Wisconsin business leaders foresee sluggish growth
By Harry Dennis III, for SBT
As this article is being written, war in Iraq has begun. Hopefully, by the time you read it, our incursion will have been successfully concluded, or in that phase where its principle objective of eliminating Saddam Hussein’s regime as a threat to the free countries of the world has been accomplished.
TEC International has developed a well-respected index, The TEC Index, that is administered in survey form to more than 5,500 chief executives in the United States, 520 of whom are located in Wisconsin. This is done each quarter.
The results of the first quarter are in. This month I would like to detail how Wisconsin CEOs view our world compared with their colleagues nationwide.
The results are interesting, to say the least. I make this observation in the face of a commonly held belief that “we, in the Midwest, are different.” Also, I’m only reporting certain answer category highlights, so the percentages in response to each question will not total 100%.
In terms of the current economic health of the US, Wisconsin CEOs are no different than their nationwide contemporaries; 60% see the growth as stagnant, and 34% see it as slow and steady.
For the full 2003 year, again, there are no differences. Seventy-six percent see the numbers coming in between 1 and 3 percent. In terms of specific business plans for the remainder of the year, again, there are no differences. Fifty-two percent expect to further cut operating expenses, and 52% are modifying their business strategy. Only 17%, in both cases, do not believe that the economy will affect their business plans.
The picture regarding personnel staffing is more convoluted. Thirty percent of the entire survey sample expects to increase staffing by 1 to 5 percent over the next 12 months. However, half as many Wisconsin CEOs compared with CEOs nationwide expect to increase staffing by more than 5%. Thirty percent of both groups see no change in staffing over the next 12 months.
Decisions regarding capital expenditures are similar for chief executives in Wisconsin and nationwide. Thirty percent expect increases in the 1 to 10 percent range. Seventeen percent see decreases of similar amounts, and another 35% see no change from last year.
Projected sales revenues show some differences between the Wisconsin and nationwide sample. Forty-four percent of the Wisconsin group expects sales to increase by less than 10%, while 33% of the nationwide group expects this. Likewise, 22% of the Wisconsin group see increases in the 10 to 20 percent range, while 27% of the nationwide group expect 10 to 20 percent growth. Ten percent of both groups report no expected change in revenues.
Roughly 86% of both samples identify these two strategies as most critical to long-term success: repositioning the company to accelerate growth, and recruiting and hiring top talent.
There is no disagreement between either group in supporting President Bush’s efforts to cut taxes: 62% agree, 20% oppose and 14% are undecided.
Regarding economic stimulus actions, there are some similarities and differences. About 60% of CEOs nationwide and in Wisconsin want to see income tax reductions for all earning brackets.
Interestingly, 32% of Wisconsin CEOs voted for tax reductions weighted more to middle and lower income brackets, while only 13% of CEOs nationwide did so.
Likewise, and far more striking, only 8% of Wisconsin CEOs support payroll tax reductions compared with 33% of the nationwide CEO sample. About a quarter of both groups want to see estate and dividend taxes reduced.
Regarding the war in Iraq, 16% of both groups expect it to have a mild positive impact. However, 63% of the nationwide CEOs expect a mild negative impact, compared with 48% of Wisconsin CEOs. Not surprisingly, over two-thirds of both groups supported the war effort before it became reality! On a similar note, both CEO groups rank Iraq and North Korea as presenting the most danger toward the US.
Roughly 60% of both groups support an increase in government powers of surveillance. But in terms of preparing for a potential terrorist attack, three quarters of both groups see nothing other than “business as usual.”
The final question of the TEC Index Survey asked respondents to indicate which industry will rebound fastest in 2003. There was a close match between Wisconsin and nationwide CEOs: biotechnology was ranked first; information technology second; and retail, manufacturing and professional services third.
Let’s face it, surveys are surveys and just that. They give us a clue of the future, but only that.
I continue to be impressed by the fact, as witnessed by a recent international conference of TEC colleagues that I attended representing more than 7,000 TEC members from 15 countries, that we in Wisconsin are highly respected for our continuing ability to successfully compete in spite of adverse circumstances.
China notwithstanding! Until next month, good fortune to all our Wisconsin enterprise!
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.
April 18, 2003 Small Business Times, Milwaukee