A majority of upstate chief executives are hunkering down, forgetting about expanding into new markets and focusing on their core businesses as they brace for a turbulent year, according to a Siena Research Institute survey released Thursday.
At a time when a multiplicity of economic stresses are sapping consumer spending and the dollar, the SRI survey provides the first snapshot of confidence among CEOs in four upstate metropolitan areas.
Almost half of the CEOs surveyed said they worry a recession might take hold this year, though taxation remains their biggest concern. The business outlook held by Albany executives was slightly brighter than those in Buffalo, Rochester and Syracuse.
The report shows that 41 percent of upstate business leaders expect economic conditions in New York to get a little worse in 2008 and 8 percent expect it to get considerably worse. Thirty-two percent said the predict the state’s economic condition will be unchanged.
Despite upstate’s malaise, few CEOs are looking at workforce reductions or price increases. However, 31 percent of survey respondents said their profit enhancement strategies include cost reductions.
“Certainly they are risk-adverse, and they have a number of things to be concerned about,” SRI Director Donald Levy said of CEOs.
Fifty-six percent of CEOs statewide said they plan to concentrate this year on growth in existing products and the expansion in existing markets. Only 16 percent foresee the acquisition of new businesses. Eleven percent plan to build new locations.
“To a certain extent, they’re circling the wagons. They’re protecting what they have,” Levy said.
Even First Niagara Bank, which sponsored the survey, is looking to broaden its reach in the region, where it has 53 branches. The Lockport-based bank recently launched an aggressive lending promotion intended to lure small business away from their regular banks, said First Niagara Eastern New York Regional President Thomas Amell.
SRI’s first annual CEO confidence survey included responses from 403 executives at for-profit businesses with annual revenues between $5 million and $150 million. Almost a third of the survey respondents were from the Capital Region.
The survey, which was unveiled at a First Niagara branch in Loudonville, takes SRI into new but not unfamiliar territory. Since 2001, the Siena College pollster has measured consumer confidence throughout the state. It has also surveyed New Yorkers for holiday spending outlooks and political issues.
SRI put upstate CEOs’ overall confidence index at 77.7 — 22.3 points below the benchmark point of 100. Albany’s index was 81.7. At 87.8, Buffalo had upstate’s highest index.
The 100 benchmark is based on a scale from zero to 200 that runs the gamut of negative to positive responses about the economy. The index of 100 represents a stable economic point where positive and negative responses are balanced.
The Conference Board earlier this week released its CEO confidence survey. It showed moods among the nation’s business leaders have dropped to their lowest levels in seven years.
The New York nonprofit business research organization said CEO confidence in the fourth quarter dropped to 39 — the first time the index slipped below 40 since 2000, when it was 31. A reading of 50 represents a positive economic outlook.
The release of SRI’s CEO survey came on a day when the onset of a national recession appeared to be increasingly likely. To prevent the nation’s first recession since 2001, the Bush administration floated economic stimulus plans possibly consisting of short-term tax breaks.
The Dow Jones industrial Average on Thursday tumbled 306 points on news of slower manufacturing and new home construction activity in December.
Levy said he sees a “silver lining” in that 63 percent of CEOs said they plan to invest in fixed assets in 2008. Only 27 percent of executives had no plans for capital projects.
“These people are here to stay,” said Levy.
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