MANUFACTURING DRIVING IMPROVEMENTS IN 2011 FIRST BUSINESS ECONOMIC SURVEY OF MILWAUKEE-WAUKESHA COUNTIES
Other Indicators Show Upward Trends
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View photos of the First Business Economic Forum of Milwaukee & Waukesha Counties.
(BROOKFIELD, WI) – December 13, 2011 – Milwaukee and Waukesha County businesses saw similar performance in 2011 compared to last year; however the manufacturing sector saw the greatest improvement, according to a report released today by First Business Bank at the invitation-only First Business Economic Forum.
The First Business Economic Survey of Milwaukee and Waukesha Counties, sponsored by First Business Bank and Carroll University, and conducted by the A.C. Nielsen Center for Marketing Research at the University of Wisconsin-Madison School of Business, manufacturing reported the greatest percentage of firms with increased profitability, with more than 53 percent reporting increases in 2011, compared to between 29-36 percent of businesses in other sectors.
Key Findings for 2011: • Businesses did not report a significant difference in sales revenues compared to 2010, however nearly half of businesses did report an increase in sales revenue. • Fifty-three percent of manufacturers reported increased profitability in 2011. • More businesses reported a 1-3 percent decrease in profitability and fewer reported a 10 percent or more decrease in profitability. • Businesses did not report any significant changes in operating costs as a percentage of revenue, however 75 percent of retail businesses and 69 percent of manufacturing firms reported increased operating costs. • Almost half of businesses reported unchanged capital expenditure in 2011. • The percentage of businesses reporting decreased employee numbers significantly declined to 19 percent, the lowest in the survey’s history. • A significant number of firms reported increased wages for 2011, 46.8 percent compared to 37.4 percent in 2010. • Manufacturing business reported the biggest change in wages, with 60 percent increasing wages in 2011 compared to 42 percent in 2010. • Forty-seven percent of businesses increased prices, compared to 36 percent in 2010. • There were no significant changes in overall performance for 2011. Fifty percent of firms report they are not meeting self-imposed expectations for 2011. • Domestic sales shortfalls was the number one reason given for not meeting expectations. • Manufacturing had the most positive results in terms of expectations. In manufacturing, 34 percent of businesses reported exceeding expectations compared to the region average of 16.7 percent. Expectations for 2012: • Businesses are slightly less optimistic about 2012 than they were for 2011, with 61 percent expecting better performance in 2012 compared to 72 percent in 2010. • A slightly higher percentage of manufacturing and technology firms are projecting better expectations in 2012 than retail and “other” business types.
“The strength of the manufacturing sector seems to be our strong suit,” says Tom Hefty, retired chairman & CEO of Cobalt Corporation, and its subsidiary, BlueCross BlueShield United of Wisconsin. “While the changes are small, they are significant.”
Despite the positive news for manufacturing, this year’s current event question addressed the needs of businesses in regard to employment applicants. A majority of respondents, 52.5 percent, indicated they are not hiring. The remaining firms reported they are not experiencing any shortage of qualified applicants. However, when broken out by sector, 46 percent of manufacturers are experiencing a shortage of applicants, and 78 percent of those experiencing a shortage claim a shortage of experienced tech school grads.
“We are in a bit of a Catch-22 with manufacturing profitability increasing, but a shortfall in qualified job candidates,” says Hefty. “This will be the challenge moving forward.”
The report also indicated upwards trends in other economic indicators. A record low of 19 percent of businesses reported decreased employee numbers in 2011, compared to 29 percent in 2010 and 49 percent in 2009.
“Employment numbers on the rise in Milwaukee and Waukesha Counties is noteworthy,” says Dave Vetta, President of First Business Bank-Milwaukee, “This may be a sign of a slow and steady climb for area businesses.”
In addition to strong employee numbers, nearly half of businesses increased wages in 2011, compared to 37 percent in 2010. Similarly, 48 percent of businesses expect to increase wages for 2012. While employee headcount and wages increased, other economic indicators remain stable. Businesses did not report a significant difference in sales revenue, profitability, or capital expenditures compared to 2010.
First Business Bank has been conducting the economic survey of Milwaukee and Waukesha Counties for the past four years. The survey was based on the responses of 500 businesses across the two counties. The sample size has an error range of 5 percent and a confidence level of 95 percent. The full report is available by clicking here
About First Business Bank - Milwaukee First Business Bank - Milwaukee was established in 2000 to provide a full range of commercial banking services to Milwaukee-area businesses and business people. It is chartered as a unit bank with a CEO, not a branch president, and a board of directors rather than an advisory board. This structure allows it to understand Milwaukee-area businesses and respond quickly and proactively to their needs. For additional information, visit www.firstbusiness.com or call 262-792-1400.
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