ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, January 5, 1997 TAG: 9701070018
SECTION: BUSINESS PAGE: 1 EDITION: METRO
TYPE: ECONOMIC FORECAST
SOURCE: JOHN LEVIN BUSINESS EDITOR
In 1997, the region's companies:
* Expect a healthy, on average 10 percent, increase in sales and revenues, about three times the anticipated rate of inflation.
*Will hire three times the number workers they may have to lay off.
* Expect it will be a better business year than 1996, according to 68 percent of the companies polled, atop 61 percent that also reported last year was better than the previous three years.
"In the aggregate, the numbers suggest businesses are pretty optimistic," said Harry Wilson, an associate professor at Roanoke College and director of its Center for Community Research.
Wilson's center compiled the latest results of a poll of Roanoke region businesses. The survey has been conducted annually for more than 20 years by The Roanoke Times.
Absent from both statistical results and answers to open-ended questions are concerns that in recent years have added a degree of caution to the optimism that a new year generally brings to both companies and individuals.
"The loss of Dominion Bank jobs and the shake-up at Norfolk Southern Corp. influenced responses in the past," Wilson said. "Maybe people are optimistic now because they don't see anything like that on the horizon."
Wilson's single caveat to a generally robust outlook deals with the labor supply.
"As always, it appears labor is relatively cheap here, but it doesn't appear to be plentiful" based on the companies' replies, he said. "My assessment of the area is that it is not difficult to find a job in this area but it is difficult to find a really good job for white-collar folks.
"Nobody says they're preparing for a downturn or a recession," Wilson said.
Here's a sample of the companies' responses:
Factors that influenced last year's business and regional economy:
"Stable economy and low interest rates."
"Shortage of office and factory help and rising costs of raw materials,"
"As a new financial services company, we benefited greatly from the stable interest rate environment and relatively good demand for credit products."
"Improved consumer demand at retail, lower raw material costs, better climate in licensed apparel business."
Factors that will influence business and the regional economy in 1997:
"Availability of an adequate work force."
"Corporate mergers, moves, acquisitions. Increasingly it seems decisions that affect our area are being made elsewhere."
"Improved economic development which has resulted in more business, which equals more jobs."
"Local companies were able to compete in quality and cost."
"Lower raw material costs will have a significant positive impact on our business in 1997, more so than in 1996."
"Product redesign - significantly increased utilization of technology and re-engineered workflow are the major 1997 factors."
Plans for major expansion and capital spending in 1997:
Several companies indicated they had completed expansions during 1996 that are expected to have positive impacts on their business this year. One company said it plans to enlarge its warehouse space by a third, two others will increase production and improve productivity, one plans to add a new product line and two expect to open new markets.
One company plans to shrink one division and expand another with a net small increase in sales.
Five companies reported no expansion plans.
The reasons for their outlooks for 1997's business:
"I am encouraged with the trend toward bringing new light industry and technology-based firms to the area. My main concern in the past - and continues today - has been one rush to relocate low-wage, dead-end distribution and bank processing jobs in the region to replace white-collar/managerial job losses which have occurred due to mergers and downsizing."
"If we can provide companies with a pool of good workers we see this area growing during 1997 and beyond. Growth will be slow due to a shortage of qualified help. The loss of white-collar employment in the area will slow retail growth."
"The Western Virginia economy continues to grow at a steady rate and the rate of business growth reflects that. However, the fact corporate decisions increasingly are made outside the area does not hold well for a company like ours that depends on upper management for our livelihood."
"The news of new business locating in this region keeps us enthusiastic about the overall continued growth; in the housing market this growth is critical."
"Overall, Western Virginia has an excellent economic outlook. Costs to do business compare very favorably with the rest of the country. Taxes are low, labor is good quality - some unskilled labor shortages are being seen in Roanoke area."
"Stable but undynamic."
"Less than 10 percent of our revenue is generated locally. Western Virginia's economy affects us in our ability to attract employees here and to retain them. We have the potential to attract large and good new industries and companies but seem to lack consistent, cohesive regional economic development approach."
"The New Century Council is helping us focus on regional issues rather than petty differences."
"Western Virginia has all the proper ingredients in place to stimulate continued growth in '97 and beyond. Most of all it comes down to good people, working in a safe, healthy environment."
"On a scale of 1 to 10, I am at 6. The area will do fairly well to create low wage ($9 to $10 an hour) jobs but without a major hub airport, how can we attract corporate headquarters? People will continue to move here because of quality and we may be able to attract `smart' people who will start new business - somewhere. Outlook is positive, but I am concerned about the loss of business leaders."
"Biggest clouds could be continuing change in the medical community due to competition, Norfolk Southern change due to CSX-Conrail merger."
"I think our region is reaching a new age of cooperation. I am particularly encouraged with our ties to Virginia Tech."
"Western Virginia's overall economy is moving up, but very slowly. Many people cannot afford good housing. We need jobs in the middle pay scale - $8 per hour and up. My outlook says wages will stay stagnant because of right-to-work laws. Removal of right-to-work laws would do more than anything to help the economy grow."
And, finally, consider this formula from one executive to explain his company's success in 1996: "Maintained our focus; worked hard; excellent management - management ain't brain surgery!"
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