Capital Region business leaders are more positive about the economy and their ability to grow in 2014 than their peers across the state, but they have concerns about the lack of skills among today’s college graduates, burdensome industry regulations and the impact of the Affordable Care Act.
At the second State of the Region breakfast Tuesday, Siena Research Institute Director Don Levy told a crowd of more than 100 at the Century House in Latham that he had much more positive news to report here than anywhere else upstate. That’s because the Capital Region leads upstate in its optimism regarding the current and future business climate, according Siena’s seventh Upstate New York Business Leaders Survey.
“I’ve been to Buffalo, Rochester and Syracuse so far, and really the very best news in this survey is right here in the Capital Region,” he said.
Siena interviewed 651 CEOs across the four regions of upstate New York, including 157 in the Capital Region. Overall, CEOs said they expect revenue and profits to increase in 2014, with the most optimistic expectations in the Capital Region. About 25 percent of CEOs in upstate New York say their primary strategy to achieve profitability in 2014 will be to cut costs. Just 15 percent of CEOs in the Capital Region said the same.
“It’s very difficult, we’ve found over the years, to cut your way to success,” said Levy. “In the Capital Region, not only do CEOs think things are getting better, but the rate at which they say they anticipate increased revenues and profits, and their likelihood to invest in fixed assets, is considerably higher.”
Consumer confidence is lower than CEO confidence in the Capital Region, Levy said.
“So don’t take it personally if your cash register doesn’t ring as much as you would like,” he said.
Conversely, a higher percentage of the public feels that Gov. Andrew Cuomo and the state Legislature are doing a good job creating a business-friendly climate than local CEOs do. Still, both percentages are low — 9 percent of the public and 8 percent of CEOs feel that way.
Local CEOs hope the government will find spending cuts, address income tax reform and provide increased business development incentives this year, according to the survey.
During a question-and-answer session with presidents of the Capital Region’s four largest chambers of commerce, it became clear that other concerns abound even as optimism grows. In particular, chamber presidents said they hear regularly from members that recent college graduates applying for jobs lack both technical and basic writing skills.
“Our members have really reached out to us to ask for a lot more staff training,” said Rensselaer County Regional Chamber of Commerce President Linda Hillman. “They’re finding that they’re not coming out of college with the writing skills, the presentation skills. They don’t have skills in [Microsoft] Excel — some of these very basic things.”
The region’s community colleges have taken the lead in addressing the skills gap, said Saratoga County Chamber of Commerce President Todd Shimkus. But there’s more work to be done.
“The writing is terrible,” he said. “If there is one message we can put out there, it’s that writing is so important. I don’t care if you can Tweet. You’ve got to be able to write. I think that’s one of those skills that has somehow been lost amidst today’s technology.”
Excessive regulations are also getting in the way of business growth, said Chamber of Schenectady County President Chuck Steiner.
The Scaffold Law is a perfect example, he said. The law holds contractors and property owners 100 percent liable in lawsuits arising from elevation-related injuries, such as a worker falling off scaffolding at a construction site. In some cases, workers may not have followed safety procedures or worn proper equipment, or may even have been working under the influence of drugs or alcohol, Steiner said. New York is the only state to still hold employers 100 percent liable and the result is huge payouts and high insurance premiums.
“This is costing us business,” he said. “But look at any business in New York state and you will find regulations for that sector.”
Much of the lingering pessimism among local business leaders is no longer about the recession, said Mark Eagan, president of the Albany-Colonie Regional Chamber. These days, it’s about Obamacare, he said.
“I think there’s a lot of businesses right now that are poised for growth, but I think there always seems to be that one thing holding them back,” he said. “And I think that thing is the uncertainty of the impact over the Affordable Care Act. They are anticipating increased costs. We’re trying to guide them, but I wish we had a solution.”
The chamber leaders also discussed things they’re optimistic about: the growing hotel and marketing sectors in Saratoga County, the expansion of tech firms in Rensselaer County, the housing upswing across the entire region, strong urban cores in each of the region’s downtowns and the diversity of jobs in the Capital Region.
“We have some problems,” said Levy. “We have to work on consumer sentiment. We need to partner with higher ed and inform our job applicants what our expectations are for them. But right now in the Capital Region, we see an increasingly bright future. We see that cloudiness in our crystal ball beginning to open up a little bit.”