For Immediate Release
Sept. 10, 2009

 

CBIA/BLUMSHAPIRO SURVEY OF CONNECTICUT BUSINESSES FINDS CONNECTICUT’S ECONOMIC RECOVERY EXPECTED TO LAG NATION’S; LEGISLATIVE EFFORTS ADVERSELY AFFECT BUSINESS

Connecticut businesses are enduring one of the most difficult periods in decades. Facing record business closures, widespread job losses, a growing state deficit, rising taxes, and numerous anti-business policies, the state’s business community has been directly and negatively affected by the recession—and, its members say, by the state legislature.

The majority of Connecticut businesses believe legislative efforts have negatively affected their ability to remain competitive and profitable in this recession. And while there is talk of recovery, businesses believe Connecticut’s comeback will be a slow one, lagging the nation’s, and will depend largely upon the strength of the small to midsize businesses that make up the state’s major industry sectors.

These are among the major findings of the CBIA/BlumShapiro 2009 Survey of Connecticut Businesses, released today.  The survey—conducted by CBIA and sponsored by BlumShapiro, the largest regional accounting firm in the state—highlights the most pressing issues facing Connecticut’s business community and provides direction for policymakers to accelerate our state’s recovery and strengthen its position in the global economy.

National economic uncertainties represent the single greatest concern for most businesses (56 percent) followed by short-term business vitality (14 percent) and a tighter lending climate (10 percent). Less than half (42 percent) of businesses expect to record a net profit in 2009.  That’s down from 62 percent in 2008.

“Connecticut businesses are struggling in this global recession,” said John R. Rathgeber, CBIA president and CEO. “Many have had to make difficult decisions in order to remain competitive and to position themselves for growth when the economy recovers. State policymakers can help by understanding the challenges that employers are facing and by making the tough decisions necessary to secure Connecticut’s economic vitality.”

Half of the businesses responding to the survey believe that the national economy will recover next year, and 30 percent expect it to happen in 2011. But they say Connecticut’s recovery will lag the nation’s: 38 percent anticipate a 2010 recovery in the state, and 35 percent said it will rebound in 2011. One quarter don’t expect a full statewide recovery until 2012 or later.

The survey also found the greatest challenge to operating a business in Connecticut is the cost of doing business (65 percent) followed by diminishing profitability and loss of customer base at 20 percent. The majority of businesses, (60 percent) identified health care benefits as their single greatest cost concern.

Taxes continue to rank high on the list of challenges for businesses. The personal income tax was identified by 28 percent of respondents as the most burdensome, followed by real estate taxes (17 percent), corporate income tax (16 percent), unemployment compensation taxes (14 percent), the state sales and use tax (9 percent), and personal property taxes (8 percent).

“The state’s economy and business tax climate are largely dependent on each other,” said Jay M. Sattler, partner, BlumShapiro. “Now more than ever, Connecticut business owners need to stay abreast of the proposed tax changes and voice their concerns to legislators.”

The majority of businesses (70 percent) believe the state legislature has negatively influenced their ability to operate a successful, profitable business in Connecticut. More than half of them (58 percent) have communicated their concerns to state and local legislators.

“In this economic environment, jobs are the name of the game,” said Susan Coleman, Ansley Chair of Finance, University of Hartford and member of the Governor’s Economic Advisory Panel. “We as a state should be doing everything we can to bring new jobs into Connecticut, to keep the jobs we have, and to create jobs in new and existing industries. An anti-business environment and anti-business legislation will not accomplish any of those things.”

The poor economic climate has forced almost two-thirds of businesses (64 percent) to trim their workforce, and almost half (48 percent) have had to reduce employee compensation and benefits.

But despite widespread cutbacks, the vast majority of companies (98 percent) continue to provide health care benefits for their employees.  Most also offer their full-time employees paid vacation (93 percent), retirement/401(k) plans (70 percent), bonuses (62 percent), and training/professional development (61 percent).

The recession has prompted 41 percent of businesses to focus more of their efforts on their core functions, their customers and ways to increase market share for their products.  More than half (53 percent) have developed new products or services in the past year, and 58 percent expect to do the same in the next 12 months.

“Even during a recession there are opportunities for growth and expansion,” said Peter Gioia, CBIA vice president and economist. “It’s encouraging that more than half of all businesses are expecting to grow their businesses next year. They are using a variety of strategies to prepare themselves to take advantage of the opportunity when the recovery comes.”

Among the tools and tactics being used by businesses to position themselves for growth are the Internet and direct marketing (34 percent each), strategic alliances (24 percent), and new technology (22 percent). Other strategies include mergers and acquisitions, outsourcing, investments in research and development, mergers and expansion into foreign markets.

The survey was emailed to approximately 5,500 Connecticut businesses in June 2009. There were 707 completed surveys for a 13% response rate and margin of error of plus or minus 3.7 percent.

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CBIA is the state’s largest business organization, with 10,000 members.

 

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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