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A CEO Bounce Back?


Survey finds local business leaders more comfortable with outlook for the near term

Story by Michael Bina

Down, down, down…

New North’s economic elevator was heading straight to, well…yeah, down there!

Generally positive, optimistic and future-focused people, New North region CEOs and business owners have not been feeling themselves lately. Their mood and instinct has been trending “south” since January 2012.

The Nicolet Bank Business Pulse – a more than a decade-old, regular quarterly survey of business owners and chief executives across northeast Wisconsin – has been tracking the moods and feelings of CEOs and business owners in the New North for 52 consecutive quarters. Throughout the years, The Business Pulse has uncovered many interesting feelings and moods in both its Current Conditions Index and its Future Expectations Index. The Nicolet Bank Business Pulse measures Current Economic Conditions compared to three months prior, and its Future Economic Expectations index asks business leaders to look out over the next three months.

A downward trend

During nearly all of 2012, business owner and CEO insights have been trending downward. Their traditionally upward, positive attitude had been trending on a slope seemingly slipperier and steeper each quarter – their proverbial glass half full had sprung a big leak!

By January 2012, future expectations of CEOs started dropping. In the first quarter of 2012, the Current Conditions Index stood at 116.8 while the normally more bubbly Future Expectations Index only reached 116.0. During the second quarter of 2012, Current Conditions Index fell to 107.7 and Future Expectations continued falling to 100.3. By the end of the third quarter 2012, Current Conditions stood at 93.8 and Future Expectations Index fell even further to 89.2.

Having the Future Economic Expectations Index lower than the Current Conditions has rarely happened in the 11 years The Nicolet Bank Business Pulse has been conducted. And it certainly had never happened three quarters in a row.

At its most recent low this past autumn, CEOs said economic conditions in their industry became even worse than in the previous three months – 35 percent said conditions were worse, compared with 21 percent in the second quarter a year ago.

CEOs also indicated their gross revenues were not as strong during the third quarter of 2012: only 38 percent said they had an increase in total receipts, compared with 45 percent showing an increase during the second quarter.

Likewise, fewer CEOs saw increases in net profits – only 31 percent reported an increase in Q3 compared with 41 percent in Q2 – and fewer CEOs reported gains in employment within their organizations, with 19 percent noting an increase in Q3 vs. 28 percent in Q2.

These critical trends were clearly down in northeast Wisconsin. The reasons were many.

“The downturn in the first three quarters of 2012 may have had more to do with the political context rather than the economic context,” said David Wegge, director of the Strategic Research Institute at St. Norbert College in De Pere, which regularly develops and conducts The Business Pulse survey. “The political context continued to produce uncertainty for CEOs and business owners: the 2012 presidential election; the uncertainty about the impact of the Affordable Care Act; the potential for falling off the Fiscal Cliff were all – no doubt – significant contributors to the decline in confidence CEOs were feeling regarding their future economic prospects.”

Nevertheless, the trend is significant, Wegge added.

Local CEOs framed some of the apparent pessimism of the second half of 2012 as being associated with governmental uncertainty as well.

“I think once elections are settled, whatever the results, entrepreneurs get back to believing that – despite the governmental self-inflicted wounds and burdens placed on our still, mostly capitalist economy – the long-term trend line of the American economy is toward growth,” said John Dykema, president of Campbell Wrapper Corp. and Circle Packaging Machinery Inc., both firms located in Green Bay. Dykema is a regular participant in the Nicolet Bank Business Pulse quarterly survey. “It’s not the growth that it could be, but it’s growth, nonetheless.”

Brighter days ahead?

Landmark Staffing Resources President and CEO Monica Vomastic is also a regular participant in The Business Pulse. She keeps a close eye on the Nicolet Bank Business Pulse indices, and noted she now sees conditions turning around.

