2015 america's economic engine study: minneapolis/st. paul results
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7/25/2019 2015 America's Economic Engine Study: Minneapolis/St. Paul results
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2015Americas Economic Engine StudyMinneapolis/St. Paul Results
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Background & Purpose
Deloittes Economic Engine Survey
Since 2011, Deloitte has undertaken a national research program with key executives from mid-market companies.
This ongoing, quantitative research has tracked their recovery from the financial crisis to the present time across anarray of insightful measures.
The Economic Engine research assesses:! Mid-market companies key business metrics,
! Mid-market executives outlook for the success of their companies as well as the strength of the U.S., and!
The specific strategies and tactics they are pursuing.
Fall 2015 Wave
For its latest Fall 2015 wave, Deloitte enlisted The Business Journals to conduct a parallel study among its mid-market subscribers in 11 markets across the country.
The purpose of this supplemental research was to provide Deloitte with individual market perspectives, and to
determine if and how the attitudes and behaviors in these markets might diverge from the overall national view.
The Business Journals individual market supplemental surveys were conducted from October 19 to November 23,2015. This timing coincided with the field dates of Deloittes national study that was fielded from October 22 to
November 4, 2015.
!
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Research Method
1,989 Interviews with The Business Journals subscribers across 11 markets
Boston (196), Washington, D.C. (174), Minneapolis/St. Paul (322), Atlanta (223), Houston (180),
Dallas (156), Charlotte (138), Seattle (189), San Francisco (154), San Jose/Silicon Valley (109),Philadelphia (148)
Manager level+ of companies with $35M > under $1B in revenue
Email invitation from market Publisher to participate
Online Survey: 10-15 minutes in length
Incentive: Drawing for a $250 gift card
Fielded October 19 November 23, 2015
Significance Testing: +/- 8% points vs. Deloitte Fall 2015 = Significant difference at the 90% confidence level or higher
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$
Deloittes Fall 2015 national economic engine study found that mid-market executiveshave adopted an air of caution, a slight tapping of the brakes after several years of
strong forward momentum.
There is less strength of confidence in the U.S. economy, lower GDP growth rate expectations,and tempered annual growth rate projections, with fewer expecting meteoric, fast growth of 25%or higher.
The one area of investment that continues to hold steady is hiring. The majority (56%) grewtheir workforces over the past year, and 61% plan for hiring growth to continue in 2016.
To download a copy of the full Deloitte report, Americas economic engine: Tapping thebrakes, please click on the following link: %%%&'()*+,(&-*./01/'2(1/3455+6237(894:(1
(active link will be provided in separate email)
National Overview
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;
EXECUTIVE SUMMARY
CONFIDENCE | GROWTH OUTLOOKU.S. Economy, Company Success
BUSINESS GROWTH STRATEGIES (and Obstacles)
TALENT | TECHNOLOGY | TRUST | DIVERSITY
Minneapolis/St. Paul Economic Engine Topics
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Executive Summary
Deloittes Fall 2015 national economic engine study found that mid-market executives have adoptedan air of caution, a slight tapping of the brakes after several years of strong forward momentum.There is less strength of confidence in the U.S. economy, lower GDP growth rate expectations, and more
conservative annual growth rate projections, with fewer expecting meteoric, fast growth of 25% or higher.The one area of investment that continues to hold steady is hiring. The majority (56%) grew their work
forces over the past year, and 61% plan for that hiring growth to continue in 2016.
The local market findings are consistent with this cautionary, macro view, and in Minneapolis/St.Pauls case are even more pessimistic. Minneapolis/St. Paul mid-market executives are significantly less
confident that the national average that the U.S. economy will improve, and project the GDP rate to average+1.95%, versus the national estimate of +2.7% (Note: Only Houston gave the GDP a lower rate at +1.70%).Smaller businesses in Minneapolis/St. Paul have a similar low level of confidence in the economy as mid-
size businesses.
Similar to the national findings, Minneapolis/St. Paul mid-market executives confidence in thesuccess of their own companies is markedly more optimistic than their view of the U.S. economy.
However,their optimism is tempered and they estimate their revenue growth to be +8.0%, a levelsubstantially lower than the +13.3% national average. Despite this lower projection, they did increase the
size of their workforces in 2015, and plan to continue this expansion in 2016.
The leading strategy for mid-market business growth in Minneapolis/St. Paul is to continue drivingorganic growth in existing markets, followed by establishing strategic alliances and mergers, and
developing new products and services. These are the lead national strategies as well.
Many (62%) agree that findingemployees with appropriate skills
& education is difficult.
