In September and October of 2010, Milwaukee and Waukesha County business owners, CEOs, and CFOs participated in the third annual First Business Economic Survey. The survey asked respondents to evaluate the current, and predict the future performance of their businesses on eight key economic indicators: sales revenue, operating costs, capital expenditures, profitability, staffing, wages, pricing, and operating capacity. (See a copy of the 2010 survey for Milwaukee and Waukesha Counties by clicking here.)
Key findings of the 2010 First Business Economic Survey of Milwaukee and Waukesha Counties, which was conducted by the University of Wisconsin’s A.C. Nielsen Center for Marketing Research in September and October of 2010, indicate businesses saw moderate improvements in 2010. Milwaukee and Waukesha businesses are optimistic. A majority of businesses saw their revenue and profitability either remain the same or increase in 2010.
Key findings for 2010:
- Overall, Milwaukee and Waukesha County businesses continue to report results that are worse than 2008 levels.
- Over 48 percent of businesses did not meet self-imposed expectations in 2010. However this is an improvement from the 60 percent of businesses that failed to meet expectations in 2009.
- Both profitability and sales revenue declined for 46 percent of businesses surveyed. On top of these difficulties, nearly 59 percent of responding businesses indicated an increase in operating costs as a percent of revenue.
- Despite these negative indicators, there is still reason to be optimistic. A majority of businesses indicated that their revenue and profitability either remained unchanged or increased in 2010. This is a dramatic turnaround from 2009 when 72 percent of business indicated decreased revenue and 68 percent indicated decreased profitability.
- Job growth moved in a positive direction as approximately 71 percent of those surveyed indicated maintaining or increasing employees in 2010. This offers some hope when compared to the nearly 49 percent of companies that decreased their number of employees in 2009.
- Job growth is likely to continue to be slow, however, as nearly 60 percent of firms project adding no employees and 11.5 percent project cutting employees in the upcoming year.
- Wages rebounded slightly in 2010 as well. Approximately 37 percent of businesses increased wages in 2010, compared to 28 percent in 2009, and 50 percent of businesses expect to increase wages for 2011.
- Businesses are dealing with increased expenses and operating costs. As noted above the majority of businesses saw an increase in operating costs and 30 percent of businesses noted an increase in capital expenditures up from 19 percent in 2009. However, it should be noted that a relatively small amount of this increased cost was passed on to the customer. Of all the businesses surveyed, 67 percent indicated no change to their pricing or an increase of 3 percent or less. In the future, customers are likely to see an increased portion of this burden as 45 percent of businesses project price increases for 2011.
- Capacity utilization shifted towards higher utilization rates compared to 2009, although it did not reach the levels seen in 2008. Despite the poor economy, 72 percent of businesses expect to perform better in 2011, up from 65 percent a year ago, and the attitude in open-end responses was generally optimistic for the future.
While all businesses are reporting a turnaround with increases in both revenue and profitability, businesses self-selecting into the manufacturing sector showed much larger differences than other sectors. Across almost all economic indicators, manufacturing businesses posted significant changes from the prior year. The percentage of manufacturing firms reporting increased sales revenue jumped from 13 percent in 2009 to 60 percent in 2010. Over 52 percent of manufacturing firms indicated increased profitability up from 18 percent in 2009. The manufacturing sector also posted significant improvements in the wage and number or employee categories. However, even with this remarkable rebound the sector was not immune to the increase in operating costs and capital expenditures seen in other sectors. Some of these increased costs will certainly be passed on to the customer as 40 percent of manufacturing firms projected increased prices in 2011.
The 2010 survey was sponsored by First Business Bank, the AC Nielsen Center for Marketing Research, and Carroll University.
JOIN US FOR THE LIVE EVENT
On Wednesday, Dec. 15, at 8 a.m., the 2010 survey results will be presented to the public by Tom Hefty, retired CEO of BlueCross BlueShield. Tom will discuss what Milwaukee and Waukesha County business leaders shared about their results for 2010 and their predictions for 2011. A panel discussion, moderated by Lynn Sprangers of Mount Mary College, will follow. The 2010 panelists include:
- Tom Hefty, Former Chairman & CEO of Cobalt Corporation, and its subsidiary, BlueCross BlueShield United of Wisconsin.
- Kent Lorenz, President of the Midwest Region of Ellison Technologies.
- Christine Holloway, Vice President of Converged Infrastructure Solutions at CDW.
- Wayne Wiertzema, Executive Vice President of Wangard Partners, LLC.
A webstream of today’s event is available at BizTimes.com. As you read the key findings above and/or watch the webstream, let me know your thoughts. Are the results in line with what you’re experiencing?
Dave Vetta is president and chief executive officer of First Business Bank.
