LEE COUNTY BUSINESS CLIMATE SURVEY REPORT Third Quarter, 2017 Prepared in partnership with: and The Florida Gulf Coast University
Project Staff Dr. Christopher Westley, Director John Shannon, Economic Analyst Serena Fernandez, Lead Student Researcher Report Information This report is conducted quarterly by the Horizon Council of Lee County, Florida, and Florida Gulf Coast University s. This work would not be possible without considerable cooperation from the Horizon Council s Chairs, the RERI s student researchers, and the Lee County Economic Development Council. The studies, analyzes are reports on the regional economy encompassing Collier, Lee, Charlotte, Hendry, and Glades counties. Established in 2005, it serves as a public service and economic development unit of the Lutgert College of Business Dean s Office and strives to connect Southwest Florida to the resources of Florida Gulf Coast University. The Institute s Business Climate Survey group specializes in sampling design and analysis, including program evaluation, policy research, and needs assessment. The Business Climate Survey group involves FGCU students in every stage of survey development, allowing them to develop professional skills and networks that add value to their degrees and, by extension, to their future employers. Lutgert College of Business Florida Gulf Coast University 10501 FGCU Blvd, S. Fort Myers, FL 33965-6565 (239) 590-1000 http://www.fgcu.edu/cob/reri/ Photo Credits: Shutterstock, Lee County Economic Development
TABLE OF CONTENTS INTRODUCTION... 2 EXECUTIVE SUMMARY... 3 I. RECURRING QUESTIONS... 4 II. THE EXECUTIVE BUSINESS CLIMATE INDEX... 6 III. SPECIAL TOPICS... 7 IV. COMMENTS, SUGGESTIONS, AND RECOMMENDATIONS... 8 V. COMPANY CHARACTERISTICS... 9 APPENDIX A. HISTORICAL TRENDS OF RECURRING QUESTIONS... 10 APPENDIX B. FULL COMMENTS, SUGGESTIONS, AND RECOMMENDATIONS... 11 1
INTRODUCTION The Lee County Business Climate Survey Report, published in partnership between the Horizon Council and Florida Gulf Coast University, provides primary research to the business community, elected officials, and other concerned citizens in an effort to gauge the state of Lee County s economy over time as well as impressions and concerns about it in the future. Since the beginning of this partnership, the BCS has been comprised of three areas of focus. The first area encompassed in the first seven questions of the survey focuses on Lee County business executives impressions of economic conditions and trends with respect to hiring and investment. The second area has been the calculation of an Executive Business Climate Index. This EBCI provides a summary number which will allow one to quickly gauge whether the business climate in Lee County is improving or declining. Finally, the third area is comprised of various questions that change from survey to survey. In the past, these Special Topics have focused on areas such as business executives concerns about interest rates and access to capital, firms demand for critical occupations and their ability to find workers within those occupations, the cost of doing business in Lee County, and even concern for employee wellness and wellness programs. The BCS also allows respondents to voice concerns, kudos, and criticisms of Lee County s economic environment. Every effort is made to include these comments in each survey. The Horizon Council FGCU Business Climate Survey is administered, written, and published by the staff and students working with the in the Lutgert College of Business. We very much welcome your comments and suggestions regarding the report, including suggestions for Special Topics questions for future editions. This survey would not have been possible without the many busy business owners and executives who took the time to respond to it. I also thank John Boland, Glen Salyer, and their colleagues at the Lee County Economic Development; Robert Beatty, Dean of Lutgert College of Business at FGCU; Russell Schropp, Chair of the Horizon Council s Business Issues Taskforce; and Michael Quaintance of Keiser University. CareerSource Southwest Florida s James Wall and Peg Elmore continued to provide valuable input and advice. Dr. Christopher Westley Director, Lutgert College of Business Florida Gulf Coast University Fort Myers, Florida 33965-6565 2 Executive Business Climate Survey Report,
EXECUTIVE SUMMARY The Executive Business Climate Survey provides a view of the local economy that is based on responses from senior executives from a range of industries across the county. An invitation to complete the internet survey was sent to 712 executives and business owners in Lee County. One hundred executives completed the survey from July 10, 2017, through July 25, 2017. Five reminders were sent during the survey period. This survey provides a key economic indicator for Lee County, the Executive Business Climate Index. This index value is computed each quarter and released to the public as a way to provide an established economic indicator on the state of the local economy. The index is computed using the two questions concerning the current and future economic conditions and