Two-thirds of the 1,600 employers participating in the 2002 Business Outlook Survey said their industries were already in a recession or heading into one at the time of the attacks. Nearly two-thirds of manufacturers said they were in recession.

"The terror attacks battered an economy that was already weakened," Gonzalez said in the November 20 news conference. "The low levels of business confidence uncovered by our survey are grounded in disappointing business conditions that predated the attacks."

The news conference was well attended with reporters representing the Associated Press, Star-Ledger, Times of Trenton, Trentonian, Asbury Park Press, The Record, New York Times, Philadelphia Inquirer, Capitol Wire, New Jersey Network public television and radio, and WHYY public radio of Philadelphia.

Collectively, the 1,600 companies participating in the Association's 43rd annual survey reported a glum outlook for sales, profits and employment in 2002. Their optimism for the first half of the year fell to the lowest levels in at least eight years. The outlook for sales fell to its second lowest level in 18 years.

"A newfound pessimism has replaced the durable optimism of the prosperous 1990s," Gonzalez said. "One year ago, a majority of New Jersey employers had every reason to believe that the prosperity of the 90s would extend into the first year of the new millennium. Unfortunately, their hopes have been dashed on the ground of an altogether different reality."

NJBIA Executive Vice President Philip Kirschner, in presenting the policy findings of the survey, said employers are most troubled by fast-rising healthcare costs and by a property tax burden that is already the nation's highest.

"In the face of falling sales and their inability to raise prices, many employers are struggling just to meet their weekly payroll expenses," Kirschner said. "The message from our members to New Jersey's newly elected government leaders is clear: lower the cost of health insurance and stabilize property taxes."

Following are some of the primary survey findings:

Industry Outlook
Compared to last year, the outlook for 2002 is gloomy.

• Forty-two percent expect conditions to worsen for the New Jersey economy in the first six months of 2002, double the proportion of survey respondents anticipating worsening conditions last year. Thirty-six percent expect conditions to remain the same, down from 53% a year ago; and 22% expect conditions to improve, down from 26% last year. The story is similar for the national economy.
• Turning now to the outlook for their "own industries," employers as a group are more optimistic about conditions in their industries than they are about the state economy. One third of respondents expect conditions to worsen in their own industries, but only 28% expect conditions to improve. Four in ten employers expect conditions in their industries to stay about the same.

Recession a Reality
Employers' current pessimism is grounded in the reality of disappointing business conditions in 2001.

• When the survey was conducted in September, two-thirds of respondents said their industries were already in recession (39%) or headed for recession (27%). Only one-third said their industries were expanding or recovering from recession. This is the reverse of the recession sentiment found in the survey last year, when approximately two-thirds of businesses said their industries were expanding or recovering, and only one-third reported they were in a recession or moving into recession.

Sales & Employment
Turning now to the outlook of individual companies for their sales and employment in the year ahead.

• The sales outlook is bleak. The percentage of survey respondents expecting sales to rise in the year ahead has fallen to 42%, down from 56% of respondents a year ago. But the proportion expecting sales to decline has risen to 31% of companies, double last year's 15%. The proportion of companies expecting sales to remain about the same is nearly unchanged at 27%. This indicator of future business conditions has reached its second lowest level in at least 18 years. Only the Association's 1991 survey, conducted at the bottom of the last recession, contained a more pessimistic outlook for sales.
• Looking at employment expectations, only 21% of employers anticipate hiring more workers in 2002, down from 30% in the previous survey year; and 13% of employers expect to shrink their workforce in 2002, up from 7% last year. Two-thirds of employers expect to keep employment stable, little changed from last year. Overall, this is the weakest employment outlook in the last eight years.

Labor Shortage Eases
One of the most significant themes in NJBIA's outlook survey last year was an intensifying shortage of skilled labor that was hampering the ability of companies to expand their businesses. Eight years of steady economic expansion had ushered in what arguably had become the most acute labor shortage in 30 years. As the number of unemployed has risen in the current economic downturn, the labor markets have weakened, easing this pressure somewhat.

• Seventy-three percent of survey respondents reported difficulty in finding skilled labor in 2001, down from 80% who reported this same difficulty last year. Sixty-two percent had difficulty finding professional/technical workers, down from 72%. The biggest change came in the category of managerial talent. Forty-six percent reported difficulty in finding the managers they needed, down significantly from the 59% who reported this difficulty a year ago.

Price Constraints
With sales and profits in decline, employers are also being squeezed by their inability to raise prices.

