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Panelists analyze outlook for region’s economy

Panelists discussing the Rochester region’s economic outlook for 2014 expressed some optimism while acknowledging that the area’s business executives had the lowest confidence in a recent survey of upstate metro areas.

Business and industry leaders met last week at the Hyatt Regency Rochester for an event that included an analysis of results from an annual research study by the Siena College Research Institute, which evaluated Rochester’s outlook for the next five years.

The event, “2014 Economic Outlook: Rochester and the Upstate Region,” was part of the RBJ Power Breakfast Series. Nearly 200 people attended.

The RBJ-Siena Business Leaders Survey, a component of the Siena College Research Institute Upstate New York Business Leaders Survey, found that Rochester was the only market among the four surveyed in Upstate New York—along with Albany, Buffalo and Syracuse—with a drop in confidence among area business leaders.

“What caught my eye was that there’s a little bit of a chip on Rochester’s shoulder this year, whereas a few years ago Rochester actually stood out as the most optimistic region,” said Donald Levy, director of the Siena Research Institute. “Rochester feels a little bit this year that they’ve been passed by, that there is this excitement (at) both the other two ends of the Thruway.

“There’s an excitement about high tech in Albany, and there’s excitement about the billion-dollar investment taking place in Buffalo, so as a consequence the business leaders in Rochester say a little bit of ‘Hey, what about us?’”

Rochester’s business leader confidence index was 85.7, compared with 94.6 across upstate, and was well below the break-even point of 100, where optimism and pessimism are equal.

The aim of the event was to bring community leaders together to delve into the implications of the research for the region. Optics, photonics and imaging; commercial and residential real estate; the automotive industry; and the legislative and policy initiatives of New York were addressed by a panel of speakers. ESL Federal Credit Union was the event’s presenting sponsor.

The five panelists were Levy; Thomas Battley, executive director of the New York Photonics Cluster; Laurence Glazer, CEO and managing partner of Buckingham Properties LLC; Bradley McAreavy, president of the Rochester Automobile Dealers Association; and Sandra Parker, president and CEO of Rochester Business Alliance Inc.

Glazer likened the real estate market in the Rochester area to a game of musical chairs, with multiple new developments taking place around the city. Most of the national retailers still are questioning the return on investment in Rochester, he said.

Glazer said he believes new Rochester Mayor Lovely Warren, from the onset, seems to support continued city development.

“It’s still pretty early in the process, but my inclination now is that the administration is actually very supportive of good projects,” Glazer said. “I think they’ve realized they need to have a healthy center city in order for everybody to thrive in the region. So far I have not seen anything indicative of a shift away towards economic development or revitalization of the center city.”

RADA’s McAreavy predicted that Monroe County will see a 3 to 5 percent increase in automotive industry revenues this year. The industry locally has experienced dealers and strong lending support, which is not always the case in other markets.

“The auto industry is certainly on an increasing trend right now, having come off of some very difficult years, but the quality of the vehicles and the efficiency of fuel economy and so forth in the industry right now is unprecedented and just the overall quality of cars in the market today is better than it’s ever been,” he said.

He added: “You’ve been through a couple of up and down cycles, and you learn how to get through it—you really do. And so we’re very fortunate to have a group of dealers like that serving this market.”

Leaders in Albany were a major factor in the study, with only 8 percent of business leaders saying the state government is doing either a good or excellent job in creating a successful business climate for the state.

“I think the business community (and) the economic climate here is steady, and quite frankly we see it as improving in 2014. But there’s a lot of work that needs to be done at the state level, both from a taxation standpoint and a regulatory standpoint,” Parker said.

The annual survey’s participants included 651 CEOs in the upstate region, with 190 of them from the Rochester area. The survey took place from September to December 2013.

When asked if New York is a friendly environment for businesses, 65 percent of business leaders viewed the environment negatively with their frustration stemming from the business relationships with government and the slow growth of the economy, Levy said.

Dividing New York business leaders into three categories by outlook—optimistic, treading water and pessimistic—the survey found Rochester business leaders to be 24 percent optimistic. Among all four upstate metro areas, 31 percent of business leaders were optimistic.

The potential for photonics to transform Rochester cannot be overlooked, Battley said.

“We were delighted to see Mayor Warren and some of her news staff convene a group around the Investing in Manufacturing Communities Partnership, which is the national program for reinvesting in communities and manufacturing,” he said. “Right out of the gate she convened a group of people, including major stakeholders around technology, optics, photonics and other major industries in the region.

“That IMCP designation would help us a lot.”

The program involves a competition that rewards designated communities with federal funding for plans that demonstrate best practices in attracting and expanding manufacturing.

In the Siena survey, 73 percent of CEOs in the Rochester area said they found job applicants to have fair or poor writing skills.

“Business leaders hire people when they absolutely are ready, and their expectation is that people walk in the door of the business day one ready to contribute,” Levy said. “It really is beholden on the workforce here: Go get that additional educational training; acquire technical skills.”

The challenges Rochester faces will require segments of the community to support each other, he said.

“It’s a new tomorrow,” Levy said. “What worked yesterday obviously is gone here in Rochester, and I think Rochester is adjusting to that. But the tomorrow is going to be created jointly by the business community, by the higher (education) community and by the workforce here. There is a tomorrow, but the transition is going to be a little rocky over the next one- to five-year period.”

2/21/14 (c) 2014 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email [email protected]


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