions of the TEC Confidence Index ask about what I’ll call some "odds and ends." They enable a fitting calibration perspective, if you will:

1. "What is the most effective way you use to develop employees for key leadership positions?"
More than half of both groups use mentoring, and about one-fourth use training and education.

2. "Is your business family-owned and did you inherit it?"
Sixty percent of both groups are family-held, and about half of both groups built their businesses from scratch.

3. "Will your business remain in the family?"
Thirty percent of the Wisconsin group and 49% of the US group plan on developing an exit strategy; 28% of the former and 20% of the latter plan on passing the business to their children.

4. "What is the most significant way your firm gives back to the community?"
Sixty-five percent of the Wisconsin group and 49% of the US group do so through corporate giving/monetary donations; interestingly, while 18% of the US group does not participate in community givebacks, only 7.5% of the Wisconsin group falls in this category.

5. "How will your company’s holiday bonuses compare to
last year’s?"
About a third of both groups plan no changes and another third do not give holiday bonuses. The remainder of both groups is evenly divided between giving increases this year and giving decreases this year.

In conclusion, 2004 promises to be a turnaround year for many Wisconsin and Michigan TEC members. Key initiatives indicated to us include:

1. More aggressive efforts to reach "buy-sell" arrangements with potential Chinese vendors and customers.
2. Implementing lean manufacturing practices.
3. Identification of new product/service opportunities.
4. Closer attention to human resource issues.
5. Continued elimination or reduction of non-performing assets.

Here’s hoping that your company’s own "Confidence Index" will reach an all-time high in 2004! Until next month, good luck implementing your own key initiatives.

Harry S. Dennis III is the president of TEC (The Executive Committee) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340.

Jan. 9, 2004 Small Business Times, Milwaukee

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