survey of chicago area business leaders - oracle...blackman kallick’s survey of chicago area...

Survey of Chicago Area Business Leaders

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Blackman Kallick Blackman Kallick Blackman Kallick Blackman Kallick Blackman Kallick BlackmanKallick.com

January Follow-up to October SurveyRelease Date: February 13, 2009

www.blackmankallick.com

© 2009 Blackman Kallick. No parts of this document can be disseminated without the prior approval of Blackman Kallick. 2

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Executive Summary

Blackman Kallick surveyed Chicago area business leaders immediately preceding the November

elections and immediately following the January inauguration of our 44th president.

We do not plan to add any interpretation to the January responses, since businesses and industries

are affected differently. However, our timing was purposeful. We believed it would reflect changes

in fiscal outlook based on economic developments and the changes in political leadership.

On the following page, we noted a few interesting observations when comparing the two surveys.

Below are a few reference points to contrast the timing of the two surveys.

Blackman Kallick’s Survey of Chicago Area Business Leaders

October 2008• President

– George W. Bush

• The $700 billion bank bailout was passed.

• The Dow dropped to 8026 on Oct. 27th

• Unemployment rate– U.S. - 6.5%

• Prime rate– Oct. 29th, 2008 - 4.0

• Exchange rate: EUR to USD (Interbank rate)– Time period: 10/26/08 - 11/01/08– Average (7 days) - 1.27

• U.S. retail gasoline price: Week of Oct. 27– Chicago - $2.95 gallon – U.S. - $2.71 gallon

• Federal Fund Rate– Time period: 10/27/08 - 10/31/08 – .22-.92

January 2009• President

– Barack H. Obama

• Bernard L. Madoff was charged with running the largest investor fraud schemeever executed by an individual.

• The Dow rose to 8224 on Jan. 21st

• Unemployment rate– U.S. - 7.6%

• Prime rate– Current - 3.25

• Exchange rate: EUR to USD (Interbank rate)– Time period: 1/21/09 - 1/28/09– Average (7 days) - 1.29

• U.S. retail gasoline price: Week of Jan. 19– Chicago - $2.05 gallon – U.S. - $1.89 gallon

• Federal Fund Rate– Time period: 1/21/09 - 1/28/09 – .19-.23


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Interesting Observations

When comparing the October survey responses to those of the January survey, we noticed

the following:

• The overall perception of Chicago’s business health has declined to almost match national

levels. While we were encouraged that the October survey respondents showed a strong

faith in the local economy, it is clear that the continued national recession has either caught

up to Chicago or dampened the optimism of our business leaders.

• One of the most noted and discussed results from the last survey was the majority of

respondents’ lack of worry about obtaining financing, especially given how the tightening of

financing was a front page issue in November and December. These results across the two

surveys have, for the most part, remained flat. (See page 12). It is also interesting to note that

66% of all January ‘09 survey respondents reported having the same or higher cash reserves

as they did in January '08.

• Reported three-month sales declines are significantly higher than they were in the October

survey. However, the respondents’ plans for layoffs and cash positions have not declined

accordingly. The chart on page 12 shows that while many companies have lower cash positions

when compared to last year at this time, approximately the same percentage are holding more

cash than they were 12 months ago.


“Good luck President Obama.”

– Actual verbatim comment from interview subject, banking/finance industry.


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Questions Overview

Part I: Survey BackgroundWhat position do you hold at your organization? ...................................................................... 5

How many employees does your company currently employ? ............................................ 6

What is the size, in revenue, of your company? .......................................................................... 6

Part II: Business PlansWhat changes, in sales, has your company experienced in the last three months? ........... 7

What changes in profitability do you expect to see in the next 12 months? .................... 8

What best describes your staffing plans for the next 12 months? ....................................... 9

By what percentage do you plan to change your work force? ............................................. 10

In the next 12 months, do you anticipate having a problem

obtaining new debt or other sources of capital? ........................................................................ 11

What is your current cash position compared to this period last year? ............................ 12

Part III: OutlookHow would you describe the U.S. economy today? .................................................................. 13

How would you describe the Chicago metropolitan area economy today? ................... 13

What condition do you think the overall U.S. economy

will be in 12 months from now? ....................................................................................................... 14

When do you think the U.S. economy will improve? ................................................................ 15

On a scale from 1-10, what is your current overall feeling

about the state of the Chicago economy? .................................................................................. 16



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What Position Do You Hold at Your Organization?


ResultsJanuary 2009

“With time, hard work, perseverance, and resourcefulness, I'm fairly optimistic that the economy will improve.”

– Actual verbatim comment from interview subject, not-for-profit industry.


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What is the Size, in Revenue, of Your Company?

How Many Employees Does Your Company Currently Employ?


Results

“Most industries will have to consolidate and reported unemployment will exceed 10% … it will take significant structural changes in most industries to generate real growth and new jobs. Buckle your seat belts!!”

– Actual verbatim comment from interview subject, marketing industry.

January 2009

January 2009


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What Changes, in Sales, Has Your Company Experienced in the Last Three Months?

What Changes, in Sales, Has Your Company Experienced in the Last Three Months?


October 2008

The number of companies reporting increased sales has halved while thosereporting a 10-30% decrease has doubled.

▲vs.▼

Results

“With massive lay-offs only having begun during the last three months there are likely equal or worse cuts still ahead of us. Customers in practically all industries are delaying purchases.”

– Actual verbatim comment from interview subject, manufacturing industry.

January 2009


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What Changes in Profitability Do You Expect to See in the Next 12 Months?

What Changes in Profitability Do You Expect to See in the Next 12 Months?


