Michael Kasprzyk’s small radiant tubing company in Holland is expanding, but the president of Inex Inc. still feels guarded about where the economy is headed this year.
Kasprzyk’s company is doubling the size of its nine-person Holland facility to about 6,500 square feet after the company brought work that previously had been done by a contractor in-house. Kasprzyk figures the company, which is working seven days a week and has run out of space, will hire a couple of new employees once the expansion is finished.
But that doesn’t mean Kasprzyk is brimming with optimism about the Buffalo Niagara economy.
To the contrary, he frets about the high taxes and the lack of tax breaks and other incentives from the region’s economic development agencies, which Kasprzyk feels are focused too much on big companies and not enough on small firms like his.
And with a customer base that spans much of the globe, the turbulence in the world’s markets – from slowing growth in China and a strong dollar that makes exports more expensive, to plunging oil prices – Kasprzyk is feeling uncertain.
He’s not alone. A new poll of high-ranking business officials found that executives are much less optimistic than they were a year ago, when a wave of optimism swept across the Buffalo Niagara region as the Buffalo Billion investment program began to move from the idea phase to the construction phase, while the state and national economy slowly gained strength.
But despite the strongest job growth in the region since 1999, last year didn’t live up to the executives’ lofty expectations. Sales were lower than they predicted, and so were profits.
This year, the executives are tempering their outlook. They mostly expect flat-to-moderate sales and profit growth. They’re still interested in making investments in their businesses, and a third expect to hire more workers this year, according to the survey of 148 executives in the Buffalo Niagara region by the Siena Research Institute.
“We certainly have taken a step backward, not a step forward,” said Donald Levy, the director of the Siena institute, which conducted its survey from late October through December.
The poll puts confidence levels back at where they were in 2010 and 2011, when the region was in the midst of the recovery from the Great Recession.
Now, with the stock market in a period of heightened volatility and global growth slowing, the uncertainty is growing.
“I sense a general slowdown,” said Michael Deakin, the president of two North Tonawanda companies, specialty metals finishing firm Val-Kro and abrasives manufacturer Pellets LLC.
Last year was the first in 15 years that sales at Deakins’ companies didn’t increase. He’s expecting this year to be soft, as well.
“The strength of the dollar has hurt us,” he said, while the plunge in energy prices has led to lower sales to customers in the oil and natural gas industry.
The decline in optimism wasn’t unique to Buffalo. The drop here mirrored rising levels of pessimism across upstate.
“That’s not surprising given what you see going on around the United States and the world,” said Ken Pokansky, vice president of the Business Council of New York State, which sponsored the poll.
In addition to the murkier economic outlook, Levy said the poll shows that executives also are concerned about how issues – such as the proposed increase in the minimum wage to $15, taxes and higher health care costs – could affect their businesses in the future.
“They’re saying ‘I just don’t feel as good as I did a year ago. The year I had didn’t live up to my expectations, and I have lessened expectations for the year ahead,’ ” Levy said.
Still, the survey shows that local executives are more than twice as optimistic than they were during the depths of the recession in 2008 – and 14 percent more upbeat than they were three years ago.
Among the survey’s findings:
• Slightly more than a quarter (28 percent) of the local executives surveyed consider themselves to be optimists, which is in line with the 29 percent who fall into the optimist camp across upstate. While optimists now outnumber pessimists in the Buffalo Niagara region by about 17 percent, that’s a huge shift from a year ago, when optimists outnumbered pessimists by a 2-to-1 margin..
• The decline in optimism isn’t limited to the Buffalo Niagara region. Overall confidence levels locally dropped by 14 percent in 2015, which is about the same size of the decline across all of upstate.
• While separate polls by Siena researchers and Quinnipiac University have found that roughly three-in-five New Yorkers support raising the minimum wage to $15, it was staunchly opposed by the local executives, with 95 percent saying it was a bad idea. The opposition locally was even stronger than it was in other parts of upstate, where the higher minimum wage was opposed by 86 percent of the executives surveyed.
“You’re seeing really strong opposition, mostly among the small employers that would be most directly affected by it,” Pokansky said.