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Odette announces results of regional economic oulook survey

Economic Outlook Still Remains Very Strong ... but with Some Obstacles

The Odette School of Business released the results of the 7th annual “Pulse of the Region” business confidence survey on April 18, 2013.  The purpose of this survey is to gather empirical data and insights about the local economy from area executives and business owners including manufacturers, service providers and professional firms thereby enabling the observation of comparisons and trends.

Key findings of the survey results include:

  • 40.9% of firms expect to hire more employees. This is a drastic change from 2010 when only 12.9% expected to do so!
  • Respondents continued to be very optimistic about the future of the local economy with 48.3% having a positive outlook.  This is down from the prior year survey results when 57.8% had a positive outlook. 27.5% were more optimistic about the Ontario economy versus 28.9% last year. However, 52.3% felt more optimistic about the Canadian economy versus 46.4% and 45.6% felt more optimistic about the U.S. economy versus 41.0% one year ago.
  • In 2012 as compared to 2011, almost 50% had higher sales (49% vs. 48.2%) but there was a significant improvement in companies reporting lower sales – 10.7% in 2012 versus 25.3% in 2011. However, 49% indicated that they would have higher sales in 2013; this contrasts to 57.8% in 2012.
  • The biggest issue had to do with capacity. 32.2% of firms were operating at 100% capacity versus 7.8% one year ago.
  • Only 47.0% of firms felt that they could increase production by 10% without upgrading or hiring more employees. This is the lowest level since the survey began in 2007. The previous low was last year at 60.2%.

Surveyed business leaders also believe the following five issues would have the most affect on their businesses in the coming year (response rates in parenthesis):

  • Energy prices (69.8%)
  • Insurance premiums (58.9%)
  • Lack of skilled labour (58.1%)
  • U.S. border crossing issues (54.0%)

Ironically, the lowest rated issue by a substantial margin was "labour issues" with only 16.8% of respondents indicating that it may be a problem in 2013.

NAFTA/Free trade and interest rates were clearly viewed as the most “beneficial” items to the future outlook of business owners with ratings of 15.9% and 12.8%, respectively.

General conclusions can be made as follows:

  1. The survey participants expect that the local, Ontario, Canadian and U.S. economies will perform better in 2013 than in 2012.
  2. The employment situation in Windsor -Essex County continues to be very favourable. However, some of this will be tempered by the lack of skilled labour which is a major Canadian issue and many parties are trying to address it, including private companies such as Valiant Corporation.
  3. Almost 50% of companies expect their sales to be higher in 2013. Some of the reasons attributable to this is the strengthening of the both the Canadian and U.S. economies.
  4. Over one-third of firms are operating at 100% capacity which means favourable conditions for additional investments in machinery and equipment and people.
  5. Soaring energy prices and insurance prices are enormous issues that need to be addressed by both the Provincial and Federal Governments. They have enormous financial impacts, especially on manufacturers. If not, they will make Canadian manufacturers uncompetitive and may force a number of them to consider moving facilities across the border. It will also make attracting companies to not only Winsor-Essex County more difficult. Numerous organizations, such as the Chamber of Commerce, the Canadian Manufacturing Coalition and the Canadian Manufacturers and Exporters Association are trying to work with the governments to address them.
  6. Living in Windsor, we all know about the U.S. border crossing issues. However, with the recent signing of the presidential permit by U.S. President Barack Obama for the second bridge, we are still about seven years away from a permanent solution.

The 2013 Pulse of the Region Survey is supported by the Windsor Essex Economic Development Corporation, the Windsor-Essex Regional Chamber of Commerce and the Odette School of Business and is conducted under the direction of Prof. Pete Mateja, Assistant Professor at the Odette School of Business.  Special thanks to Linda Ingram, Secretary to the Associate Dean and Research Chairs at the Odette School of Business, who administered the survey and prepares the summary reports.

The full report of survey results can be found below.

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