Area panelists discussed Rochester’s economic outlook on Feb. 5 at the “2015 Economic Outlook: Rochester and the Upstate Region”—part of the Rochester Business Journal’s Power Breakfast Series.
More than 250 people were in attendance to hear about Rochester’s economic future.
Leaders across multiple industries met at the Joseph A. Floreano Rochester Riverside Convention Center for a discussion that focused on analyzing results from the Eighth Annual RBJ-Siena Business Leaders Survey. The survey is a component of the Siena College Research Institute Upstate New York Business Leaders Survey.
Panelists at the breakfast included Daniel Burns, senior vice president and president of M&T Bank Corp.; Brad McAreavy, president of the Rochester Automobile Dealers Association Inc.; Martin Mucci, president and CEO of Paychex Inc.; and Richard Plympton, CEO of Optimax Systems Inc.
Bond, Schoeneck & King PLLC was the presenting sponsor for the event.
“For the first time in the eight years that we have simultaneously been tracking consumer confidence and CEO confidence, both groups expressed considerably more optimism than pessimism about the marketplace,” said Donald Levy, director of the Siena College Research Institute. “It really is a long slide that has taken for us to get here; it’s true for the rest of the state of New York and it’s especially true here in Rochester. There not only is growing optimism (but) there is a more secure optimism than we have seen in eight years.”
A total of 524 business leaders—including 147 from Rochester—of private, for-profit companies were surveyed in upstate regions including in Buffalo, Syracuse and the Capital Region, along with Rochester.
The survey found that overall confidence in Rochester is at 113.3—skyrocketing a full 27.6 points from 85.7 last year when Rochester was the market in which confidence had dropped.
Forty percent of CEOs polled in Rochester were fully optimistic.
“In 2008, we not only didn’t have 40 percent of CEOs who were fully optimistic but also had nearly 60 percent of CEOs who were pessimistic (and they) were telling us at that point in time that they were hoping just to survive,” Levy said. “So we have stood that nearly on its head.”
The survey posed four questions for CEOS about their current outlook, their outlook on the future of the marketplace, industry conditions they’ve experienced and their thoughts on near future improvement of hose industry conditions.
“The CEOS—they ought to have a better handle on the economy then consumers,” Levy said. “CEOs obviously see orders coming in everyday, they know the status of (their) business and the business of their competitors is and so we look very carefully at that.
“For the first time, we see each and every industry sector demonstrating more optimism than pessimism,” he added.
The major challenges outlined through the survey for area CEOs included government, regulation and health care.
M&T’s Burns discussed the region’s banking outlook. Rochester has more commercial loans than Buffalo but there is still a lack of risk in some respects, he said.
“The loan window is wide open,” Burns said. “We’re dying to make loans, but I think Rochester as well as the Northeast is very conservative. Despite some of the information we see about confidence, I think people are very slow to take some chances or to make a bet on something with their business.
“It’s not because the banks aren’t willing to lend money,” he added.
In the auto industry, 2014 was a strong year, McAreavy said.
Nationally, the industry recorded $16.4 million in sales this year—up from $15.5 million last year—making it the best year in retail car sales since 2006. In Monroe County, there were almost 47,000 new car sales in 2014, which is the best year in more than a decade.
“Right now the industry is probably in the best scenario it could be in from a sales standpoint,” McAreavy said. “We have cheap gas, we have low interest rates, we have fairly free-flowing credit and we have a growing level of consumer confidence. It’s a nearly perfect scenario for the auto industry right now.”
Small business data also showed strong gains in the region. Mucci discussed Rochester’s small business outlook.
Paychex provides a monthly small business index that measures payroll data from 350,000 of its clients. Recently, the firm isolated Upstate New York to draw some insight for the region’s future.
December was the first time that the overall upstate index was stronger than the national index, Mucci said.
“Upstate is feeling a pretty good resurgence in small-business job growth,” he said. “It’s stronger than 2004 and it’s quite a bit stronger than just last year. It’s a pretty good story for Upstate New York compared to the nation.
“While the upstate numbers are good now, I think we’ve got to keep an eye on regulations, tax breaks, the Affordable Care Act and state mandates,” he added.
Two areas of importance for Rochester are optics and advanced manufacturing. Technology breakthroughs are happening right now in optics, Plympton said.
Some ways optics and advanced manufacturing will affect the future include in laser optically guided missiles, non-invasive eye corrective surgery, smaller electronics for mobile devices and even apps for businesses, Plympton said.
The greatest challenge is bridging the middle skills gap.
“We have a lot of great technology and a lot of good schools here in the region, but we still have a gap where we are growing businesses faster than we can educate and train people to work in those businesses,” Plympton said. “I think there’s a misperception in the community that manufacturing has kind of left town and also that manufacturing is dirty or also even dangerous, and that’s just not true in advanced manufacturing.
“Currently there are hundreds of advanced manufacturing jobs in our community. Many of our companies are looking to grow 3 to 10 percent this year and Optimax is looking to beat that pace,” he added.
With the confidence of area leaders high, 2015 looks bright for Monroe County. Rochester is in a better place than years past, Levy said.
“CEOs feel as though they’re more successful, they’re more confident but they’re confident in spite of rather than because of government,” he said. “Still, we expect a very strong year here in Rochester.”
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