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Lakeland College Survey Says Sheboygan County Businesses Expect Continued Growth in 2006

The local economy continues to look strong for 2006 according to the second annual comprehensive economic indicator study of Sheboygan and Manitowoc Counties conducted by Lakeland College.

The survey was conducted by Lakeland's Scott Niederjohn, the Charlotte and Walter Kohler Business Chair and an assistant professor of Economics and Business Administration, and Joe Botana, Lakeland Business Administration professor and Chief Financial Officer.  They had assistance from Chris Albrecht, a junior at Lakeland majoring in Business Administration.  The survey was conducted between December 2005 and February 2006.
 
Survey results are available on Lakeland's website at www.lakeland.edu/survey.
 
The two-page survey was distributed to the CEO, CFO, president or owner of businesses with five or more employees in the two-county area. A total of 141 businesses responded to the survey.
 
With similar expectations as last year, most businesses report that they anticipate increases in sales revenue, profitability, employment and wages. The majority of firms expect wages to rise between 1 and 3 percent.
 
Other key findings from the survey include:
 

• Sales revenue: 72 percent of companies that replied expect sales to increase in 2006, with 17 percent expecting no change, and 11 percent expecting a decrease. In 2005, 20 percent of companies saw an increase in sales of 10 percent or more and 16 percent had forecast the same for 2006.
• Profitability: 58 percent of businesses surveyed expect profitability to increase in 2006, while 27 percent are expecting no change and 15 percent expecting a decrease.
• Capital expenditures: 49 percent of companies anticipate increases in 2006, 46 percent expect no change and 5 percent expect decreases in 2006.
• Number of employees: 29 percent of businesses surveyed expect to increase the number of employees in 2006, with 63 percent expecting no change and 8 percent expecting to decrease the number of employees.
• Wage change: 76 percent anticipate an increase in overall wages, 20 percent anticipate no changes and only 4 percent expect to lower wages.
• Production/operating costs (as a percentage of revenue): 61 percent of companies expect an increase in 2006, while 23 percent expect no change and 17 percent expect a decrease.
• International Competition/Business opportunity: 29 percent of companies are experiencing pressure from international competition, while 20 percent are engaged in international business opportunities.
• Rising price of energy: 92 percent of companies surveyed are being adversely affected by the rising price of energy. Of those affected, 91 percent are seeing an increase in cost of operations and 22 percent have seen a decrease in sales due to energy prices.

 
These findings differed slightly when compared to last year's survey. Production/operating costs (as a percentage of revenue) showed the largest percentage of change from last year - 23 percent of companies anticipated an increase in 2005, while 60 percent of businesses surveyed expecting an increase for 2006.
 
"This sizable increase is most likely due to rising energy costs," Niederjohn said.
 
Results from this survey reveal that the Sheboygan and Manitowoc County economy is operating at the same 80-85 percent of capacity as last year. The two most common barriers to achieving optimal capacity are demand and qualified employees.
 
"Lakeland conducts this survey to give businesses in the two-county region a better idea of their position compared with others, and to give all of us a snapshot of how business sees the coming year," Niederjohn said.

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