a third question concerning the expected industry economic conditions. The index is an average of the responses, with substantially equal to 100, moderately equal to 75, same equal to 50, moderately equal to 25 and substantially equal to zero. The index value can range from 0 to 100. The present third quarter survey s index of 67 reflected no change from the second quarter index. Although still higher than the index scores observed for the second, third, and fourth quarters of 2016, a negative trend since the third quarter of 2015 persists. The current survey s Special Topics section focuses on Lee County business community's concerns regarding Wellness and Health Care, with the intention of re-using questions from a 2013 Business Climate Survey to gauge changes since then. Gary Griffin, executive committee member of HealthyLee (www.healthylee.com/), provided much assistance in designing these questions. Other findings of the Business Climate Survey for the third quarter 2017 include: 60 percent of executives stated that the current economic conditions have improved over last year, while 33 percent stated that they were the same; 70 percent of the executives expect the economy to improve over the next year, and 26 percent stated that the economy would stay the same; 51 percent of the executives stated that the current economic conditions for their industry have improved over last year, while 39 percent stated that economic conditions remained approximately the same; 61 percent of executives expect economic conditions for their industry to improve over the next year; 34 percent of executives had increased over the last year, while 6 percent had reduced ; 49 percent of executives expect to increase at their companies during the next year, while 46 percent of executives plan to remain at the same level; 54 percent of companies expect to increase investment next year while 3 percent expect to reduce investment levels; 52 percent of executives said that reduced productivity due to health issues caused a negative impact on their company s profitability; 30 percent of executives said the primary reason for not offering a wellness program was the lack of personnel to develop and oversee such a program; 55 percent of executives indicated that the single most important goal of their wellness program was to improve the health of their employees. 3
Percent of Responses Percent of Responses Percent of Responses I. RECURRING QUESTIONS Each quarter, the Horizon Council FGCU Business Climate Survey polls Lee County s business leaders about the state of the economy in Lee County. These seven questions are designed to provide a snapshot of short-term trends and perceptions regarding the state of the local economy,, and capital investment. Asking the same recurring questions allows for a side-by-side comparison of the economy during each quarter. The results from these questions for the third quarter of 2017 can be found in Figures 1 through 7 below. 8 7 6 5 Figure 2: Future Economic Condition What are your expectations for the Lee County one year ahead? 62% 48% 63% 41% Figure 1 reports that 60 percent of surveyed executives indicated that economic conditions in Lee County were moderately or substantially compared to a year ago. This was a slight decrease from the previous quarter measure of 63 percent, but is still an increase from last year s third quarter measure of 53 percent. Despite the slight decrease from the previous quarter, these results indicate that local business owners and executives are pleased with the direction of the local economy over the past year. 8 7 6 5 2 Figure 1: Current Economic Condition How are the Current Lee County economic conditions compared to one year ago? 5% 6% 55% 47% 56% 39% 33% Same 7% 8% Figure 2 tracks business leaders perceptions about economic conditions going into the next year. The survey found that 70 percent of executives indicated they expect economic conditions in Lee County to be moderately or substantially in the next year. This is an increase from the second quarter 2017 measure of 66 percent. It is also a substantial increase from the third quarter 2016 report, which found that 52 percent of surveyed executives expected conditions in Lee County to be in the next year. 2 11% 8% 26% Same 7% Figure 3 reports on executives perceptions about their particular industry and is more narrowly focused. The survey found that 51 percent of surveyed executives believed current conditions in their industry were compared to a year ago. This marks a decrease from the 57 percent recorded in the second quarter 2017, but an increase from the 45 percent reported a year ago on the third quarter 2016 report. 8 7 6 5 2 Figure 3: Current Industry Condition 9% 5% 42% 56% 39% 38% Figure 4 reports that 61 percent of surveyed executives expect conditions in their industry to be moderately or substantially in the next year. This is an increase from the second quarter 2017 report, which reported that 57 percent of surveyed executives expect conditions in their industry to be in the next year, it is also an increase from the third 25% What are the current conditions in your industry in Lee County compared to one year ago? Same 9% 17% 1% 4 Executive Business Climate Survey Report,
