(Crain's) ? Small manufacturing and distribution executives in Illinois are starting to lose optimism about their business prospects as their faith in the U.S. and world economy plunges, a new survey finds.
Despite deepening global worries, top exporters are more likely to report their businesses were thriving and growing, according to the latest quarterly survey by tax and consulting firm RSM McGladrey Inc.
The somewhat contradictory findings stem from the split performance of overseas economies. Executives focus largely on Europe, which is close to sinking back into recession, while emerging markets such as China and Brazil are sucking in U.S. exports as their economies surge.
?Companies that can tap into that global customer base and be selling product internationally tend to be doing better,? said Karen Kurek, McGladrey's Chicago-based national manufacturing and distribution practice leader.
For the second quarter in a row, slightly fewer executives described their businesses as thriving, the survey finds. The share slipped to 43% in the fall quarter, from 44% in the summer and a four-year high of 45% in the spring.
Still, just 4% said their companies were in decline.
The most optimistic executives were those in automotive, food and beverage and chemicals companies.
But the number of executives who are pessimistic about the U.S. economy more than doubled this fall from since last spring, to 78%.
Roughly a third cited federal gridlock and a sinking global economy as the biggest risks to their business growth, eclipsing higher commodity prices. Last spring, the stalemate in Washington and world economic troubles were ranked the top problems by less than half that percentage.
Conversely, respondent worry about higher commodity prices shrank to 32% from 48% six months earlier, as prices eased and executives became more confident they could pass along higher costs to customers.
?Business executives are really concerned about what's happening in Washington, D.C., and that they can't pass effective legislation,? said Ms. Kurek. ?There's a lot of uncertainty about what's going to happen with tax rates and what's going to happen with health care costs.?
Overall, Illinois executives' perceptions mirrored their peers' answers across the rest of the country. But they differed in a few areas, including their hiring outlook and where they export.
When it comes to their workforce plans, 44% of Illinois companies expect to hire more; that's less than the national figure of 50%. (The state's jobless rate rose to 10.1% in October, more than a full percentage point higher than the national average of 9%.)
And while the hot emerging market for many U.S. companies was Brazil, with 29% of executives saying they now ship goods there, 25% of Illinois named it as an export market. Instead, they mentioned Asia and other parts of South America more, Ms. Kurek said.
Of the 512 executives polled by McGladrey, 96 are from Illinois and 214 are counted in the Great Lakes region; they were mostly from Illinois, Indiana, Ohio and Wisconsin, though respondents from Michigan, western New York, western Pennsylvania, Kentucky and West Virginia were included in this group.
Nine out of 10 of the survey participants are privately held or owned by private equity and three-fourths have sales of less than $100 million a year.
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