• Slightly more than one third of companies (36%) raised prices in 2001, down from 42% of companies the year before. Twelve percent lowered their prices in 2001, compared with 9% the year before, and 52% kept prices essentially the same, little changed from 50% the year before. Thus, in 2001 nearly two-thirds of survey respondents (64%) lowered their prices or left them unchanged. Nine in ten companies said they could not raise prices due to domestic competition pressures.

The results of NJBIA's 2002 Business Outlook Survey, which was conducted in early and mid-September, are based on responses from the first 1,600 member companies or 9% of the Association's 17,000 member companies, an exceptional rate of return. The respondents represent every industry and county in the state. The vast majority of respondents were small companies employing fewer than 50 people. NJBIA, with 17,000 New Jersey employers as members, is the nation's largest state-level employer association. For more information, contact Chris Biddle at 609-393-7707, ext. 227.

McGreevey Calls for Budget Belt-Tightening and Business-Education Partnerships at NJBIA's Public Policy Forum
Governor-elect Jim McGreevey called on the business community to invest in technology education and warned of austere state budgets in the future while addressing more than 300 business leaders at NJBIA's Public Policy Forum on December 5. It was the Governor-elect's second major meeting with the business community in as many weeks. On November 29, NJBIA helped organize a roundtable with McGreevey and about 40 business leaders to discuss economic, business and education issues.

In his speech at the Policy Forum, McGreevey asked the business community to "join with me" to instill fiscal discipline in the state budget and form a new education partnership.

"There is no more singularly critical element for the preparation of our workforce than having a quality education," McGreevey said, calling better school performance and closing the achievement gap "among our most urgent requirements."

McGreevey said the business community needs to be "brought into the equation" in education. He said he wanted to "co-invest with the business community to improve worker's skills." Specifically, he proposed creating career academies in each county as an alternative to the traditional high school that would focus a student's education on specific areas, such as biotechnology or telecommunications. The academies would be formed in conjunction with major businesses to address specific areas of expertise.

"What I am offering today is a partnership-asking the major businesses of this state to work collaboratively and constructively to provide for these career academies," McGreevey said. "I believe there can be nothing more important."

Regarding the budget, McGreevey repeated his call for the current administration and Legislature to halt new spending before he and the state's newly elected legislators take office in January. By McGreevey's estimate, New Jersey will have to close a multi-billion dollar gap between revenues and spending obligations in the coming fiscal year, in addition to managing his estimate of a $1.9 billion budget shortfall this fiscal year, which ends June 30, 2002.

In the weeks following his November election, McGreevey has repeatedly asked the outgoing Legislature and Acting Governor Donald T. DiFrancesco to stop new spending programs in the face of a looming budget deficit. DiFran-cesco's administration has said that McGreevey is overstating the budget shortfall and that he and legislative leaders are being prudent in their spending.

The Governor-elect called on DiFrancesco to freeze 50 percent of each department's operating budget, all discretionary state aid and grant programs, all "Christmas tree" spending items, and new appointments.

McGreevey gave his keynote address as the finale to NJBIA's 2001 Public Policy Forum, an annual conference on the economy, politics and public policy, held this year at the Sheraton at Woodbridge Place in Iselin. NJBIA President Joe Gonzalez kicked off the event with a presentation of the findings of NJBIA's 2002 Business Outlook Survey, representing the opinions of 1,600 New Jersey employers about future business conditions. The survey produced a glum outlook for sales, profits and employment.

Four legislative leaders-John Bennett and Dick Codey from the Senate and Alex DeCroce and Joe Doria from the Assembly-shared their ideas for the next legislative session during a panel discussion moderated by Laura Jones of News12 New Jersey.

Four of the region's top political analysts assessed the fallout from the gubernatorial and legislative elections during the political outlook panel moderated by New Jersey Network Political Correspondent Michael Aron. The panel featured national political consultant Kellyanne Conway, political analyst Stephen Salmore, Democratic Party advisor Harold Hodes, and veteran State House reporter Herb Jackson. At the same time, NJN's Rich Young hosted an economic outlook panel featuring Dr. James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University; Lewis Eisenberg, chairman of the Port Authority of New York and New Jersey; Steven B. Kalafer, chairman of Flemington Car & Truck Country; and Joel Naroff, chief economist with Commerce Bank.

NJBIA also recognized the accomplishments of two outgoing legislative leaders. Retiring Assembly Speaker Jack Collins and retiring Acting Governor and Senate President Donald DiFrancesco each received a Distinguished Legislative Leadership Award. The crowd welcomed both Collins and DiFrancesco with standing ovations.