Percent of Responses Percent of Responses Percent of Responses Percent of Responses quarter 2016, when 45 percent of surveyed executives expect conditions in their industry to be in the next year. 8 7 6 5 2 Figure 4: Future Industry Condition What are your expectations for your own industry in Lee County one year ahead? 12% 8% 5% 49% 56% 33% Figures 5 and 6 focus on. Figure 5 reports that 34 percent of executives have moderately or substantially increased over the last year. This is a substantial decrease from the second quarter report, which reported that 48 percent of surveyed executives have increased over the past year. This was also a slight decrease from the third quarter 2016, when 37 percent of surveyed executives reported increased over the past year. 8 7 6 5 2 Figure 5: Current Hiring Trend increased 33% 52% increased Figure 6 reports that 49 percent of surveyed executives expect to moderately or substantially increase over the next year, marking a slight one-percent increase from the previous quarter s measure, and a substantial increase from the third quarter of 2016, which reported that 37 percent of 46% Same 6 57% 33% 3 Little or no change In 8% 6% 3% 6% 7% reduced What has been your hiring trend over the last year? 1% Reduced Employment surveyed executives expect to increase over the next year. 8 7 6 5 2 9% 7% 5% increase Figure 6: Future Hiring Trend 42% 27% 48% increase 46% 5% 5% Finally, Figure 7 focuses on capital investment. It reports that 54 percent of surveyed executives expect to moderately or substantially increase investment over the next year. This was a decrease from the second quarter report, which reported that 64 percent of surveyed executives expect to increase investment over the next year, and an increase from the third quarter report from 2016, which reported that 49 percent of surveyed executives expect to increase investment over the next year. 8 7 6 5 2 What hiring trends do you see for your business over the next year? 7% 6% Figure 7: Future Investment Trend 1 47% 43% 5 1% Results from previous quarters surveys going back to 2012 can be found on FGCU s s web site, at fgcu.edu/cob/reri. For charts depicting historical trends for recurring questions, see Appendix A below. 6 42% Same or flat 49% 43% 32% reduce Reduce Employment Do you plan to increase investment in your business during the next year? increase investment increase investment Keep investment the same or flat 3% 1% reduce investment Reduce investment 5
II. THE EXECUTIVE BUSINESS CLIMATE INDEX One of the key features of this survey is the calculation of an Executive Business Climate Index. This index value measures the current business climate in Lee County and is released quarterly to provide an economic indicator allowing one to gauge whether the business climate in Lee County is improving or declining. The EBCI is computed using the two questions concerning the current and future economic conditions (reported in Figures 1 and 2) a third question concerning the expected industry economic conditions (reported in Figure 4). The index is an average of the responses, with substantially equal to 100, moderately equal 75 71 67 63 59 55 70 3rd Qtr 2015 Horizon Council FGCU Business Climate Index 71 4th Qtr 2015 to 75, same equal to 50, moderately equal to 25 and substantially equal to zero. The index value can range from 0 to 100. The results from the third quarter survey reflect little change from the second quarter 2017 result, with the index remaining at 67. While the index was greater than the third quarter 2016 index of 61, it was less than the third quarter 2015 figure of 70. While the business climate has clearly improved since last year, it has not reached the same positive levels recorded in 2015. 68 1st Qtr 2016 63 2nd Qtr 2016 61 3rd Qtr 2016 63 4th Qtr 2016 68 1st Qtr 2017 67 67 2nd Qtr 2017 3rd Qtr 2017 6 Executive Business Climate Survey Report,
Percentage of Responses III. SPECIAL TOPICS Each Executive Business Climate Survey contains a set of questions not asked on a recurring basis. These special topic questions highlight areas of importance to the economic development of our region with the intention of accessing the business community s input and feedback to development officials, industry agents, and government officials. The present survey focuses on the Lee County business community's concerns regarding Wellness and Health, and uses questions previously surveyed in 2013. The results below then compared with the previous results. Figure 8 considers firm s concern with negative health factors. Fifty-two percent of business executives indicated that reduced productivity due to health issues caused a negative impact on their companies profitability in the third quarter of 2017. This was an increase from the fourth quarter of 2013 (39 percent). Nineteen percent of executives said substance abuse had caused a negative impact on their profitability, a slight increase from the fourth quarter 2013 result. Fourteen percent of executives selected Other, suggesting other reasons not offered in the survey. Figure 8: Negative Impact to Profitability Health Factors 6 5 2 Which of the health factors have caused a negative impact on your company's profitability during past 12 months? 