Executive Summary
This report highlights the findings of the 2008 First Business Economic Survey of Northeast Wisconsin, which was conducted by the University of Wisconsin's A.C. Nielsen Center for Marketing Research between September and October 2008. This was the first year that the study was conducted in this geographic market. The survey was sent to 7,500 businesses in Northeast Wisconsin that were reported to have one or more employees and was addressed to the CEO, CFO, President, and/or business owner. The survey asked questions regarding eight key economic indicators in each of the following areas: Sales Revenue, Profitability, Total Operating Costs as a % of Revenue, Capital Expenditures, Number of Employees, Overall Wage Change, Change in Pricing, and Operating Capacity. The survey also asked questions pertaining to changes in expenses, and the impact of the slowdown in the housing market.
Overall, businesses saw an increase in revenues in 2008. There was some variance among geographic markets served and across sectors, which contributed to a wide dispersion in the results reported (while most businesses reported increases, a fairly substantial number of them reported decreases also). With the exception of the Technology sector, a substantial number of businesses also reported increases in their total operating costs (more than two‐thirds of businesses in most categories). There was a great deal of variability with regard to capital expenditures in 2008. “No change” was reported most often, but the data tended to skew slightly toward small increases. The data reflected a similar variability for Profitability. A relatively equal number of businesses report decreases and increases. Most businesses reported “no change” in the number of employees in 2008. If they did report changes, they seemed to be in the 1 to 3% range. Most businesses reported an increase in wages and an increase in pricing. These changes tended to be overwhelmingly in the 1 to 3% and 4 to 6% ranges.
On the whole, businesses seem to have moderate expectations for 2009. There are some areas of optimism, but most businesses project similar results to 2008. Fewer businesses expect to see a decrease in revenues in 2009, and fewer expect an increase in costs. These changes are made up in terms of businesses reporting “no change” in these variables. Overall, fewer businesses expect to increase their capital expenditures in 2009, with more electing to hold these figures constant. There is less optimism with regard to profitability, but this variable exhibited a significant amount of dispersion. More businesses expect to keep the number of employees at their businesses constant in 2009, while fewer expect there to be wage increases. Most businesses expect pricing to stabilize and remain fairly.
First Business Economic Forum Highlights
Good News
- Last year nearly everyone reported increases in most key indicators
- Despite the 2008 economy most were optimistic about 2009
- Those businesses whose customers were beyond the state did better and had higher expectations than those with regional or local customers only
Bad News
- Overall most businesses performed below expectations for 2008
- Survey data collected in September and early October preceded much of the impact of the national economy
- Decrease in costs may mean at bottom with greater profitability next year
Survey Example
Methods
- Survey sent to 7500 businesses
- Sent to Owner, President, CEO, CFO
- 790 returned for 10.5% response rate
- Only 15% had more than 99 employees
- Geographic market was NE Wisconsin for 54%
- 39% were service while 24% were manufacturing
Segmentation
Cost of Doing Business
- Wages: All sectors showed increases in wages but manufacturing showed the most and expected the most in 2009
- Operating Expenses as % of Revenue: Modest increases in 2008 and more modest expected in 2009
- Capital Expenditures: Expect expenditures to decrease in 2009
Operating Costs - Actuals
Possible Drivers:
- Commodity prices evidenced by the CRB index shown below and cited by respondents
- Fuel prices and wage levels
- Bit of “good news” is the economic downturn has driven down commodity and fuel prices
- 2008 had modest increases in operating costs and most likely no change in capital expenditures. There was little difference across industry sectors, customer type, or sales region.
Operating Costs - Projections
- Both expenses expect to increase less in 2009 than 2008 actual increases
Operating Capacity
- In 2008 almost 60% of businesses were operating at 80% capacity or greater
Number of Employees - Actual
- Manufacturing had more companies decreasing employment than increasing, Technology and Retail had more companies increasing than decreasing employment
Number of Employees - Projected
- Service and Manufacturing sectors are more likely to increase employment.
Change in Wages - Actual
- Manufacturing showed highest percentage with an increase in wages, Technology the lowest
Change in Wages - Actual
- Manufacturing showed highest percentage with an increase in wages, Technology the lowest
Change in Wages - Projected
- Projected wage changes similar to 2008 actual changes with Manufacturing greatest having many more companies increasing wages than decreasing, and Technology companies the smallest
Overall Performance Indicators
- Revenue: All sectors had more companies with sales increase s than decreases but those whose customers are international/national did better.
- Profitability: Generally 2008 showed same number of companies with an increase in profitability as those with a decrease. Every sector is optimistic about 2009.
- Overall Performance: Most firms did worse in 2008 than expectations but expect 2009 to be better.
Sales Revenue - Actual
- While all sectors had more businesses with an increase in sales revenue than a decrease, those businesses with markets outside of Wisconsin did better
Sales Revenue - Projected
- All sectors expect increase in revenue with those having international markets most optimistic
Profitability
- Actual results for 2008 across the sectors typically showed same number of companies increased profitability as decreased; for 2009 all sectors have more companies projecting an increase in profitability than those projecting a decrease
Overall Performance
- Few companies exceeded expectations in 2008, but most expect 2009 to be better