3.3%
Unemployment rate
20.8%Women & Minorities in ExecutiveLeadership Positions(vs. 19.2% national average
Charlotte
Minneapolis/St. Paul
61%Planning workforce growth(vs. 61% national average)
#1
Growing existing marketsorganically
49%
Strategic alliances/collaborative projects
13
Mergers & acquisitions 12
Leading Planned Tech Investments
Data Analytics/Business
Intelligence
#1
#2
Automation of businessprocesses
US Economic Growth +1.95% (vs.+2.72 national average)
+8.0%expected revenue growth
(vs. +13.3% national average)
Primary Growth Strategies Obstacles to Growth
Economic uncertainty (38%)
Skills shortage (31%)
Weak market demand (28%)
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CONFIDENCE | OUTLOOK
2015
?
U.S. EconomyBusiness Success
Americas Economic Engine StudyMinneapolis/St. Paul Results
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15% 14% 11%
41%38%
25%
32% 36%
31%
11% 10%
24%
1% 2%10%
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
Level of Confidence U.S. Economy Will Improve
@A
Extremely Confident
Very Confident
Confident
Somewhat Confident
Not Confident
What is your level of confidence that the U.S. economy will continue to improve over the next 24 months?
Less than half of mid-market executives in Minneapolis/St. Paul (44%) are confident that the U.S.economy will improve. Their confidence is significantly below the national level.
44%
65%
48%
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At what pace do you expect the U.S. economy to grow over the next 12 months?
0% 1% 1%4% 3% 4%
44%
35% 29%
46%
48%
34%
6%13%
32%
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
Grow Above Trend orRobustly
(More than 3.5%)
Grow Moderately (2% to 3.5%)
Grow Slightly (Less than 2%,but more than 0%)
Show No Growth (0%)Negative Growth
Expected Economic Growth in the U.S.
Half (52%) of mid-market executives in Minneapolis/St. Paul are expecting moderate to robust
growth for the U.S. economy, significantly lower than the national average. Only Minneapolis/St.Paul and Houston executives project that the GDP will fall below 2% on average.
52%
66%
@@
61%
+1.95%Average: +2.72%+2.28%
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Level of Confidence Success of Company
@!
3% 3% 3%
16% 17%11%
43% 40%
33%
26% 31%
36%
12% 9%17%
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
Extremely Confident
Very Confident
Confident
Somewhat Confident
Not Confident
What is your level of confidence in the success of your company (based on revenue, profitability, and growth) over the next 24 months?
By contrast, Minneapolis/St. Paul mid-market executives are quite confident that their companies
will be successful, matching the overall level found among mid-market executives nationwide (81%vs. 86%). Nonetheless, their top two box intensity is not as great (38% vs. 53%).
81%86%
80%
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What would you estimate your business revenue growth to be over the next 12 months?
1% 1%4%
17%
40%
33%
1% 3%3%4%
7%
15%
35%
31%
2% 3%
15%
8%6%
14%
21%
27%
6%
3%
31% orHigher
21%-30% 16%-20% 11%-15% 6%-10% 0-5% Negative No response
Minneapolis/St. Paul 11 Market Average Deloitte Fall 20152
Estimated Revenue Growth Over Next 12 Months
Nearly all mid-market executives (96%) in Minneapolis/St. Paul are expecting revenue growth, averaging+8.0%. Businesses nationwide are more bullish,expecting revenue increases of +13.3%.
Minneapolis
/St. Paul
11 Market
Average
Deloitte
Fall 2015
Any Growth 96% 95% 91%
Average Growth Rate 8.0% 9.4% 13.3%
@#
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The level of uncertainty in terms of factors that drive future business prospects (e.g., taxes, regulations, credit availability and the economic outlook) is!
1%
9%
45%
36%
8%
0%
7%
56%
30%
7%
0%
7%
60%
28%
5%
Much lower
Lower
About the same
Higher
Much higher
Minneapolis/St. Paul
11 Market Average
Deloitte Fall 2015
Level of Uncertainty re: Factors Driving Future BusinessProspects
The majority of mid-market Minneapolis/St. Paul executives (60%) find their level of uncertaintywith factors that could impact their businesses unchanged versus a year ago. By contrast,business owners nationwide have a higher degree of increasing uncertainty.
@$
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3% 4%
16%22%
43%38%
26% 25%
12% 11%
$35M-$1B Under $35M
15%22%
41%36%
32% 29%
11% 10%
1% 3%
$35M-$1B Under $35M
Level of Confidence U.S. Economic Improvement &Company Success Among Mid-Size & Smaller Companies
@;
Extremely Confident
Very Confident
Confident
Somewhat Confident
Not Confident
What is your level of confidence that the U.S. economy will continue to improve over the next 24 months?
NOTE: A 6%-7% difference between mid-size and smaller companies is statistically significant at the 90% confidence level or higher
Minneapolis/St. Pauls mid-market and smaller business executives show the same confidence
level in the improvement of the U.S. economy. In terms of the success of their own companies,mid-size businesses are slightly more optimistic.