52% 39% Reduced productivity as a result of health issues 5% 23% Smoking 19% 18% Substance abuse (tobacco or alcohol) 1 11% 5% 5% 5% 5% Obesity related illness or conditions 2013 Q4 Mental health related issues Other Figure 9 focuses on the reasons for not offering a wellness program or initiative. The most prevalent reason for not offering a wellness program or initiative was the lack of personnel to develop and/or oversee the program (30 percent). This was a decrease from the 2013 fourth quarter measure of 40 percent. The costs to implement the program (27 percent) was only a small increase from the 2013 measure (23 percent). The reason that was sited the least was previous negative experience (3 percent) which was a 1 percent decrease from 2013 (4 percent). Figure 9: Reasons for Not Offering Wellness Program If your company does not offer a wellness program or initiative, what is the primary reason for this decision? Lack of personnel to develop and/or oversee such a program Program costs Unfamiliarity with offering such a program Previous negative experience It is not important to our business Other 3% 7% 6% 1 17% Figure 10 focuses on firm s single most important goal of a company wellness program. Over half of all business executives said their most important goal was to improve the health of their employees (55 percent). This is a decrease from the fourth quarter of 2013 (58 percent). Fourteen percent of executives stated decreasing health care costs to their company as their primary goal, a decrease from 2013 (17 percent). Improving morale of employees increased from 2013 from 12 percent to 16 percent. Figure 10: Important Goals of Wellness Program 7% 3% 3% 9% 19% 27% 23% 2013 Q4 2 5 The single most important goal of a wellness program at my company would be.. Improve the health of your employees Decrease the health care costs to your company Improve morale of employees Increase profitability of your company Increase retention of employees Other 6% 1 17% 16% 12% 55% 58% 2013 Q4 2 6 8 7
IV. COMMENTS, SUGGESTIONS, AND RECOMMENDATIONS At the end of each survey, business executives are given the opportunity to provide any general comments they have about the local economy. Below is a list of the general topics on which the business executives commented. Local economy Housing markets Lack of qualified employees State employee benefits Government regulations Executive responses to this question are found in Appendix B. 8 Executive Business Climate Survey Report,
V. COMPANY CHARACTERISTICS Each executive provided information about his or her firm, including: Business Type; Number of Employees; Company Location; and Geographic Client Base. The following figures provide an overview of general characteristics of the responding companies. Construction Professional, Scientific, & Technical Service Finance & Insurance Manufacturing Arts, Entertainment, and Recreation Accommodation & Food Services - Resorts Real Estate Sales Educational Services Information Computer Software, Design, and Technical Accommodation & Food Services - Restaurants Health Care & Social Assistance Retail Trade Real Estate Development Transportation and Warehousing Agriculture, Forestry, Fishing, and Hunting Utilities Accommodation & Food Services - Attractions Aerospace Real Estate Rental and Leasing Business Types 5 4 4 3 3 3 3 3 2 2 1 1 0 0 0 7 11 13 13 16 0 2 4 6 8 10 12 14 16 18 8% Employee Size of Firms Responding to Survey 2 12% 39% 1-9 employees 10-24 employees 25-49 employees 50-99 employees 100-249 employees 250 or more employees Geographic Locations of Business Respondents Geographic Client Base of Lee County Firms South Fort Myers City of Fort Myers Bonita Springs Cape Coral Other Estero Sanibel/Captiva North Fort Myers Town of Fort Myers Beach East Fort Myers 21% 2 19% 15% 13% 13% 9% 32% Lee County Collier County Charlotte County Florida U.S. Markets Hendry County Glades County International Markets Southeast US region 36% 29% 26% 22% 17% 49% 68% 81% Lehigh Acres 7% Other 7% 2 5 2 6 8 10 9
APPENDIX A. HISTORICAL TRENDS OF RECURRING QUESTIONS Historical trends of the seven recurring questions asked in each Executive Business Climate Survey can be found in this section. 10 9 8 7 6 5 2 How are the current Lee County economic conditions compared to a year ago? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 10 9 8 7 6 5 2 Same 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 10 9 8 7 6 5 2 What are the current conditions in your industry in Lee County compared to one year ago? Same What has been your hiring trend over the last year? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 Substaintially increased increased Little or no change in reduced Substaintially reduced 10 9 8 7 6 5 2 What are your expectations for the Lee County economy one year ahead? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 10 9 8 7 6 5 2 Same What are your expectations for your own industry in Lee County one year ahead? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 10 9 8 7 6 5 2 Same What hiring trends do you see for your business over the next year? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 Substaintially increase increase Same or flat reduce Substaintially reduce 10 9 8 7 6 5 2 Do you plan to increase investment in your business during the next year? 2012 Q1 2012 Q3 2013 Q1 2013 Q3 2014 Q1 2014 Q3 2015 Q1 2016 Q1 2017 Q1 Substaintially increase investment increase investment Keep investment the same or flat reduce investment Substaintially reduce investment 10 Executive Business Climate Survey Report,
