The Rochester economy is growing and changing, and local experts view the Rochester Top 100 as a perfect reflection of that.
This year’s list of the 100 fastest-growing private companies in Rochester showed a drop in total revenue over the previous year, but local economic experts said the growth of certain sectors is a bellwether of an economy growing further from the gridlock of the recession.
The list is made up of privately held, independent local companies with no parent company. To qualify, businesses must have revenue of at least $1 million in each of the last three years and have headquarters in the Rochester region, which encompasses Monroe, Genesee, Livingston, Ontario, Orleans, Seneca, Wayne, Wyoming and Yates counties.
Companies on the list come from across an array of sectors, including construction, financial services, manufacturing, retail, service, technology and wholesale/distribution.
This year, the companies on the Top 100 list had combined revenue of $11.75 billion, down from $12.28 billion in 2013.
While the total revenue dipped, certain sectors saw growth. The largest jump came in the technology sector, which increased from 22 companies in 2013 to 27 in 2014. The sector’s total revenue also jumped by more than 40 percent, increasing from $464 million in 2013 to $653 million in 2014.
Though the number of companies in a given sector on the Top 100 list ebbs and flows from year to year, the technology sector has shown steady revenue growth in recent years. Collectively the technology sector logged the highest revenue since 2006, when it totaled nearly $801 million.
Sandra Parker, president and CEO of the Rochester Business Alliance, said the numbers reflect a strong sector in general as well as a growing part of the economy.
“The growth of the technology sector is one of the biggest takeaways of the Top 100 list this year,” she said. “But while that jump in technology companies may be significant, we see that the service sector remains strong and we still have many manufacturing companies.”
The service sector was right behind technology on the Top 100 list with 26 companies, bringing a total of $1.43 million in revenue.
Retail was the largest sector by revenue, with a collective $7.82 billion in 2014. That sector also had the largest local employment, with 14,436 employees.
Some sectors saw declines from 2013. The manufacturing sector lost three companies on the list, dropping from 18 on the 2013 list to 15 in 2014. The sector also saw its revenue slashed nearly in half, decreasing from $1.5 billion in 2013 to $813 million in 2014.
The wholesale/distribution sector saw retraction as well. The number of companies represented on the Top 100 list fell from nine in 2013 to four in 2014, with total revenue dropping 56 percent to $159 million.
Breaking down the list
The Top 100 list for 2014 contained companies big and small, new and old.
Three of the companies on the list were formed before the dawn of the 20th century—Harris Beach PLLC was founded in 1856, Fee Brothers Inc. in 1864 and the Pike Cos. in 1873. The youngest companies on the list—Hamilton Stern Construction LLC and Inde—were both founded in 2010.
The Top 100 list also contains some familiar names. Wegmans Food Markets Inc. appears for the 28th consecutive year, while Bob Johnson Chevrolet, Sutherland Global Services Inc. and Hammer Packaging Corp. have appeared each of the last 20 years.
These frequent members of the Top 100 list were also among the top local employers. Wegmans topped the list with 13,582, while Sutherland had 3,009. The next highest was the Dorschel Automotive Group with 478 local employees.
The list also saw a rise in the number of companies new to the list. There are 14 newcomers to the list, up from 12 last year.
To Timothy White, the makeup of the Top 100 list shows a local economy ready to grow.
White, managing partner of KPMG’s Upstate New York office, said the expansion of the construction sector shows that the overall economy is poised to grow.
“If you ask, ‘what is the read of that growth to the macro economy?’—whenever you see construction increase that’s a good sign of confidence in the economy because people are willing to make investments into expanding,” he said. “The growth in technology also shows that people are making continued investments in the technology sector, and you’ll continue to see more companies in the Top 100 in that sector.”
The construction sector suffered a dip after 2009 on the Top 100 list, posting total revenue of $220.9 million in 2010 and $91.2 million in 2011, before rising to $269.2 million in 2012. It has since recovered in the past two years, with $980.5 million in 2013 and $783 million in 2014.
The growth is a good sign given the uncertainty that fell over local industries during the recession, White added.
“There was a bit of a sea change in 2009 subsequent to the financial crisis,” he said. “That changed everything, and revenue numbers, regardless of industry, were down, and the number of companies even participating in the Top 100 was down.”
Total revenue of all Top 100 companies saw a decline for several years after cresting at $9.53 billion in 2008. After two consecutive years of decline following that year, the overall revenue has been mostly on the rise. Even with a 4 percent decline from 2013 to 2014, this year’s total revenue of $11.75 billion still represents the second-highest total in the history of the list. Last year’s $12.3 billion was the high mark.
White said it was not until 2010 or 2011 that companies began to see stabilization, noting that revenue numbers for many companies and industries are now finally returning to pre-recession levels. Much of the expansion put on hold is now catching up with local businesses and is reflected in the Top 100, he added.
“What’s happening now is largely a continuing of what we saw starting in 2009 when there was not a lot of expansion and the economy was sour,” he said. “What happens when people won’t build and expand is they’ll knuckle down and grind it out until things improve.
“The growth, especially in the construction sector, shows a continuum of an improving economy and a bit indicative of what we’re also seeing nationally. There are more investments, including expansion of buildings, and it’s a good sign from what we’re seeing from 2013 to 2014 and also a continuation back from 2009.”
Other factors are contributing to local economic growth, including global instability for companies that work beyond the United States, White added. But all the local signs point toward growth again.
White said the nominations for the Top 100 themselves show how much the local economy has stabilized from the volatility of the recession.
“A bellwether of stability in the economy is that we have only 100 companies make the list but continue to have nominations that far exceed that,” White said. “Last year the number of nominations was almost identical at 190, so that’s a sign to me of good solid consistency of where they were a year ago in metrics related to the economy. It’s all very strong.”
The makeup of the Top 100 list is also a strong sign of the depth and diversity of the economy, RBA’s Parker added.
“We’ve said all along that it’s a diversified economy now,” she said. “Technology companies led the pack in the Top 100, but the rest of the numbers were more or less evenly divided between manufacturing, construction and other types of companies.”
10/31/14 (c) 2014 Rochester Top 100 supplement. Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email firstname.lastname@example.org.