County businesses made money despite U.S. economic slowdown

By Mark Meloy

The stock slide on Wall Street, the fallout in the housing market and the surge in oil prices earlier this year painted a gloomy outlook for 2007. But in Dane County, businesses are doing well.

First Business Bank recently teamed with the UW-Madison School of Business and the A.C. Nielsen Center for Market Research on the fifth annual Dane County Economic Survey. It is the only economic survey conducted of Dane County.

On Dec. 5, the full survey results were shared. It detailed the data and expectations of more than 500 participating businesses. Those surveyed were CEOs, CFOs, presidents and business owners.

The survey showed that Dane County businesses continue to show resilience and remain profitable. Two-thirds of area businesses reported unchanged or increased profitability as compared to 2006, while more than four-fifths project stability or growth in profitability. Operating costs are trending down, and more firms are predicting an increase in capital spending next year.

Revenue, labor and capital expenditures also trended downward. Profitability and wages are holding steady. Operating costs as a percent of revenue improved slightly, trending downward. Labor numbers dipped slightly.

Local businesses are reporting and predicting slowdowns. Expectations for 2008 reflect a more cautious attitude than last year with fewer firms expecting to do better.

Notable survey points:

• After three years of decreased capital expenditures, businesses are predicting that trend to reverse. Capital expenditures decreased or remained the same in 2007. Next year, more local businesses predict increased spending and fewer report decreased spending.
  
• In 2007, 57.6 percent of businesses reported no affect from the current housing market. However, it has affected 38 percent negatively or very negatively and 4.5 percent positively or very positively.
• While two-thirds of businesses reported same levels or increasing profitability from 2006, there is a decrease in the percent of firms that project profitability for 2008 compared to last year.
• Firms that do business nationally and internationally fared better than those that do business only in Dane County. Technology sector businesses performed the best.
• Predictions for 2008 reflect this year's caution that labor numbers are slightly dipping. The percentage of firms predicting lower headcount is slightly up, and the number of firms predicting labor to expand is down.
• More respondents than ever before reported that performance in 2007 was below expectations, and fewer reported that expectations were met. Causes include higher operating costs, domestic sales shortfall and rising gas prices.
• Actual increases in sales revenue in 2007 were lower than in 2006 by 4.7 percent. For four straight years there has been a rise in the number of firms reporting a decrease in sales revenue.
• The number of firms that reported actual increases in total operating costs as a percent of revenue has dropped once again, continuing a trend that started in the 2004 survey.
• Wages are steady and should remain so.
• Manufacturing reported a decline for 2007.
    

Everyone can be proud of the economy in Dane County. Best wishes for a prosperous 2008!

Mark Meloy is president & CEO of First Business Bank - Madison.

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