APPENDIX B. FULL COMMENTS, SUGGESTIONS, AND RECOMMENDATIONS This list includes specific responses from the executives for the following question: Please indicate any other comments, suggestions, or recommendations you would like to make regarding the regional economy or your business. 1. When the Gridlock in Washington breaks and the new business policies start to trickle down to the State, Regional and County levels, we will experience a significant upswing in business. 2. We're "making hay while the sun shines", because I am worried about the long-term sustainability of the local economy. The national homebuilders all seem to look at the same data that says there is demand for 2,500 total new units - then they each go out and build 2,000. I don't see anything like our last local building depression, but there will be a "correction" as the pendulum must swing back at some point since we are not at equilibrium. 3. Last three questions made no sense. My business has not been affected by my health. 4. Presently very stable, with little if any increase. 5. Concerned about the local economy. 6. While new construction may be up somewhat and remodeling is continuing at a moderate growth rate--- the overall price of units is still low and that prevents medium to higher level finishes to be specified. This prevents a healthier bottom line which contributes to added jobs and growth. Wages of the majority of the workforce prevent them from buying many of the slightly upgraded products. 7. National companies seem to be taking more of an interest in the SW Florida market, which has increased competition, both for our business, and for our clients. 8. Our business has few local / Florida customers as its base. Market in U.S. (mostly N.E.; mid-west, California, and International base) is manufacturing of Unit Dose packages for the Cosmetic, Health&Beauty, OTC Pharmaceutical, Pet Care, Medical Device, and Consumer Product markets to retail. 9. "Which of the health factors have caused a negative impact on your company's profitability during past 12 months?" There should be answer "None of the above health factors have caused...etc." 10. We're an eco-business selling, renting, racing, and touring paddle craft in Bonita Springs. The single biggest negative impact to our business is poor water qualities in our bays and estuaries from rain runoff and Lake O releases. Or the threat there of. Last year Lake O greatly reduced the number of people coming here in the summer. Fresh water releases kill the grass beds in the estuaries and reduces the amount of life they support. People coming to see the wildlife can be disappointed because of the negative impact of this water. Large fish and mammal kills often accompany these releases. What good is preserving this wildlife only if it is only to save them for a lingering poisoned death? 11. Finding qualified employees is very difficult in this entire region. Seems like most move her to retire not to work full time. Need to do something to change this area in order to attract younger, qualified, educated workforce. Those we've had who are young and talented have moved because "there is nothing to do and not enough young people". When I vacationed here 45 years ago, the waiter complained of the same thing then! Nothing has changed in all that time. I've heard this same concern from others business CEOs/leaders in the SW Florida region. Also, when people move to Florida, they think they are going to get the same services/access to programs that they got from where their "home" state for themselves or family members. Once they move here, they find they don't exist in SW Florida. Many only stay a short time and then move back. Yes, our weather is great - but social support, intergenerational activities, etc. do not exist/thrive in this area. Lack of transportation services, lack of affordable housing are also critical services yet not available in this part of Florida. 12. Would like to see an improvement in the land use at the dog track. A casino with a hotel would attract more out of town visitors and increase revenue for Bonita. 13. Florida Retirement System is excessively generous and therefore excessively expensive to the people and business of the state. When a tax burden is unjustified, it takes huge amounts of disposable income out of the economy. 14. My business is very cyclical and is impacted by the political election cycle. 15. Governmental regulation has gotten out of control. A change is needed in Lee county development services. 11