CEO President Robert Simpson's 2015 Economic Forecast Breakfast Remarks (transcript)
Posted on December 1, 2015
“Think Big, Work Collaboratively”
Remarks by Robert M. Simpson
CenterState Corporation for Economic Opportunity
January 15, 2015
Thank you to the 230 CenterState CEO Members and business leaders who participated in our survey and focus groups. You are the individuals with boots on the ground and it is your knowledge and insight that helps us put these macro-economic trends in to a context that is both real and understandable.
So let’s take what is real, for a moment, and focus on that, before we try to make further sense off it all.
71% of our forecasters are projecting overall sales and revenue growth in 2015 – the highest level of business confidence we have seen from our members since before the recession. A year ago at this time, 68% of our survey respondents forecasted revenue growth in 2014 and 63% of our survey participants reported that they did in fact grow last year. That number was up 5% from 2013, and continues a slow and steady progression over the last five years in the number of businesses reporting improving economic conditions.
Last year, 49% of you expected corporate profits to increase, and this year’s projection is 54%. In 2014, only 39% of you expected to be hiring in 2014 with 53% expecting no change in hiring.
But for 2015, that projection is much improved, with a clear majority of you – 51% -- projecting job growth this year while the number of you projecting job losses has shrunk to 7%, the lowest that measure has been in years.
This is what our forecasters predicted for their own businesses through their own eyes. But we also asked them to look beyond their immediate sphere of influence and give us their perception of the regional economy as a whole.
It was comforting to hear an equal dose of optimism here – a sense that our region is growing steadily. And while many feel, rightfully so, that growth isn’t happening quickly enough, they are seeing signs of progress nonetheless. They cited opportunities presented by our region’s thriving entrepreneurial culture; investments that are creating a newly resurgent downtown; emerging trends and new offerings that are breathing life in to traditional industries such as agriculture and tourism; as well as hope that recent investments in new industries like unmanned aerial systems will provide a much needed boost to our economy.
These anecdotes and insights are supported, in part, by some of the most obvious economic indicators available for our region. Our unemployment rate declined to a six-year low of 6.2% in November - down from 7.1% one year ago.
As you heard from Becca, Manpower expects employers in the Syracuse Metro-area to hire at a steady pace in the first quarter of 2015, with a Net Employment Outlook of 6%.
And our manufacturing economy, long a bell-weather of our region’s economic performance, actually expanded by 300 jobs (+0.1%) over the last 6 months of 2014, serving as the first tangible example of the drum-beat I hear from many of our region’s manufacturers, particularly our small and mid-sized manufacturer’s, that conditions for American manufacturing are improving, that re-shoring is real, and that industrial downsizing may be less of a drag on our economy in 2015 than in recent years.
For those looking for further fuel for optimism in 2015, there is good news at the national level, as well. In a recent report shared by M&T Bank’s Economist Gary Keith, there are some clear indications that the U.S. economy is gaining momentum.
• This year, GDP growth is expected to average 3.0%--the strongest performance in a decade.
• On an annualized basis, real GDP growth has exceeded that 3.0% estimate in four of the past five quarters, something that we haven’t experienced at the national level since 2005.
• Corporate profits continue to reflect a similar trend, remaining at historically high levels and providing firms with the flexibility to respond quickly to rising customer demand.
• And, as we all know, as consumers buy more, employers invest more and hire more – creating more than 2.5 million private sector jobs last year alone, the highest number since 1999.
The economy is picking up. The outlook is positive, and improving. So where’s the champagne?
The fact is, our economic circumstance, and our perception of our economic circumstance, is relative. And there are, in fact, legitimate reasons for our region to feel like true prosperity still eludes us.
Private job growth in the region’s three major metropolitan areas – Syracuse, Utica-Rome, and Ithaca – lags well behind that of upstate peers Albany (1.0%) and Buffalo (0.8%).
On a year-ago basis, private sector employment in November was only 0.1% higher than in 2013, compared to a U.S. growth rate of 2.3%.
Of great concern to each and every one of our members looking to grow in this time of greater global economic prosperity - the regional workforce, the very foundation of our economic success, declined by 23,000 people over the past twelve months, more than half of our total workforce contraction since January 2007.
And perhaps most troubling, in the city of Syracuse, one third of the adult population, and a full half of those under 18, live in poverty.
So no wonder, then, that amidst the hope and optimism that we heard from participants across all industry sectors we also heard a steady refrain of caution and concern that was unusually consistent.
• Attracting and retaining skilled talent
• Managing benefits costs
• Navigating an increasingly complex local, state and national regulatory environment
• Political Gridlock
• And accessing capital
Yes, conditions are improving. Yes, the outlook for 2015 is a positive, forward-looking and improved picture from the year before. But for those in our community who don’t study the regional economy but who experience it – who feel it with every job application, paycheck, and difficult decision – there is neither the time, the money nor the inclination to celebrate.
It’s amazing what becoming a parent does for you. Whether it’s some dormant gene that activates the moment the doctor hands you your baby boy, or whether it is simply the humbling process of being forced to see the world’s through a child’s eyes, I find myself relearning all of these lessons that were once so common and familiar as to be routine.
A few short weeks ago, I exercised a bit of discretion, leaving work early one day to go to a holiday party at my son’s daycare. I remember the day vividly because it had started with a series of less than productive conversations with certain community partners about the Governor’s proposed Upstate Revitalization Fund – what some have colloquially come to call the “Syracuse Billion.”