Additionally, NJBIA presented state Environmental Commissioner Robert C. Shinn Jr. with the Paul L. Troast Award and Patrick Ryan, Chairman of the Hopewell Valley Community Bank, with the Leonard C. Johnson Award.

During the legislative leaders panel, a Senate evenly split between Republicans and Democrats at 20 seats apiece provided fodder for the panelists. Senate Democrat Leader Codey called it "a marriage.that neither one of us wants to be in." He and Senate Republican Leader Bennett said this was an opportunity to show people that political leaders can work together.

The leaders also addressed paid family leave. Bennett and Republican Assembly Leader DeCroce indicated that they did not support paid family leave. Codey said he did not support the current bill but wanted to see a more workable bill. Democratic Assembly Leader Doria expressed concern about the impact on small businesses and the cost of the bill.

Manufacturers Strut Their Stuff At Trenton State House During NJBIA's 6th Annual Made In New Jersey Day
New Jersey manufacturers set up shop in the halls of the State House to show off their New Jersey made products for the Senate and Assembly members who were in town for legislative business on Thursday, November 29, as part of the New Jersey Business & Industry Association's annual Made in New Jersey Day.

Companies from across the state showcased American flags, military ribbons, life rafts, canvas tote bags, solar swimming pool heaters, vinyl windows, and dozens of other products made every day in the Garden State.

"Made in New Jersey Day is an opportunity for our members to strut their stuff," NJBIA President Joseph Gonzalez said. "One out of every five of our member companies is a manufacturer, creating jobs and making investments in communities throughout New Jersey. This is an effort to educate government and the public about the important contributions manufacturers make to our economy."

"This is a fun event that lets our lawmakers know about the interesting and exciting products our entrepreneurs have developed," NJBIA Executive Vice President Philip Kirschner said. "But there is a serious side to this event as well. We're here to let our legislators know that it is vital to keep manufacturing alive in New Jersey and to support manufacturers in their efforts to create jobs in the state."

Twenty-five New Jersey manufacturers exhibited their products in the State House, sharing how they are made with legislators and Governor-elect Jim McGreevey.

Annin & Co. of Roseland demonstrated their American flag manufacturing operation, Switlik Parachute Company, Inc. of Trenton displayed their life rafts and life preservers, and Ballet Makers, Inc. of Totowa exhibited their toe shoes.

"We were honored to be a part of the NJBIA Made in New Jersey Day and we are proud to manufacture our product in Fair Lawn, New Jersey," said Lisa Giacoio-Egan, human resource manager of Ballet Makers. "We're already looking forward to next year's event."

Made in New Jersey Day also featured well-known name brands such as Ocean Spray Cranberries, L'Oreal Cosmetics, and Lenox China.

The names of other exhibitors may not be as recognizable even though their products are everywhere. Accurate Box Co. Inc. of Paterson, for instance, manufactures containers and folding cartons for familiar products like Kleenex tissues. Robert Lighting and Energy makes fixtures for fluorescent lights.

Twenty-two companies contributed product samples for the famous "New Jersey Product Sampler Bag," which was distributed to legislators during the luncheon. Sample products include Polaner All Fruit preserves by B&G Foods of Parsippany, M&M Candies from Masterfoods USA of Hackettstown, and Worchestershire sauce by Lea and Perrins of Fair Lawn.

Made In New Jersey Day was sponsored by A. J. Jersey, Inc./Crown & Daewoo Lift Trucks of South Plainfield; Anheuser-Busch, Inc. of Newark; International Flavors & Fragrances of Union Beach; Phillips Bayway Refinery of Linden; and PSE&G of Newark.

For a complete list of participants, go here.

Employers Face Tax Withholding Changes for 2002
Employers face changes in tax withholding rates and taxable wage bases for 2002. Higher personal exemptions and standard deductions and revised tax brackets are reflected in new federal income tax withholding tables. The social security (FICA) tax will apply to an increased taxable earnings base. On the state level, the maximum taxable wage base will rise for contributions to the State Plan Temporary Disability Insurance, Health Care Subsidy Fund, Unemployment Insurance Fund, and Workforce Development Partnership Fund. The following rates and wage bases are applicable in 2002.

SOCIAL SECURITY (FICA)

• Maximum taxable earnings $84,900 (up from $80,400).
• Employee and employer tax rate - 6.2% (.062).
• Self-employed tax rate - 12.4% (.124).