Entering 2013, CEOs and top executives across New York state show new signs of frustration and more pessimism about business conditions and the state economy. And private-sector leaders in Westchester County and the Hudson Valley are some of the least confident about business prospects in New York this year, second only to the Buffalo region, according to a recent survey.
Conducted by the Siena College Research Institute, the annual survey by First Niagara Bank N.A. was expanded in its sixth year to include the eight-county Hudson Valley region, stretching from largely rural Columbia and Greene Counties in the north to suburban Westchester and Rockland counties in the south.
First Niagara in 2012 entered that regional market with its conversion of about 100 upstate New York and Fairfield County, Conn. branches acquired from HSBC Bank USA. It operates 24 branches in the Hudson Valley, including 6 branches in northern Westchester and 12 in Rockland. Its regional business banking and mortgage offices are in Nyack.
The Siena survey in December drew responses from 199 CEOs, chief financial officers and other senior managers of private businesses in Westchester and the Hudson valley with $5 million to $150 million in annual sales. They represent the service, manufacturing, engineering and construction, retail, wholesale and distribution, financial and food and beverage industries. Statewide, 1,142 corporate leaders were surveyed by Siena researchers.
For the first time in three years, the overall confidence index statewide fell well below the 100 mark, the point of equal balance between surveyed leaders’ optimism and pessimism about current and future economic conditions in their industry and across the state. The overall index dropped 12 points from 97.9 near the close of 2011 to 85.9 near the close of 2012.
In Westchester and the Hudson Valley, the overall confidence index was 83.5 among company chiefs. That ranked fourth among five upstate regions, with Buffalo’s long-ailing private sector registering 80.6 on the index, a more than 14-point drop from the previous year.
The Albany area, one of the nation’s fastest-growing high-tech job markets, led the 2013 overall confidence index at 96.3. Yet a majority of business leaders there too shifted to pessimism from their optimism at the start of 2012, when the capital area’s confidence index was at 102.8
The Rochester region, another center of high-tech enterprise in the state, was second on the confidence index at 91.8, down 7.8 from a year ago.
In Westchester and the Hudson Valley, 27 percent of leaders surveyed said they expect business conditions in the state economy to improve this year, while 35 percent expect conditions to remain about the same as in 2012. A plurality of leaders, 38 percent, said conditions will worsen.
Nearly the same plurality, 37 percent, expects their companies’ profits to decline this year. Another 35 percent predicted they will stay the same, while 27 percent expect to see profits increase in 2013.
David Ring, managing director of enterprise banking at First Niagara, said “signs of frustration” seem to have emerged among executives, a good number of whom have “weathered the storm” since the 2007-2008 recession. Though less optimistic now than in the last three years, executives are “still willing to invest in people and fixed assets,” he noted.
In this region, nearly one in five, or 19 percent, of corporate leaders said they expect to increase their workforce in 2013, compared with 16 percent who said they will cut employment levels. The great majority, about 64 percent, said their companies’ job numbers will remain the same.
About 47 percent of the region’s business leaders surveyed said they plan to invest in fixed asset acquisitions this year to meet growing demand, reduce costs or increase profitability. Of those looking to invest, 45 percent plan to use internally generated funds while 43 percent intend to finance through a financial institution.
At First Niagara’s business banking division, “What we’re seeing is basically flat demand for loans, but we’re not seeing that hoarding of cash” by companies, said Ring. “We see borrowing, utilization of our lines, not changing very much.”
Ring said he was surprised that Westchester and the Hudson Valley fell on the low end of the confidence index. The region “is a very important growth market for us because through good times and bad it tends to perform better than certain markets we’re in.”
“Downstate tends to do better in terms of bouncing back quickly. I’m surprised at the difference in confidence down here compared to up there,” he said.
Unlike upstate markets served by First Niagara, this metropolitan area has felt the impact of the real estate bubble, Ring noted. And business leaders’ confidence might also have been shaken by the devastating losses of Hurricane Sandy, he said.
Ring said it was also a surprise that top executives in the region see governmental regulation as the greatest challenge to their companies, with 22 percent ranking it first, ahead of adverse economic conditions at 20 percent, taxation at 13 percent and health care costs and cash flow at 12 percent each.
“Consumer confidence seems to be better right now than business owner confidence,” Ring said. As consumers spend more, “Hopefully business owners will pick up that optimism.”