Editor’s note: As part of the coverage in the Economic Trends special report, BizTimes Milwaukee asked Julia Taylor, president of the Greater Milwaukee Committee, to share her thoughts about the year ahead in business and to collect economic forecasts from some of the prominent members of the GMC.
2010 is the year of building on key foundations and taking some catalytic opportunities and risks to grow our economic base.
The Water Council is getting more tools to work with – the WAVE district incentives are moving forward quickly to review by the Public Service Commission, which will bring more jobs to Milwaukee. Partnerships with global companies and countries and cities rich in research like Israel and Singapore are opening up new markets and products.
The University of Wisconsin-Milwaukee School of Fresh Water Sciences will truly be a game-changer for this region and its prominence on the world stage of water. We will see a lot of progress in the water arena in 2010.
Transit is still a top priority for the GMC. Our companies and companies in the region and we are pushing hard in early 2010 to move this through the remaining legislative session. Expect to hear a lot more on this issue every week. There is very strong business leadership moving this forward.
Milwaukee certainly had its share of pain in the recent recession but also did not have the drastic swings of other parts of the country. The conservative and long-term business approach of Milwaukee-based companies will truly pay off in 2010 as we are already seeing some business recovery and certainly better stock recovery for the publicly held companies.
We will continue to see a strengthening of the companies, but job recovery will be moderated and matched to actual economic returns – not building up for potential opportunities. Many companies took a lot of costs out quickly to manage through the recession and they will not quickly rebuild infrastructure but look for ways to grow moderately through increased business opportunities or through acquisition.
There will be more job growth here due to those acquisitions, as we’ve already seen with Bucyrus International Inc. and A. O. Smith Corp. This is a great time for acquisition, and we are fortunate to have companies here in a good financial position to take advantage of the market opportunities.
So we will see some good and sizeable business deals occur, but overall expect a slow growth pattern.
Below are economic forecasts for 2010 by some of our key members:
Sheldon Lubar, chairman, Lubar & Company
“The good news for 2010 is that business is reviving, the financial markets have stabilized, and the overall economy will be improving. Although the stock markets have regained some of their losses, nothing material has been done to reform the system that failed or change the government policies that resulted in the collapse. Problem areas remain. Housing, which will have a slower recovery; unemployment, which will slowly decline; and the absence of adequate bank lending to small business and other worthy projects. However, the worst seems to be past and I see the sun breaking through.”
Paul Purcell, chairman, president and CEO, Robert W. Baird & Company Inc.
“2010 will be a modest growth year with 2- to 3-percent growth and some risk of a second dip of recession given the high unemployment and lack of consumer spending.”
Jill Morin, executive officer, Kahler Slater
“I think the economy is showing signs of recovery, and I anticipate that we’ll see steady improvement in 2010 (but I’m the eternal optimist without a crystal ball). I think that we were closer to a complete economic meltdown than we realize, and I¹m encouraged to see positive signs of a recovery so soon. If you’ll recall, at this time last year, most predictions indicated that any economic recovery wouldn’t begin until the second or third quarter of 2010, so I think we’re ahead of where most people thought we’d be. But then again, I think most of us have the patience of a 2-year-old and the memory of a 90-year-old.”
John Daniels Jr., chairman, Quarles & Brady LLP
“I expect the initial part of the year to show relatively modest growth. I am anticipating that by the third quarter of the year, we will start to see the initial signs of confidence in the economy. While I don’t see a rapid upturn, I don’t believe that the fear of a double dip is likely. In other words, I think 2010 will be a year where people will start to really believe that the initial phase of the recovery is really in place.”
Carlos Santiago, chancellor, University of Wisconsin-Milwaukee
“Overall, the economy will continue its slow but steady recovery. 2010 will bring considerably more positive economic news than 2009. Job growth will remain sluggish, particularly in Milwaukee. Until confidence returns and companies start augmenting their inventories, employment growth will suffer. A real concern will be growing inequality with central city residents continuing to fall behind. A challenge for the city’s leadership will be to make the case that growing the economic pie is of benefit to everyone. Targeting central city job growth without an overall strategy to expand economic growth in the region will probably not prove successful in the 2010 economy. Water will continue to be a large focus in SE Wisconsin, nationally and globally. I predict that the Water Related Research Park will provide big dividends by the end of 2010.”
Austin Ramirez, CEO, INCOVA Technologies
“Stronger than expected corporate profitability due to cost cutting measures put in place during 2009 combined with a mild general economic recovery. Continued high unemployment as firms will be reluctant to hire due to continued economic uncertainty. Many employment losses will be permanent as firms have learned to operate with lower staffing levels.”
Tim Sullivan, president & CEO, Bucyrus International
“The U.S. economy will continue to slowly recover through 2010 as the developing world explodes with GDP growth approaching 10 percent, further demonstrating that the U.S. economy has peaked and it will expand at only moderate levels vs. the hyper growth of the developing world over the next 20 to 30 years. Excessive and unchecked greed perpetrated by some will be the demise of the U.S. economy. The ‘land of entitlement’ will become consistently less significant as time passes.”
Gale Klappa, chairman, president and CEO, We Energies
“As we enter 2010, we seem to have weathered the worst of the economic storm. While the recovery is still fragile and we’ve yet to see any significant turn in the jobless rate, I believe that the first half of 2010 will see stronger growth than the consensus forecasts are projecting. Based on what many of our major industrial customers are telling us, order rates and production levels should improve as we move through the first quarter. This should support a continued rebound in manufacturing and export activity across the Milwaukee 7 region. For the longer term, southeastern Wisconsin remains locked in a battle for growth, for jobs and for a brighter economic future. Through the work of the Milwaukee 7, we’ve made considerable strides over the past five years in identifying our unique strengths and attracting a surprising number of new jobs. Now, as we begin to emerge from the Great Recession, we need to demonstrate that the region’s manufacturing skills, its entrepreneurial spirit, and our unique positioning on the fresh coast of Lake Michigan can propel us to a new decade of progress and prosperity.”
Steve Roell, CEO, Johnson Controls Inc.
“In the U.S., I anticipate moderate growth from the 2009 base year. It will take several years for the general economy to recover to the levels we enjoyed two to three years ago. At this time last year, we were faced with a great deal of uncertainty about the depth and duration of the global economic downturn. The outlook has improved and there are signs that we are on the road to recovery. However, the key remains … the confidence and spending activity of the consumer. With high unemployment, mortgage foreclosures and ongoing concerns about job stability I think the consumers will continue to defer major purchases. There will be higher automobile purchases and home sales than in 2009, but all at a level that is still 25 percent lower than the level in 2007. Multinational corporations that have operations in Asia, Brazil and certain markets in the Middle East will benefit from the higher economic growth of those regions for the foreseeable future.”
Mark Furlong, president and CEO, M&I Corp.
“Unemployment increases during the first quarter, possibly even early into the second quarter, but should end 2010 lower than where we started. Housing values will decline for at least six months, and will stabilize in the fall. It is difficult today to envision the source of demand that would inflate home prices. The Fed will hold short-term interest rates unchanged for many months, likely until late in 2010, if not even into 2011.”
David Raysich, partner, Plunkett Raysich Architects LLP
“If you kept your job or your business survived in 2009, you drastically changed the way you handled your home budget or business operations. You know have a new normal of how you operate. The savings you realized in 2009 will carry over to future years and we will see part of that savings being spent in 2010 on new consumer goods. As time passes, we forget about the past and in the future will conduct our business in the new normal.”