ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Sunday, January 7, 1996 TAG: 9601110013
SECTION: BUSINESS PAGE: D1 EDITION: METRO
SOURCE: JOHN LEVIN BUSINESS EDITOR
If the economy continues to grow, if consumers' disposable income increases, if interest rates stay low, if the federal government gets costs under control, if area communities find ways to work together - if all these things happen, Western Virginia business leaders expect 1996 to be a good year for their companies and the region's economy.
With all those conditions, it's no surprise that the operators of area businesses say they're "guardedly optimistic" and that business will be "gradually better" this year.
"Problems continue to exist for some segments of the economy in this region," said one executive. "However, the overall economy is sound, should continue to improve and be stable for the foreseeable future. Basically we see the economy in 1996 [as] sound with potential for modest growth."
These assessments are from those who operate the firms where we work and shop, companies in which Western Virginians own stock and with whom we do business daily.
They reflect the composite views of 91 companies that replied to an annual economic survey by The Roanoke Times. Questionnaires were mailed in November and December to 183 companies doing business in the region asking for their assessments of 1995's economy and their outlooks for 1996. The survey asked about their plans for their work forces and their capital budgets and what factors they believe most influence the state of the region's business.
The replies were confidential. Companies identified themselves only by their lines of business and sizes of work forces. The responses went directly to Roanoke College's Center for Community Research, which gave the newspaper only statistical summaries of the replies and unattributed responses of open-ended questions.
The survey drew replies from 91 companies, a 49.7 percent response rate, which is considered a valid measure, according to John G. Keyser, a Roanoke College assistant professor of public affairs, who analyzed the results.
The key findings, he said, show:
While 55.1 percent of the respondents said business conditions in Western Virginia were significantly better or somewhat better in 1995 than the previous three years, 71.4 percent said that about their own companies.
"Most people are guardedly optimistic about business conditions, but they're saying their own companies are doing better than the overall average," Keyser said.
Better than two-thirds of the companies - 67 percent - expect their 1996 performance will be better than 1995. In terms of sales, about 15 percent of the companies will see revenue growth at about the rate of inflation, meaning little if any real gain. Another 21.7 percent said they think sales will grow at three times the expected inflation rate.
Work forces should not change dramatically this year at area companies. Half of those responding said they anticipate no change this year while 40 percent project some gains. The largest changes were among 23 percent of the companies that expect to hire five additional workers and 26 percent who think they'll grow by 10 workers. This was a question a significant number of companies declined to answer.
Capital spending and expansion plans were wide ranging, from 39 companies that haven't anything budgeted for 1996 to one that expects to spend $14 million. There are plans to upgrade technology, increase capacity and provide better customer service, the companies said.
The factors most often mentioned about affecting both 1995's performance and this year's outlook are issues that generally are front-burner concerns for businesses: interest rates, government policies, privatization and the benefits as well as problems of defense downsizing, Keyser said.
NAFTA and GATT, major international trade agreements implemented during 1995, "appeared in the comments more often than I would have expected," Keyser said. "Companies clearly view themselves as global actors. The global economy and the strength of the dollar as it affects trade appeared often."
In their own words, here's what the executives said about their outlook for Western Virginia's economy in 1996:
"We have a stable economy not vulnerable to major disruptions caused by strikes or plant closings - all that is good. At the same time, we have fewer corporations' headquarters here, which can hurt over time. We need to be supportive of the businesses who are still here and do everything possible to help them succeed to grow."
"Roanoke Valley's employment at low-wage levels are filled. The powers that bring in industry must look at businesses that create more midmanagement and white-collar jobs, something that will keep our youth from moving to Richmond, Charlotte, etc."
"More industrial sites must be created. Six-laning of I-81 is of utmost importance."
"We will never realize significant growth until there is consolidation of the whole Roanoke Valley."
"Virginia cannot compete with other states to attract new business unless they offer tax breaks and assist with acquiring loans."
"The economy of Western Virginia depends on the leadership of the business community. If these leaders take the steps necessary to make their company and organization successful, then the overall economy will be successful."
"Great potential is here but the region is too Balkanized to take maximum advantage of the potential for the region's greatest good."
"Our company does business outside this region. The ability of the federal government to balance its budget will [be] key to the long-run prosperity in the U.S. and this area."
"Let's get serious about the questions that need to be addressed and get answers. The rest of the world moves forward while we stand still ... frustrated that local government will not get together to reduce their cost and, therefore, be able to put more money into those things that will help create economic growth: electronic region, recruiting higher wage companies, invest in high-tech industrial parks."
"Southwest Virginia badly needs the presence of a major bank that will focus on financing manufacturing operations in this region."
"I am moderately optimistic that Southwest Virginia will begin to move toward utilizing the talents and strengths of Virginia Tech and local high-tech firms to attract high-value, high-wage firms to the region."
"The outlook is good here because we are a transportation hub for surrounding areas and this is perceived as a good place to do business and live."
LENGTH: Long : 112 lines ILLUSTRATION: GRAPHIC: graphs - Economic Survey colorby CNB