Fewer businesses in Northeast Wisconsin reported higher profits in 2013, but many saw stability in other key economic indicators over 2012, according to a report released by First Business Bank at the New North Summit on Dec. 6.
About 39 percent of businesses reported increased profitability last year, compared to about 54 percent a year ago. The First Business Economic Survey of regional businesses also found that 41 percent reported decreased profitability in 2013, compared with about 31 percent in 2012.
“While this sounds like bad news, it’s really just a leveling-off in the recent upswing in the Northeast,” says Dennis Winters, chief of the Wisconsin Department of Workforce Development’s Office of Economic Advisors, who presented a summary of the results. “We have seen steady growth over the last several years; we are still adjusting to the rate of that growth.”
The number one reason businesses chose for the low performance in 2013 was “Domestic sales shortfall,” a top contributor to low performance since 2009.
This was the sixth annual First Business Economic Survey of Northeast Wisconsin, sponsored by First Business Bank and conducted by the A.C. Nielsen Center for Marketing Research at the University of Wisconsin-Madison School of Business.
Highlights of the survey:
» A smaller percent of respondents said they exceeded expectations in 2013, 20 percent compared to about 28 percent in 2012. Consistent with last year, about four in 10 met their expectations for the year.
» The number of employees remained fairly consistent in 2013. More than 60 percent of businesses reported unchanged employee numbers. Those reporting hiring more employees were 23 percent in 2013, down from 36 percent in 2012.
» Wages were flat. The proportion of businesses reporting unchanged wages was 37 percent, compared to about 28 percent in 2012. In 2013, 62 percent of manufacturers reported increasing wages, fewer than in 2012.
» Sales were down. A higher proportion of businesses, 40 percent, reported decreased sales revenue, compared to 28 percent last year.
Mickey Noone, president of First Business Bank-Northeast, says it’s encouraging to note that 77 percent of firms expect better performance in 2014, projecting an overall positive outlook.
“Despite lower numbers in many economic indicators this year, the New North continues to be optimistic. They are planning for the coming year and are charging forward,” Noone says.
Business leaders who participated in a panel discussion during a breakout session at the New North Summit said they were not surprised by the results.
“We’re not seeing momentum,” said Ben Griggs, president and CEO at Aarowcast, a Shawano foundry that produces large castings for national and international clients. “We’ve reduced people and held wages.” Griggs said 2012 was the “best year ever” for his company, but the federal government shutdown substantially curbed sales at Aarowcast, which had been doing projects for the military.
Others on the panel, Darwin Copeman, CEO of Jewelers Mutual in Neenah and Craig Dickman, CEO of Breakthrough Fuel in Green Bay, said their own businesses were doing better than the results of the survey indicated. Each has seen increased sales and expects to continue hiring to accommodate growth.
In 2013, businesses were asked to rank the top three criteria that attributed to their improved performance. The majority said improved internal efficiencies (53 percent), increased marketing efforts (53 percent) and increased sales efforts (48 percent) were the main factors.
First Business Bank conducted the economic survey of Northeast Wisconsin in September and October. The survey was based on the responses of 382 businesses across the New North region.
ON THE WEB
See the full survey results at www.firstbusiness.com/surveyresults