Happy days are (sort of) here again

Local business leaders are optimistic about 2010, but with a hefty chaser of caution. It was an expected message shared at the BizTimes‘ Northern Trust Economic Outlook 2010 breakfast held Friday morning, but those in attendance were glad to hear it.

The panel of speakers incuded Michael Knetter, Ph.D, Dean, UW School of Business; U.S. Rep. Paul Ryan (R-Janesville); Bob Arzbaecher, CEO of Actuant Corp.; Aaron Jagdfeld, CEO of Generac Power Systems Inc.; and Andy Nunemaker, president of EMSystems LLC. All agreed that 2009 pretty much sucked in terms of growth, hiring and obtaining capital. But they also had good news and pointers for businesses that made it through the “mother of all recessions.”

Nunemaker kept his message short and sweet, beginning with encouraging businesses to practice “employment arbitrage.”

“In this economy there are many workers with high-level skills and a stong work ethic, willing to work,” he said. A strategy of buying highly skilled employees for less cash due to the weakened economy is one that has been practiced by Nunemaker and other business leaders able to do so.Nunemaker also encouraged business owners to look at aquiring new properties. “Good companies are available and this is the type of economy where good deals are made. If you don’t take advantage, you’ll be kicking yourself later on.”

Jagdfeld echoed Nunemaker’s advice to upgrade talent in a company, while advising business leaders to expand their global presence, increase product development, make use of social networking and use every point of contact with a customer to market the business.

In a taped presentation, Rep. Ryan slammed the Obama administration for nebulus stimulus job results, an overreaching health care bill, higher taxes and legislation aimed at creating a “European-type social welfare state.” None of Ryan’s remarks reflected the recent GOP gain in Massachusetts, implying that the segment may have been taped before the Tuesday election. Instead, he called on Washington to provide a clear choice to Americans, “so we can restore the promise of this great country.”

While the business executives gave solid advice to their fellow travelers, academician Knetter looked into his crystal ball to predict the 2010 economy.  Knetter agrees with other economists that the worst of the recession is over, but that recovery will be slow. Unemployment will hover at the 10 percent level and banks will continue to hold capital close to the vest.

The Obama administration received low marks from Knetter, specifically for failing to have a long term fiscal plan. “Obama needs to show us a credible path to fiscal responsibility at the national level. It is important to have a clear path, even if it isn’t the right path.”

Another administration blunder, according to Knetter, was splitting its focus from the economy to health care and climate change. He said the main priority of the government has to be the economy, whether it is politically wise or not.

He also predicted the stock market would gradually rise, with equity growth ending the year up 10 percent. Knetter believes inflation and the dollar will remain stable, and talk of nations moving off the Dollar standard to the Euro will cease. He went so far as to say the dislike of the Euro among member nations will doom the currency within 20years.

Knetter had two items on his national economic wish list – a gradual and orderly reduction in monetary and fiscal stimulus programs and that the nation maintain its position of leadership in worldwide innovation, secondary education, and conservation. He expressed caution about cap and trade regulation on utilities, instead looking for a shift of tax policy to fossil fuels from the current labor costs. Knetter also wants to see federal immigration policies allow for the retention of smart, talented immigrants who study here.

On the state level, Knetter called for a diversified regional strategy for recovery. In southeastern Wisconsin and the Fox Valley, Knetter wants the state to focus on manufacturing and to improve logistics and the movement of products to major markets. The Milwaukee area should also be encouraged to pursue water technology innovations and build on a strong financial services base.

Added-value agricultural products should be the focus of development in farming regions, with biotechnology, genetic sciences and general educational advancements pursued in Dane County. His pet economic development focus for Northern Wisconsin is tourism, targeting especially the Chicago and Twin Cities markets.

“This will be a slow recovery,” Knetter said.  “But unlike the slow recovery of ’83-’84, we know our advantages and we need to sieze them.”

For more information on the Northern Trust Economic Trends 2010 program, click here.