CEO survey: Here's what Columbus business leaders expect in 2021
In the fall of 2019, local business leaders were primarily concerned with finding talent.
What a difference a year makes.
Columbus CEO’s latest survey of economic conditions reveals how Covid-19 upended the Columbus region’s economy and created a whole new list of anxieties, expectations and priorities for C-level executives.
“The current economic climate is by far the dominant challenge facing these businesses,” says Bill LaFayette, a Columbus-based economist with Regionomics LLC who completed the analysis for Columbus CEO. “That concern dwarfs labor availability, which was the overriding concern last year.”
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Asked to identify the top three challenges facing their businesses, more than 40 percent of respondents cited the current economic climate, making it the top answer. The changing needs of customers is a distant second, followed by labor availability and health care reform.
Business leaders were forced to change gears more quickly in 2020 than at the onset of the 2007-08 financial crisis. The University of Michigan’s Consumer Sentiment Index plummeted from a reading of 101 in February to 89.1 in March, then to 71.8 in April, which was the lowest reading since December 2011.
“Typically, when you have a recession, you see it coming,” LaFayette says. “The index started declining a full year before the recession began in December 2007, and this year it just fell off a cliff.”
Between February and April, employment declined by 14.4 percent in the Columbus region. Although jobs started coming back after the expiration of stay-at-home orders in May, the region failed to claw back all it lost and, through September, recorded a net loss of 8.1 percent, or 91,500 jobs.
The majority of business executives surveyed suffered revenue declines in 2020, and nearly 30 percent reported negative impacts to cash reserves, employment and suppliers. They said they are less optimistic about the future, too.
Last year, more than three-quarters of survey respondents expected an increase in revenue over the next 12 months. Heading into 2021, however, 56 percent are counting on revenue growth. Half expect costs to increase and only 43 percent expect an increase in profits, down from 55 percent a year ago. Expectations for productivity, capital investments and staffing are lower.
The business and economic fallout from the coronavirus pandemic has not been entirely negative.
Local leaders report using the slowdown to think more carefully about business strategy, establish or enhance their online presence, innovate and develop new markets. Several respondents also mentioned opportunities stemming from low interest rates and the receipt of Paycheck Protection Program loans.
“There were certainly some really, really negative impacts of the pandemic, but there were some positive impacts too,” LaFayette says. “Companies have been forced to take a close look at their technology and a close look at the opportunities for upgrading technology that seem to be springing up everywhere. And that’s going to have some very long-run positive impacts for how business is done in Central Ohio and elsewhere.”
The survey, which was conducted before election results were known, did not find significant differences in economic expectations between a Biden or Trump presidency.
Respondents are somewhat more optimistic about the economic outlook for the Columbus region compared to the country and the world. Only 35 percent expect improvement in the global economy, while 46 percent expect improvement in the U.S. economy and 53 percent expect continued growth in the Columbus region’s economy.
Asked to identify the single most important action that would improve the Central Ohio business climate, survey respondents pointed to education, public transportation, affordable housing, larger business incentives and tax reform. The Columbus region earned marks as an attractive market to businesses for its location, affordability, collaborative culture and educated workforce.
The question looming over local business leaders is just how quickly activity will rebound from the shock of Covid-19. But, when it does, they may find themselves trying to solve the main challenge of 2019—a tight labor market—all over again.
“As soon as the economy stabilizes, we’ll be right back in that again,” LaFayette says. “I think it’ll be next year. Assuming we get the virus under control, I think it’ll come right back.”
Evan Weese is a freelance writer.