‘2011 has the potential to be outstanding’

Compared with the stark predictions for 2009 and 2010, 2011 is expected to be a year of moderate growth and improvement as we enter the third year of what by many is predicted to be a 10-year cycle of “the new normal” in economic growth.

The region has ran consistently with lower unemployment than the national trends, and we should continue to see slow but steady improvement in the employment numbers. Many mid-size and large companies in the region are well-capitalized and continue to make small acquisitions to fill in market share and expand R&D capability. As a result, we should see more joint ventures in foreign markets and more product development over the next year.

As our universities, colleges and tech schools continue to grow corporate relationships, this will create stronger glue in the region for talent and research funding. We are building the focused regional relationships across key asset sectors like educational and research institutions in core cluster areas that will pay off in the next year and even more so in the future.

As painful as the past two years were, the fundamental strength of our region’s economy was apparent. We did not have any disastrous sector losses, and the rebound has been underway since early last year.

While some CEOs count hot air balloons as indicators, I think the growth in the umbrella agencies’ fund drives, United Way and UPAF, shows both employers’ and employees’ confidence in the stability of jobs and revenue. However, we will see continued stress in the nonprofit community as many large foundations continue to cut grant funds to the nonprofit sector due to continued depressed stock market conditions and several very generous foundations will begin to sunset starting in 2014.

Looking forward to 2011, here are the prognostications from some of Greater Milwaukee Committee’s most prominent members.

Gale Klappa, chairman, Wisconsin Energy Corp.

“As we open the chapter on a new year, it might be helpful to glance back at the economic events of 2010. In the year just passed, our state and our region began a slow process of healing from the damage caused by the ‘Great Recession.’ To the casual observer, our economic condition seemed anything but robust. However, the manufacturing sector across the M7 region is clearly on the rebound. Unemployment statistics for Wisconsin are markedly better than the national average. And there’s ample reason to believe that the slow but building momentum evident in the latter half of 2010 will carry through into 2011. Progress will likely come in fits and starts. But based on conversations with literally hundreds of our electric customers, I truly believe that 2011 is poised to be a year of at least modest expansion.”

Paul Purcell, chairman, Robert W. Baird & Company Inc.

“Our forecast for 2011 is for GDP growth of 2 to 3 percent. We think employment will improve slightly but probably not get below 9 percent. We anticipate a much slower recovery by historical standards coming out of a severe recession. We think the chances of a ‘double dip’ are now quite remote, although the sovereign debt crisis in Europe remains an issue. All in all, slow but consistent growth for 2011.”

John Daniels Jr., chairman, Quarles & Brady LLP

“Over the last several years we have seen an unprecedented improvement in productivity in virtually every industry sector, and with some obvious exceptions strong improvements in balance sheets. Business leaders have also observed that some of the most pressing issues associated with sustained gains are now being addressed in a manner more consistent with a long-term, pro-growth economy. Look for modest-to-moderate growth in most sectors this year, probably slightly better than current economic forecasts, followed by the prospect for even stronger activity in 2012.”

Richard Meeusen, chairman, Badger Meter Inc.

“While most people are predicting slow growth for 2010, I am a bit more optimistic about the underlying strength of our economy, perhaps because our water sector continues to show robust growth. I believe the overall economy will see stronger-than-expected growth and a steadily improving employment situation. Some level of increased inflation is likely as commodity prices continue to climb. I also think Wisconsin now has an opportunity to see a rebound in manufacturing jobs as government policies improve, although I would expect to see the City and County of Milwaukee continue to struggle due to a broken MPS model, ineffective development efforts and a negative business environment.”

Timothy Sullivan, president and CEO, Bucyrus International Inc.

“2011 has the potential to be outstanding, and I am betting that it will be if Congress can get their act together. There is evidence that many companies are stockpiling cash, fearful of the effects of the protracted sluggish domestic market. Improved domestic confidence is possible with a renewed bipartisanship in Washington. Should this occur, we could see the trigger of a midyear increase in capital spending that could provide the jumpstart that our economy needs to get moving again. I predict that this will happen.”

Sheldon Lubar, chairman, Lubar & Co. Inc.

“2011 should be a good year for business. All of the companies we are involved with showed good gains in 2010, and 2011 looks better. Much depends on the political scene. If Congress can be rational and cooperate on revised tax and health care policies that address the out of control deficit, the outlook will be the best in years.”

David Rayisch, managing partner, Plunkett Rayisch Architects LLP

“I am certainly not qualified to predict the future and my crystal ball broke a few years ago but I do have an observation that I believe may be an indicator of the future. I have been traveling to Scottsdale, Ariz., for the past 18 years. Over that time period I marveled at the hot air balloon sightings. It would not be uncommon on any weekend morning or evening to see 10-15 balloons in the air at one time. It truly is a great sight.

I had the opportunity to charter a balloon for my daughter’s birthday a number of years ago so I know it is not an inexpensive venture. Over the past two years hot air balloon sightings have been rare. I repeatedly commented to my wife that the empty skies must the result of the poor economy. This Thanksgiving, and the weekend before, the air was filled with 15-20 balloons. Are hot air balloon sightings an indication people can again afford luxury items and the economy is recovering or is this prediction just full of hot air?”

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