Bad Business Outlook Demands Attention

September 6, 2005
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The National Federation of Independent Businesses-Michigan last week released results of its survey of small businesses in the state, comparing it to 26 other neighboring and larger population states. The findings are probably not a surprise to employers of fewer than 250 people, but re-emphasize the state’s failing as a supportive business environment.

NFIB Michigan State Director Charles Owen commented, “Michigan’s ranking from the first and second quarter survey was so poor we didn’t think they could get much worse, but they did.” Michigan ranked last among the 26 states on current business conditions, the outlook for improvement, the outlook for the next three months, and whether sales and profits were considered to be “good.”

The independent survey, conducted by a Las Vegas firm, used a Dunn & Bradstreet list for the random survey of 350 Michigan businesses. It did not “split” the state by geographic territory (as it did in California, Florida and Texas).

Small businesses identified insurance and weaker sales as important issues facing business profitability, and taxes remained a significant concern. Business owners responded that government policies, regulations and taxes were principal reasons for pessimism. Michigan ranked third from bottom on a supportive business environment (with California and Connecticut tied for second from last and Washington in last place).

Asked whether the state was headed in the right direction, 39 percent said “somewhat,” but 32 percent and 22 percent, respectively, indicated it was not too satisfactory or not satisfactory.

The survey also reflected that per-employee costs were headed up in benefits and wage pressure and 63 percent indicated they would curtail any spending on capital equipment, vehicles or business upgrades. Credit availability and bank relationships were not considered to be issues. In the Aug. 29 issue, Grand Rapids Business Journal reported the Small Business Administration’s findings that companies of all sizes are “reducing availability of health insurance to employees due to increasing costs associated with benefits.”

The answers underscore the impact state government is having on its business community. And they underscore the necessity for the governor to embrace the state House-passed budget tax plan. That plan was built on outcomes for state departments and programs and takes more immediate action on the Single Business Tax rollback.

While the governor has proposed $2 billion in bonding or tobacco settlement funds to initiate growth in life sciences and technology, we caution that the latter would see the bulk of that spending, and remind readers that the automotive industry is now considered a technology industry.

Alternative plans have been thoughtfully introduced by the House, and should receive support. Business outlook really cannot get any worse in Michigan.    

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