The fact is, it’s not a Syracuse Billion at all, or a Rochester Billion, or a Utica Billion, but a proposal by the Governor to spend more than a billion and a half dollars of the state’s record surplus to support the economic revitalization of Upstate communities, similar to what the state has done successfully in Buffalo and Albany over the last many years.
It is the single largest investment I have ever heard proposed for places like Syracuse, and it is a major opportunity for our region, and for all of the Upstate economy that has lagged for so many years.
To be clear, this investment is not an entitlement. At this point, it is nothing more than a proposal by the Governor but it has gotten a lot of our attention. But what hasn’t received the same headlines is that this investment in the Upstate economy, if it passes legislative scrutiny, is being designed as a competition just like the Regional Economic Development Councils, to encourage and reward the best ideas.
The long and the short of it…we are being challenged:
• To develop robust, data-driven plans;
• To invest in new and existing industries that offer the greatest potential to attract private investment and create good-paying, sustainable jobs;
• To build our human capital and connect those in our economy who need jobs to the jobs we create;
• To build upon and leverage our region’s academic and research excellence;
• Yes, to invest in the infrastructure needed to grow a modern and lasting economy;
• But most importantly to develop shared priorities between our public and private sector and join hands to solve some of our own problems before we ask the state to invest along side us.
So I know what you are thinking. What does any of this have to do with a group of two year olds at a holiday party?
Picture it, all of the kids in my son’s daycare class, dressed in their holiday finery. There are hats and cookies and noisemakers – the actual kind that you blow in to, not just the kids themselves. And after cake and juice they line up for a little parade, and what do they do?
They take each other’s hands. One by one, Johnny, Lee, Emma, Carter, Eliza, Peyton, Ben and the rest of his class transform from 12 little people in to this large, amoeba-like caterpillar scurrying along on 24 tiny feet.
And why do they hold hands? It’s not because Emma and Ben are madly in love, but she does share her stickers with him. And it’s not because Johnny and Ben like to play with trucks together, because neither boy really likes to share their trucks with anyone. They do it so that, at the end of the parade, despite all of their individual pulling and tugging, they end up in the same place, together.
Together just works better, doesn’t it?
Together, our region’s public and private sector partners crafted the region’s Metropolitan Business Plan – the CenterState Agenda for Economic Opportunity – developed with the Brookings Institute and hundreds of regional stakeholders – giving us exactly the kind of data-driven framework we need to pursue this new opportunity before us.
“Together” gave us initiatives like NUAIR, where our region is pursuing a brand new market for unmanned aerial systems, attracting interest from hundreds of companies new to the region and supporting existing employers like SRC and Saab.
“Together” gave us Armory Square Ventures, the first new venture capital fund in Upstate New York in more than 15 years, where people and institutions right here in this region are putting their own money at risk to invest in the very best startups emerging from the innovation ecosystem we’ve recreated from whole cloth.
Together, business, labor and local governments are working on Consensus, the Commission on Local Government Modernization, which will release its Baseline Report tomorrow designed to help us develop solutions for a stronger, more sustainable system of service delivery and governance in Onondaga County.
Together, philanthropy, employers, and community benefit organizations in our neighborhoods are investing in Work Train, connecting the un- and under-employed in our community to the job opportunities our employers are creating and the career pathways needed to help-them advance.
“Together” has given us the Central New York International Business Alliance, that assisted more than 120 businesses last year to begin exporting or increase their exports through the development of export business plans, mentoring, and trade missions to China, Singapore, and the ASEAN nations.
And “Together” has allowed Central New York to secure more state investment through the Regional Economic Development Council process than any of the 10 regions around this state.
Listen…the financial issues and infrastructure challenges facing the City of Syracuse are real and difficult. Rising poverty and crime in our city and suburbs? Real and difficult. The future of Interstate 81? Real, and difficult. How to breathe life in to an Upstate economy that has spent the better part of the last 50 years on the short-end of the State’s priority list? Real. And difficult.
You all know me as someone who prides himself on partnerships. And you know that collaboration is one of the three core values upon which CenterState CEO was built. So forgive my occasional frustration when we fall back in to age-old patterns of trying to go it alone.
Difficult is the reason we need each other, even if we have different perspectives. Because we have a vested interest in ending up, together, in the same place -- in a region that supports a growing economy, good-paying jobs and a greater measure of community prosperity than we have today.
As a life-long Upstate New Yorker, I have a deep and abiding faith in this region and the people who call this place home. We are innovative. We are generous. We are impervious to cold. We have an amazing capability to design things with our heads and make them with our hands. We have had, still have, and I hope will always have a working-class sensibility and grit that pushes us forward even as outside forces pull against us.
This place has left a lasting impression on the world via the people we have raised, the products we have developed and the ideas that we have nurtured and launched in to our human consciousness.
Which is why my own personal economic forecast for 2015 is Confident. In our ability to make this year better than the last; in our ability to think big; and in our ability to hold hands and meet these challenges and opportunities head on.
So my challenge to you as we leave this morning, and walk outside to face the frozen dawn of 2015, is this. Be an active part of that conversation. Be one among many thinking creatively. And as you do, consider the key factors that influence economic growth and create true economic prosperity:
• Our Industry Sectors
• Innovation Assets
• Human Capital
• Infrastructure, and
• Our civic capacity and governance
We need and want the best of your thinking in each of these areas, and we want to encourage you to share your ideas by tweeting using the hashtag #ThinkBigCNY.
Please join us in making this year’s economic forecast an economic reality worth celebrating next year.
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