“Eliminating uncertainties creates a more favorable future,” Vomastic said. “The Fiscal Cliff is behind us, we now know sequestration means a reduced growth rate. Most companies have determined the financial impact of the Affordable Care Act and are adjusting their business models.”

“My industry is predicting stronger growth in the second quarter of 2013 as companies continue to expand temporary workers. The announcement (in early April) of Japan’s $1.3 trillion stimulus was a welcome surprise to the global markets. With certainty and more optimism, greater results will be achieved.”

Wegge quantified this optimism, citing much improved results from the most recent Business Pulse conducted in February.

“The most significant shift is the substantial improvement in future expectations,” Wegge said. “From 2009 through 2011, the Future Expectations Index and the Current Conditions Index were about the same. Then, future expectations headed south, and dropped below current conditions for the next three quarters.”

According to the latest Business Pulse survey for the first quarter 2013, CEO perception that the economy will improve in general during the next three months increased from 15 percent to 26 percent. Views that economic conditions within their specific industry would improve in the next three months increased from 16 to 32 percent, and projections of gross revenues increasing in the quarter ahead improved from 29 to 45 percent.

Additionally, the number of CEOs who said net profits would increase in the quarter ahead doubled from 20 to 40 percent of those participating in the survey. Capital spending and employment projections remained positive as well.

“Today, with a 22 percent improvement in confidence about the future, it appears that CEOs may be coming out of their post-recession funk,” Wegge said. “Of the six indicators we look at in the Future Expectations Index, perception of the general economy, the economy in their industry, gross revenues and net profits all saw considerable improvements.”

The latest Conference Board survey showed CEO confidence improving from 42 during the third quarter 2012 to 46 in the last quarter of the year. The Conference Board survey – a national metric of business confidence – interviews 100 CEOs across the U.S. A score of 50 indicates the same percentage of positive and negative responses, while scores higher than 50 indicate more positive than negative responses, and vice versa for scores lower than 50. Ultimately, this means CEO confidence nationally may be leveling out as well.

“The ‘shock and awe’ phase of the general economic crisis is over, but the fundamental restructuring of economic policy triggered by the crisis is just beginning,” said Bob Atwell, CEO of Nicolet Bank, in a report to shareholders and bank customers earlier this year. “In particular, the financial services and health care sectors are the subject of massive new legislative initiatives. Consequently, the environment remains clouded and complex, but we believe this chaos creates great opportunity for seasoned companies.”

Thinking ahead, creating opportunity

Green Bay-based consultant Jack Riopelle is a retired owner and president of an industrial firm who now shares his expertise to help up-and-coming businesses plan their future strategically. He’s also a regular participant in The Business Pulse survey, and believes the recession created opportunities for those business owners who were forward thinking.

“I think the New North business climate is a tale of two cities,” Riopelle said. “In my opinion, companies that innovated, reduced structural costs and/or created new markets or products during the Great Recession are doing well.”

Riopelle believes many of those CEOs who hunkered down during the recent recession and continued the “same old-same old” routine are probably struggling right now. Their competition has passed them by, he said.

This recent quarter’s 22 percent improvement in the Future Expectations Index did catch Riopelle by surprise.

“It’s unusual for the Future Expectations Index to spike this high in one quarter, so we need to watch what the CEOs say in the next Business Pulse,” he said.

The next Nicolet Bank Business Pulse survey will be in the field shortly. Northeast Wisconsin CEOs will weigh in and either celebrate or commiserate.

If you are a CEO, business owner or general manager in the New North, you are welcome to join The Business Pulse conversation. Each quarter, Nicolet Bank will email you a short business survey. After the results are analyzed by the Strategic Research Institute at St. Norbert College, the results are sent to respondents.

It doesn’t cost anything but a few minutes of your time. To enroll, contact Bob Atwell, CEO at Nicolet Bank ( or Mike Daniels, president of Nicolet (

Michael Bina is a writer, educator and thought leader based in Green Bay. Read his musings about business on his blog at