CEOs optimistic about economy

Last updated on May 13th, 2019 at 02:29 pm

The Executive Committee’s mid-year economic survey of Wisconsin and Michigan TEC members is complete, as well as the second-quarter confidence survey of more than 3,000 TEC chief executive officers in North America.

The results of both are summarized here. They might not equal 100 percent, due to rounding error or the absence of a survey response.

Let’s start with the revenue and profit picture. In the United States and Canada, 80 percent of those surveyed expect revenue increases in the third quarter, and 70 percent see profits improving. These percentages are slightly lower than those reported in the first quarter.

Looking at Wisconsin and Michigan in general, 58 percent saw increased revenue results in the first six months of this year compared with the first six months of last year (the average increase was 18 percent), 26 percent said the revenue results were the same and 14 percent reported lower results.

As for the profit picture in the first six months of this year, 55 percent reported better results (the average increase was 28), 26 percent reported results similar to the first six months of last year and 18 percent said they had worse results.

Turning to second half expectations for this year, 54 percent see increased revenue results over the same six-month period as last year (the average increase expected is 16 percent), 32 percent expect no changes from the second half of 2003 and 16 percent expect worse performance.

Regarding profits for the second half, 54 percent see better results compared with the same period as last year (average increase expected is 12 percent), 30 percent expect similar results for the second half and 12 percent see a decline.

Hiring practices present an interesting picture. Sixty percent of TEC members in the North America sample expect to hire more workers, with the greatest increases coming in the third quarter.

In Wisconsin and Michigan, 43 percent hired more salaried employees in the first half of this year (average number of additions was 1.80, ranging from a low of one addition to a high of 10), 52 percent reported no additional salaried employees and 3 percent reported fewer.

Expectations for the second half show that 55 percent expect to add salaried employees (average number of additions anticipated is 2.62, ranging from a low of one addition to a high of four), 42 percent do not expect any salaried additions in the second half of this year and 4 percent anticipate reductions.

Again looking at Wisconsin and Michigan, 51 percent hired more hourly workers in the first half of this year (average number of additions was 10.36, ranging from a low of one addition to a high of 20), 36 percent made no additions and 3 percent reported reductions.

As for the second half, 54 percent expect to hire more hourly employees (average number of additions is 6.4, ranging from a low of one to a high of 30), 36 percent do not plan any additions and seven percent anticipate reductions.

Turning to capital equipment spending, 38 percent report increases over last year, with the average increase at 24 percent. About 48 percent plan no increases over last year, and 12 percent plan no capital equipment investments this year.

On the North American scene, 2 percent of TEC CEOs indicate they are exploring doing business in China. In Wisconsin and Michigan, 28 percent are already doing business there. Purchasing and manufacturing were listed most frequently. Another 4 percent expect to be doing business there before the end of the year. Finally, 17 percent indicate they may be doing business in China sometime in the future. However, 49 percent have no intention of doing so.

India is emerging as a strategic partner for many IT firms. In Wisconsin and Michigan, about 12 percent of the survey group are doing business there, with purchasing mentioned most frequently. Another 13 percent may do business there sometime in the future. Seventy percent don’t see India as a future business opportunity.

Forty percent of the Wisconsin and Michigan group do not do business with any other countries outside the United States. For the 60 percent that do, Mexico, Europe, Canada, Brazil and Taiwan were mentioned most frequently, with those countries primarily providing a sourcing relationship for the TEC member.

Forty-one percent of the Wisconsin/Michigan group see themselves as a global business. Forty-three percent are not global today, but 13 percent see themselves as global in the future.

For the national survey group, most agree that a half-point rise in interest rates over the next two quarters will not affect their business. In Wisconsin and Michigan, looking specifically at inflationary fears, 14 percent are very concerned, 66 percent somewhat concerned and 14 percent not at all concerned.

For the national group, more than 70 percent would vote for President George W. Bush if the election were held today. In Wisconsin and Michigan, 81 percent believe Bush will be re-elected, and 12 percent are undecided, with the balance in favor of John Kerry.

Seventy-four percent of the Wisconsin/Michigan group voted for staying the course in Iraq and 23 percent are not in favor of it or are undecided. Nationally, 54 percent of those surveyed state that the war in Iraq is the most critical election issue, whereas 70 percent of those surveyed in the first quarter said that the economy was the most critical election issue.

All in all, both survey groups-national TEC CEOs in general and Wisconsin/Michigan CEOs in particular-are far more positive in their outlooks than they were one year ago. Of particular note are the number of major customer projects that were on hold at the beginning of the year that are now being released for quotes.

Until next month, here’s hoping that your business is profitable and is on your desired growth track for the remaining months of 2004.

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.

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