44% 42%
81%74%
Confidence in Improvement ofU.S. Economy
Confidence in Success of OwnCompany
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BUSINESS GROWTH
STRATEGIES
2015
@
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What is your companys main obstacles to growth? (Please choose up to three)
10%
15%
27%
34%
27%
32%
29%
18%
40%
6%
11%
10%
14%
18%
20%
24%
31%
35%
5%
6%
9%
18%
19%
21%
28%
31%
38%
Availability and/or cost of credit
Budget cuts by government (federal, state,municipal)
Cost of raw materials & other input costs(including energy)
Health care costs
Cost of keeping up with technologicaladvances
Increased regulatory compliance
Weak market demand
Skills shortage
Uncertain economic outlook
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
Obstacles to Company Growth
The leading obstacle to future growth for Minneapolis/St. Paul executives is economic
uncertainty, followed by skill shortages and weak market demand. Only four markets vieweconomic uncertainty so strongly as a barrier, the others are Washington, D.C., Atlanta andHouston.
@?
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Obstacles to Company Growth Cross-Market Comparison
!A
Deloitte
Fall
2015
Boston Phila-
delphia
Wash,
DC
Atlanta Char-
lotte
Dallas Houston Minn/
St Paul
Seattle San
Fran
Silicon
Valley
Uncertain economic
outlook1 1 1 1 1 2 2 1 1 2 2 3
Healthcare costs 2 7 5 7 5 6 4 5 6 8 7 7Increased regulatory
compliance3 4 4 5 4 5 6 4 4 2 6 2
Weak market demand 4 4 2 3 3 3 3 2 3 4 4 5
Cost of raw materials 5 9 7 7 8 8 7 7 7 6 4 5
Cost keeping up tech
advances5 2 6 6 6 4 5 6 5 5 3 4
Skills shortage
7 3 3 4 2 1 1 3 2 11 1
Budget cuts by
government8 6 7 2 7 7 8 9 8 7 9 8
Availability/cost of credit 9 8 9 9 9 9 9 8 9 9 8 9
Rank Order of Obstacles to Company Growth
What is your companys main obstacles to growth? (Please choose up to three)
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Talent | Technology |
Trust | Diversity
2015
!@
Americas Economic Engine StudyMinneapolis/St. Paul Results
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It is difficult for us to find new employees with the skills and education tomeet the needs of our business
Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needsof our business.
17%
14%
12%
47%
46%
50%
21%
19%
20%
14%
19%
15%
2%
2%
3%
Deloitte Fall 2015
11 Market Average
Minneapolis/St. PaulStrongly agree
Agree
Neither agree notdisagree
Disagree
Strongly disagree
64%
62%
Talent Recruitment
Finding skilled talent is an issue in Minneapolis/St. Paul as it is across the U.S. The majority ofMinneapolis/St. Paul mid-market executives (62%) agree that it is difficult to find educated andskilled employees.
!!
60%
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Talent Recruitment & Unemployment Rates Cross-Market Comparison
!#
64% 62%59%
55%61% 60% 58%
52%
62%58%
67% 67%
5.1%
4.0%
5.3%
4.3%
5.5% 5.3%
3.8%
4.5%
3.3%
4.3%3.9% 3.8%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Agree - Difficult to Find Skilled Employees Unemployment Rate
Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needsof our business.
September 2015 Unemployment Rate by MSA, Bureau of Labor Statistics; National rate = 5.1% (9/15)
The skills issue does not appear strongly correlated with unemployment rates, e.g., Charlotte and
Minneapolis/St. Paul both cite similar levels of skills shortage, but have dramatically differentunemployment rates.
Skills Shortage and Unemployment Rates
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It is difficult for us to find new employees with the skills and education tomeet the needs of our business
Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needsof our business.
NOTE: A 6%-7% difference between mid-size and smaller companies is statistically significant at the 90% confidence level or higher
16%
12%
39%
50%
29%
20%
15%
15%
1%
3%
Under $35M
$35M-$1BStrongly agree
Agree
Neither agree not disagree
Disagree
Strongly disagree
62%
Talent Recruitment Among Mid-Sized and Smaller Companies
!$
55%
Mid-size business executives in Minneapolis/St. Paul experience the skills shortage to a higherdegree than the level found among smaller businesses with under $35M in revenues.
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Change in Size of Full-time Domestic Workforce: Last 12 Months
!;
9%
22%
25%
30%
8%
4%
2%
12%
23%
26%
19%
12%
6%
2%
8%
20%
34%
19%
13%
4%
2%
More than 10% bigger
Between 5% & 10% bigger
Less than 5% bigger
No change
Less than 5% smaller
Between 5% & 10% smaller
More than 10% smaller
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
How has the size of your full-time domestic workforce changed over the last 12 months? How do you expect it to change over the next 12 months?
