UP FRONT: All signs point north

Posted on Jan 1, 2015 :: Up Front
Sean P. Johnson
Posted by , Insight on Business Staff Writer

The bottom line is moving north for companies in Northeast Wisconsin.

At least that’s what the results from two separate economic surveys commissioned in the fourth quarter of 2014 show. The results of both the 2015 Manufacturing Vitality Index and the First Business Economic Survey — released during the Dec. 2 New North Summit — show many of the region’s companies hit a high note in 2014 and were planning to move up the scale even more this year.

Nearly 54 percent of businesses in Northeast Wisconsin reported increased profitability in 2014, according to the First Business Economic Survey. A record high 95 percent project they will have a better year in 2015.

Nearly 54 percent of businesses in Northeast Wisconsin reported increased profitability in 2014, according to the First Business Economic Survey. A record high 95 percent project they will have a better 2015.

“I knew the results would be positive, says Mickey Noone, president, First Business Bank–Northeast. “But it surprised me just how positive they were.”

Businesses in the region reported record highs for sales, profits, hiring and wages, Noone says, and most were expecting to do even better for 2015.

First Business Bank conducts its economic survey each year concentrating on three key regions in the state: Northeast Wisconsin, Madison and the greater Milwaukee area. The survey collects current year and next year’s predicted data regarding sales revenues, total operating costs, capital expenditures, profitability, number of employees, changes in wages and changes in pricing.

Highlights for Northeast Wisconsin include:
» A significantly higher percentage of businesses, 64 percent in 2014, reported increased sales revenue, compared to 51 percent in 2013.
» Northeast Wisconsin businesses reporting increased profitability rose to 54 percent in 2014 from 39 percent in 2013.
» Northeast Wisconsin businesses reporting new hires increased to 50 percent in 2014 from 23 percent in 2013.

As good as those findings are, it was the finding of business optimism heading into the new year that really stood out. The survey reported a record high 95 percent of businesses project better performance in 2015.

“They’re reporting further increases in sales, profits, hiring and wages. The outlook is strongly optimistic,” Noone says.

The optimistic view was also reflected in findings from the Manufacturing Vitality Index prepared by the NEW Manufacturing Alliance and presented during the afternoon session of the New North summit.

Based on a survey of Northeast Wisconsin taken each November of manufacturers with at least $3 million annual revenue and 25 or more employees, the Vitality Index found that businesses in Northeast Wisconsin are reporting record-level sales and profitability — trends expected to continue into 2015.

“Over the last five years of conducting the survey, we have never before seen such strong positive response from manufacturers in a variety of business indicators,” says Ann Franz, strategic partnerships manager at Northeast Wisconsin Technical College and director of the alliance. “It is critical that manufacturers work with education, economic development and workforce boards in communicating to the public the strength of manufacturing in the New North region and the great jobs available.”

Key findings include:
» 86 percent expect an increase in sales for 2015.
» 66 percent plan a plant modernization in the next 12 to 24 months, and 30 percent plan an expansion, up from 50 percent and 23 percent, respectively, a year ago.
» More than 40 percent plan to hire throughout each quarter in 2015 and 52 percent expect to hire in the first quarter.

The results, which reflect responses from 151 firms in the region, are the most optimistic the alliance has seen in the five years of conducting the study. That manufacturers feel bullish about the future signals positives for other industries as well, says Bill Bartnik, incoming chair for the alliance and director of manufacturing systems at Sargento, who presented the Vitality Index at the summit.

“Given the numbers expecting to expand or update their plant, it should be a pretty good year for the construction industry as well,” he says.