2019 MODC BUSINESS OUTLOOK SURVEY

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1 2019 MODC BUSINESS OUTLOOK SURVEY Presented by Stephen Reed, CPA, PSA, CGMA Shareholder/Managing Director Monmouth County Office Cowan, Gunteski & Co., P.A. Tinton Falls Toms River cgteam.com

2 Objectives Determine how we compare to other regions in New Jersey Determine what business issues affect companies in Monmouth and Ocean counties Assess projections for business and economic conditions in 2019 Benchmark statistics and trends for future analysis Utilize this information to develop MODC programs

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4 The primary location of your business is in: Other, 15% Ocean County, 20% Monmouth County, 65%

5 How many people did you employ in the Monmouth/Ocean region in 2018 (including yourself if you are a sole proprietor)? 100% 80% 60% 56% 40% 20% 0% 20% 9% 11% 4%

6 In what industry segment is your business? Other, 16% Healthcare, 9% Manufacturing, 5% Tourism/Hospitality/ Retail, 6% Technology Services, 5% Nonprofit, 20% Service Industries, 7% Education, 4% Professional Services, 28%

7 In 2019 do you expect business conditions as compared to 2018 to be: 100% 80% 23% 15% 13% 60% 40% 50% 51% 52% 20% 27% 34% 35% 0% New Jersey Your Industry Monmouth/Ocean Better Same Worse

8 How did employment levels change at your company in 2018? Increased, 29% Stayed the Same, 61% Decreased, 10%

9 Do you anticipate 2019 employment levels at your company to: Decrease, 4% Increase, 32% Stay the Same, 64%

10 Tell us your expectations regarding these cost items for 2019 vs % 4% 4% 1% 4% 80% 26% 30% 52% 47% 60% 40% 70% 69% 20% 44% 49% 0% Healthcare Benefits Marketing/PR/Advertising Fees & Taxes Training & Education Increase Stay the Same Decrease

11 How did your company perform in 2018 compared to 2017? 100% 11% 10% 17% 80% 60% 49% 24% 24% 40% 66% 59% 20% 40% 0% Purchases Sales Profits Increased Same Decreased

12 In 2018, did the prices you charged for products or services: Decreased, 1% Remained the Same, 55% Increased, 44%

13 How do you project your company will perform in 2019? 100% 7% 7% 10% 80% 27% 26% 60% 53% 40% 66% 64% 20% 40% 0% Purchases Sales Profits Increased Same Decreased

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15 Compared to 2017, did the services or programs you provided in 2018: Decrease, 7% Increase, 34% Stay the Same, 59%

16 In 2018, did your operating budget: Decrease, 16% Increase, 48% Stay the same, 36%

17 What was the average percentage of pay increase you gave your employees in 2018? 100% 80% 60% 65% 40% 20% 0% 24% 10% 1% Pay Decrease 0% 1-4% 5%+

18 Do you project that the average pay increase you will give employees in 2019 will: Decrease 2% Remain the Same 78% Increase 20% 0% 20% 40% 60% 80% 100%

19 What benefits do you currently provide your employees? 100% 80% 66% 60% 56% 46% 40% 20% 25% 34% 20% 0% 0% 0% 0%

20 What effect will increasing the minimum wage to $15 an hour have on your costs and business? No Impact, 28% Unsure 10% Significant Impact, 29% Some Impact, 33%

21 Benefits: 2018 vs In 2018, did your overall benefit package: Decrease, 7% Increase, 15% Do you anticipate that in 2019 your overall benefit package will: Decrease, 6% Increase, 17% Stayed the Same, 78% Stay the Same, 77%

22 In 2018, did your investment in capital spending (i.e. investments in new buildings and equipment): Did Not Invest, 22% Increase, 35% Decrease, 4% Stay the Same, 39%

23 In 2018, did you make productivity investments in any of the following areas: (check all that apply) Did Not Invest in Productivity 9% Training & Development 67% Production Equipment/Facilities 33% Information Technology 59% 0% 20% 40% 60% 80% 100%

24 How do you view the bi-county region s performance as compared to other NJ counties in each of the following: 100% 80% 16% 16% 10% 12% 10% 7% 7% 12% 19% 4% 30% 60% 39% 42% 50% 35% 40% 56% 20% 35% 30% 28% 42% 0% Economic Development Environmental Issues Workforce Quality of Life Public Schools Better Same Worse Not Sure