Smaller
Bigger
Minneapolis/
St. Paul
11 Market
Average
Deloitte
Fall 2015
Smaller 19% 20% 14%
No change 19 19 30
Bigger 62 61 56
Talent difficulties or not, Minneapolis/St. Paul mid-sizedexecutives are growing their full-time workforces. Nearlytwo-thirds (62%) grew their staffs last year.
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Change in Size of Full-time Domestic Workforce: Next 12 Months
!
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Technology Investments in Next 12 Months
!=
10%
1%
9%
16%
24%
24%
45%
34%
45%
20%
4%
2%
3%
17%
25%
32%
36%
43%
16%
3%
3%
5%
17%
27%
31%
36%
48%
Don't know/Not sure
Other
Additive Manufacturing (3D)
Robotics
Enterprise application suites
CRM
Cloud computing/software as a service
Automation of business processes
Data analytics/Business intelligence
Minneapolis/St. Paul
11 Market Average
Deloitte Fall 2015
Which investment(s) in technology is your company most likely to make in the next 12 months? Please choose up to three.
The leading planned technology investments in Minneapolis/St. Paul are in data analytics/business intelligence, process automation and cloud computing.
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Technology Investments in Next 12 Months Cross-Market Comparison
Deloitte
Fall
2015
Boston Phila-
delphia
Wash,
DC
Atlanta Char-
lotte
Dallas Houston Minn/
St Paul
Seattle San
Fran
San Jose/
Silicon
ValleyCloud computing/
software as a service1 3 3 4 3 2 3 3 3 2 4 1
Data analytics/Business
intelligence1 1 1 1 1 1 1 1 1 1 2 2
Automation of business
processes3 2 2 2 3 3 2 2 2 3 1 2
Enterprise application
suites4 5 4 3 5 5 5 4 5 4 5 4
CRM 4 3 5 5 2 4 4 5 4 5 3 5
Robotics 6 6 6 6 6 6 6 6 6 7 7 6
Additive manufacturing
(3D)7 6 7 7 7 7 7 6 7 6 6 7
!>
Which investment(s) in technology is your company most likely to make in the next 12 months? Please choose up to three.
Rank Order of Planned Technology Investments Next 12 Months
Data analytics/business intelligence is the leading technology investment across most markets, followed
by the automation of business processes. Minneapolis/St. Paul was in line with this popular plan forfuture technology investments.
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12%
2%
1%
30%
18%
18%
37%
55%
60%
17%
22%
18%
3%
3%
3%
Deloitte Fall 2015
11 Market Average
Minneapolis/St. Paul
Substantially more
Slightly more
Same
Slightly less
Significantly less
Level of Trust in Business vs. 12 Months Ago
19%
42%
One-fifth (19%) of Minneapolis/St. Paul business leaders believe that the publics trust inbusinesses has increased over the past 12 months. The large difference versus the nationalfindings may be due to the longer time frame that the national study incorporated (24 months).
!?
20%
Among the general public, how would you define the level of trust in business (in general) compared to 12 months ago?NOTE: The national study used a 24 month time frame in their question.
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Executive Leadership Positions Held by Women & Minorities
#AWhat percentage of your companys executive leadership positions (C-suite or senior management) are held by women and minorities?
3%
19%
18%
23%
19%
13%
5%
10%
22%
17%
16%
13%
15%
7%
10%
21%
15%
16%
16%
16%
6%
Don't Know/Not Sure
Under 5%
5%-10%
11%-20%
21%-30%
31%-50%
More than 50%
Minneapolis/St. Paul
11 Market Average
Deloitte Fall 2015
Across the U.S., roughly 19% of executiveleadership positions in mid-sized companies areheld by women and minorities. Minneapolis/St.Pauls average level is slightly higher at 20.8%.
Minneapolis/
St. Paul
11 Market
Average
Deloitte
Fall 2015
Average % ofwomen & minoritiesin executiveleadership positions
20.8% 19.3% 19.2%
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How Companies Foster Diversity and Inclusion
#@
40%
35%
13% 12%
41%
34%
13% 12%
42%
31%
21%
6%
Established programs in place Comply w/ regulatoryrequirements w/o program
Developing programs Dont Know/Not sure
Minneapolis/St. Paul 11 Market Average Deloitte Fall 2015
Please select the one response that most closely describes how your company fosters diversity and inclusion: We have demonstrated commitment, withestablished programs in place (e.g., leadership development, mentoring, targeted recruiting & retention); We are in the process of developing programs that focus
on building a diverse & inclusive culture & workforce; We comply with regulatory requirements, but dont have dedicated programs at this time.
Four in ten Minneapolis/St. Paul mid-market executives have programs in place that fosterdiversity and inclusion in their companies; another 13% have programs in development.
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