2015 america's economic engine study: minneapolis/st. paul results

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%


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%


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


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


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


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


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


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


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


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


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%


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


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.

2015 america's economic engine study: minneapolis/st. paul results

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