25 Do you find it difficult to locate appropriate employment applicants for your business? No, 33% Yes, 67%

26 Which employment level do you find the most difficult to locate applicants? 60% 50% 40% 30% 55% 20% 35% 10% 10% 0% Entry Level Middle Skills Supervisory

27 How do you deal with the labor shortage in finding appropriate applicants? Increased Pay, 31% Outsourced Work, 37% Cross-Trained Staff, 63% Temporary Help, 28%

28 What resources do you typically use for recruitment? 100% 80% 60% 45% 40% 36% 20% 9% 4% 6% 0% Educational Institutions Online Job Boards Craigslist Referral Staffing Agencies

29 Which educational institutions do you typically recruit from? 100% 80% 69% 60% 40% 38% 20% 23% 15% 6% 0%

30 List of Taxes That Qualify for the NJ Tax Amnesty Program Alcoholic Beverage Tax Atlantic City Casino Taxes and Fees Atlantic City Luxury Tax Atlantic City Tourism Promotion Fee Cape May County Tourism Sales Tax Cigarette Tax Corporation Business Tax Cosmetic Medical Procedure Gross Receipts Tax Domestic Security Fee Inheritance and Estate Taxes Hotel/Motel Occupancy Fee/Municipal Occupancy Tax Insurance Premiums Taxes Landfill Closure and Contingency Tax Litter Control Fee Motor Fuels Tax Motor Vehicle Tire Fee System and Emergency Response Assessment Nursing Home Assessment Petroleum Products Gross Receipts Tax Public Community Water Systems Tax Public Utility Taxes Railroad Property Tax and Railroad Franchise Tax Recycling Tax Sales and Use Tax Sanitary Landfill Tax Spill Compensation and Control Tax Sports and Entertainment Facility Tax Tobacco Products Wholesale Sales and Use Tax Transitional Energy Facility Assessment UEZ and UEZ Impacted Districts Reduced Sale Tax Uniform Transitional Utility Assessment

31 Do you think New Jersey has made progress over the past year in easing regulatory obstacles for business? 100% 80% 60% 71% 54% 51% 60% 29% 78% 78% 71% 91% 40% 20% 0% 71% 40% 29% 22% 22% 29% 9% Yes No

32 Significant Concerns to Executives in Monmouth & Ocean Counties Wage/Labor Costs 43% Property & State Taxes 55% Cost of Doing Business 62% Health Insurance Costs 71% State Regulations 57% 0% 20% 40% 60% 80% 100%

33 Do you plan to expand your business in 2019? Yes, in NJ, 19% Yes, in Monmouth- Ocean, 24% No, 37% Yes, Outside NJ, 20%

34 What is the reason(s) you plan to expand or move outside of New Jersey? 60% 50% 40% 37% 43% 20% 27% 13% 23% 20% 0%

35 Please share your thoughts about the business climate in Monmouth & Ocean counties. Low unemployment rate causes less applicants seeking employment. High cost of living causes applicants to move out of the area to seek employment. While I am planning to keep my business in NJ open, I am expanding and moving South for a better tax structure, laws and regulations. Many are concerned that the new governor and administration will make it difficult to do business in NJ. We have an excellent business climate. The shore region needs to diversify from tourism/service and healthcare. The region is not able to attract manufacturing and IT jobs that pay above average wages to justify a high cost of living. The business climate is growing quickly and providing a ton of opportunity by promoting development and bringing more customers to the area. Our lease is up in We will not be staying in NJ. Definitely more activity in 2018 on all fronts. The housing market is booming and prices have moved substantially, but appear to be peaking. The next decade could be strong for Monmouth and Ocean counties, but for different reasons. With the developments of Fort Monmouth, BellWorks and other repurposing projects, Monmouth County is poised to attract more people into the area with more jobs to offer. Ocean County will continue to grow in population and business activity because of cheaper property values and lower cost of living.

36 What Did the Survey Tell Us? Overall, not as positive as last year s survey. Companies are looking to increase healthcare benefits and cross train employees in Many companies in our bi-county region increased their prices in Mid-level employees hard to find in Monmouth and Ocean counties. More reasons this year to expand business outside of NJ. Many people in our area do not think NJ has made progress in easing regulatory obstacles for businesses over the past year. Cost of doing business, property taxes and cost of health insurance still major concerns. Even though companies are more cautious compared to last year, the current state of business in Monmouth and Ocean counties remains optimistic.

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38 Questions? Stephen Reed, CPA, PSA, CGMA Shareholder/Managing Director Monmouth County Office Tinton Falls Toms River cgteam.com