Optimism mixes with concern over regulation, taxes

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Behind the aggregate Siena College Research Institute survey statistics are scores of individuals who have laid down roots in Rochester, founded companies and often guided them through decades of growth and change.

Some of them echo the rising level of confidence found in the survey.

“I’m on the board of the Rochester Builder’s Exchange,” says Victor Salerno, CEO of O’Connell Electric Co. “At our monthly meetings we go around and ask, ‘How’s business?’ In our last meeting, it was unanimous: Everybody in the room has as much business as they’ve ever had.”

O’Connell Electric itself, a Victor-based electrical contractor that serves mostly New York, today counts a robust $215 million backlog of orders, Salerno says. The company plans to keep hiring both field and engineering staff in 2019. Its biggest problem, in fact, is finding qualified people. However, Salerno sees much promising technology and expertise coming out of the University of Rochester and Rochester Institute of technology.

“I’m an optimistic person,” he says. ‘In my mind, it’s all about creating quality jobs, so people can do well and buy houses and cars.’

Read this post on the Siena College Research Institute’s new survey of top executives: “More growth in business confidence”

Quality jobs and the staffing to fill them translates into business success for Bond Benefits Consulting, whose Vice President Erick Bond seven years ago joined the company his father, Erick Bond Sr., founded in 1992.

“Our business rises and falls with the economic climate—the more people are working, the more people get benefits through their employers,” Bond says. “(While) tariff and trade issues seem to be impacting the outlook nationally, good things are going on in Rochester—innovations in optics and health care—and we’re well positioned to take advantage of that.”

Bond says he grew up in Rochester and is raising his own four young children here.

“I have a great deal of confidence in the economic outlook, in Rochester especially,” he says.

For some business leaders, however, international tariff and trade issues are hitting close to home. Messner Flooring, which sources a lot of material from China, in December saw a 10 percent rise in the cost of Chinese goods. President Peter Messner is glad that a planned rise of tariffs to 25 percent has been delayed.

“We were looking at significant increases in our costs and we didn’t know how we were going to deal with that,” he says. “I’m feeling calmer now, but we are concerned. We buy an awful lot of imported goods.”

Messner says a lot has changed since he filled out the Siena survey months ago. Stock market declines in December and early January reduced the value of consumers’ 401(k) and investment portfolios. Political conflict has shaken people.

“Consumer confidence drives our business,” Messner says. “People saw their investments shrink … and when people are not feeling confident, they put off their purchases.”

Messner Flooring operates two divisions: commercial and residential. The largest is the commercial division, which is less affected by daily headlines because companies make their purchasing decisions a year in advance. It’s the residential side that’s more vulnerable to volatility. Despite a downturn there in late 2018, Messner Flooring saw strong sales in both divisions last year. While the industry as a whole is projecting flat sales for 2019, he adds, Messner Flooring continues to grow.

“We’re not growing because Rochester is growing but because we are taking market share (from competitors),” Messner says.

The top three challenges of concern to Siena survey respondents were health care costs, government regulations and taxation.

Regulation is the issue most vexing to Mike Hogan, president of Information Packaging, a Macedon maker of custom-printed packaging.

“The business climate in New York State continues to get more difficult, especially for a small business, because of more and more regulation,” Hogan says. “The burden of added paperwork raises costs and takes time away from doing things that add value to the company.”

Asked if they had it all to do over again, considering all factors, would they locate their business in New York or someplace else, 66 percent of survey respondents chose “someplace else.” Hogan has no intention to leave the area, but he understands how those respondents feel.

“I consider Rochester my home,” he says. “My friends are here, part of my family is here, and I’ve been in business here for 34 years. But if I could move my friends and family to another place, New York would be the last state on my list to start a business.”

Salerno cites excessive taxation as a reason many business leaders consider fleeing New York.

“One of my top concerns is that the New York State tax situation is getting out of hand, and the state isn’t doing anything about it,” he says.

The state’s so-called millionaires tax drives well-off individuals to relocate to states such as Florida, he says. And now with changes at the federal level, New Yorkers have lost the ability to deduct state and local taxes.

“That’s a double whammy,” Salerno says. “I can name 15 people who moved down South (because of the tax situation). You can strangle people only so long before they say, ‘enough’s enough.’”

Salerno himself has no plans to leave.

“I’m the CEO of my company and I have grandchildren here. We’re not moving,” he says. “We’ll (stay and) take the beating.”

Don Waltzer, president of H&C Tool Supply, says he is confident in Rochester’s business climate, and he loves living and working here. He’d like to see the state better managed, however, to allow business vitality.

“I understand the need to fund social programs in New York State,” Waltzer says. “I just wish that the funding was more efficiently managed. Maybe if it was, the state could afford to be a little more business-friendly.”

One thought on “Optimism mixes with concern over regulation, taxes

  1. Taxes and regulations. Yawn. This complaint is beyond tiring. There seems little correlation between high taxes and economic growth (CA and the NYC area for instance), so please stop using that as an excuse for your business failure. The business community would do itself a favor if it cited specific regulations that are stymieing their growth — tell your story. How might the regulation be modified to obtain better results? Can the tax structure be rearranged without starving government? If you want to conduct business in a libertarian business climate, then perhaps you should relocate. New Yorkers don’t want to live like that.

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