More respondents reported being “unsure” of what to expect. The greatestchange, however, is that more companies expecting growth have revised theirresponse from “greater than 10%” to “less than 10%”.

▲vs.▼

Results

“The most negative sign of economic prospects I’ve heard recently is that many banks face low or no DEMAND for credit from small businesses. This is a side of the collapse in financial markets that Ihave not heard discussed in the print or broadcast media.”

– Actual verbatim comment from interview subject, service/professional not-for-profit industry.

October 2008

January 2009


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What Best Describes Your Staffing Plans for the Next 12 Months?

What Best Describes Your Staffing Plans for the Next 12 Months?

Less than 40% of companies plan smaller work forces; the majority of theplanned decreases will come from hiring freezes instead of layoffs. Fewercompanies plan to hire staff and more are currently reviewing their plans.

▲vs.▼

Results

“We are in for a long battle. Many companies are not going to make it, but these situations force companies to develop new ideas and ways to serve their customers with expanded services that theymay have to outsource. It is going to take our economy several years to recover, but recover we will.”

– Actual verbatim comment from interview subject, professional service industry.

October 2008

January 2009


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By What Percentage Do You Plan to Change Your Work Force?

By What Percentage Do You Plan to Change Your Work Force?

The percentage results of the two surveys are nearly identical.▲vs.▼

Results

“Chicago's wide industry base helps smooth out economic valleys (chasms that others, e.g. Detroit)are experiencing, but I believe Illinois' non-status as a right-to-work state harms us immensely.”


October 2008

January 2009


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In the Next 12 Months, Do You Anticipate Having a Problem Obtaining New Debt or Other Sources of Capital?

“Maybe [the bailout] will keep the situation from getting worse but at a terrible price in the long run.”

– Actual verbatim comment from interview subject, legal industry.

In the Next 12 Months, Do You Anticipate Having a Problem Obtaining New Debt or Other Sources of Capital?

The January 2009 survey shows a 4% increase in expected difficulty when itcomes to obtaining capital.

▲vs.▼

Results

October 2008

January 2009


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What Is Your Current Cash Position Compared to This Period last Year?

What Is Your Current Cash Position Compared to This Period last Year?

Both “lower” and “higher due to uncertainty” are now at approximately 25% while the October survey results had them at approximately 20%. The 5% increase to both responses came from those reporting “no change.”

▲vs.▼

Results

“Recovery ... to be slow as companies will be hesitant to ramp up to previous levels until they areconfident that the economy will be able to sustain growth over a time.”

– Actual verbatim comment from interview subject, manufacturing industry.

October 2008

January 2009


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How Would You Describe the U.S. Economy vs. the Chicago Metropolitan Area Economy Today?

How Would You Describe the U.S. Economy vs. the Chicago Metropolitan Area Economy Today?

While Chicago’s numbers still look stronger than the nation’s, the gap hasclosed. Far more respondents now see the economy as being in a recession.

▲vs.▼

Results

“Uncertainty in the financial markets remains the biggest hurdle to begin to move past this recession.”

– Actual verbatim comment from interview subject, banking/finance industry.

October 2008

January 2009


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In What Condition Do You Think the Overall U.S. Economy Will Be in 12 Months from Now?

In What Condition Do You Think the Overall U.S. Economy Will Be in 12 Months from Now?

Fewer respondents now believe either the nation’s or Chicago’s economy willrebound in 12 months.

▲vs.▼

Results

“I would categorize our situation as a modern day depression. The fact that we have been in a depression for 13 months indicates that the necessary purging of economic blemishes are likely well under way and inevitably brings us closer to the end of this natural cycle.”

– Actual verbatim comment from interview subject, restaurant industry.

October 2008

January 2009


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When Do You Think the U.S Economy Will Improve?

When Do You Think the U.S Economy Will Improve?

Three months had little effect on when respondents believe the overall economywill recover. There is an increasing gap in optimism, with 4% more respondents seeing either a 12-month or 24-month recovery period vs. an 18-month recovery.

▲vs.▼

Results

“Deeper recession than experts ever imagined. Financial markets in complete disarray and bottom is not yet here. It will get much worse before it gets better. Chicago's main hope to stem problem -Olympic selection = avoid deepest part of this recession in late 2009/10.”

– Actual verbatim comment from interview subject, insurance industry.

October 2008

January 2009


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On a Scale from 1-10, What Is Your Current Overall Feeling About the State of the Chicago Economy?

Results

On a 10-point scale, the strength of the economy averaged a rating of 4.2 inOctober and 3.7 in January.

▲vs.▼

“Things are improving...we're having a great January...optimistic that extra effort in Q4 is paying off andwill continue to pay off as we grab market share….”



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10 South Riverside Plaza9th FloorChicago, IL 60606

312-207-1040

BlackmanKallick.com

Contact Details

ClientsContact your engagement partner.

Network Contacts If you do not have a primary contact at Blackman Kallick, please contact Budd Eichner, Partner –

New Business Development, at 312-980-2906 or [email protected]. He can help you

find the most appropriate professional for your industry.

Media Please contact Candice Hickman at 312-980-3233 or [email protected].

About Blackman Kallick

Blackman Kallick is the ninth largest accounting firm in Chicago (Crain’s Chicago Business,

November 17, 2008). The firm’s more than 250 professionals provide audit, tax and consulting services

for privately held and public companies as well as not-for-profit organizations. Blackman Kallick is a

member of HLB International, a worldwide network of independent professional accounting firms

and business advisors with more than 15,000 professionals in more than 100 countries.

www.blackmankallick.com

survey of chicago area business leaders - oracle...blackman kallick’s survey of chicago area...

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