This is one of the main findings of NJBIA's 2004 Business Outlook Survey, which NJBIA President Philip Kirschner presented November 18 at a news conference in Trenton.

Kirschner said three difficult years-in which actual sales, profits and employment fell short of expectations for many employers-has tempered the optimism found in the Association's 45th annual survey.

"We find that business confidence in New Jersey, while improved, remains guarded," NJBIA President Philip Kirschner said in the news conference.

Forty percent of companies responding to NJBIA's 2004 Business Outlook Survey said they expect conditions in their industries to improve in the near term. This is the most expansionary assessment in six years, and expectations are more positive than negative for all major industry sectors, including manufacturing.

But the outlook of individual companies for their own sales, profits and employment in the year ahead remains subdued. This outlook slightly exceeds last year's improved outlook.

Asked to assess the state's business climate, only 28 percent said New Jersey is a good place for business expansion.

The survey of NJBIA's 21,000 member companies was conducted in September 2003. The findings are based on the first 2,000 responses, which came from companies of every size and every industry across the state. The vast majority of respondents were small companies employing one to 24 people.

General Economic Outlook
Forty-seven percent believe economic conditions will improve for the US economy during the first six months of 2004. Only 16% expect national economic conditions to deteriorate, down from 42% two years ago at the recession bottom. This is the most expansionary assessment since the 1986 survey, and the second year of substantially improved expectations.

With regard to respondents' own industries, 40% expect conditions in their own industries to improve in the first half of 2004, up from 28% two years ago. Nineteen percent anticipate a worsening, down from 33% two years ago. Considerably more firms are positive than negative within all major industry sectors. Even within manufacturing, where optimism is the most subdued, 41% expect improvement, and only 26% believe conditions will worsen.

Respondents are less upbeat about the near-term outlook for the New Jersey economy. Thirty-four percent expect the New Jersey economy to pick up steam in the first half of the year, up from 28% last year and 22% the year before that. Twenty-six percent expect conditions to worsen in New Jersey, down from 31% and 42% in the two previous surveys, respectively.

Employment
The weakest link in the outlook is employment. Twenty-three percent of survey participants anticipate hiring more workers next year, and 11% anticipate reducing employment. The remaining 66% expect to maintain employment at current levels. This is even somewhat below last year's employment projections, which, as it turned out, were above the mark. A weaker than expected economy caused many employers to scale back their hiring plans in 2003.

When polled a year ago, 24% of companies anticipated adding workers to their payrolls in 2003 and only 10% anticipated making cutbacks. Because of weaker than expected conditions, almost the reverse came true. Only 15% of this year's respondents reported adding workers to their payrolls in 2003, while 24% reported making cuts. This marked the third consecutive year in which actual hiring conditions fell short of expectations.

Sales & Profits
As with employment, expectations for rising sales and profits over the past year failed to materialize for many companies. Our 2003 outlook survey found more companies than not expecting their sales and profits to rise. Actual conditions turned out to be less favorable, with more companies reporting declines than increases.

Looking ahead, 50% of all respondents expect sales to rise in 2004 and only 23% anticipate a decline, barely changed from last year's expectations. Forty-four percent of respondents project increased profits in 2004 while 28% anticipate a decline. Expectations are above last year's levels.

Business Cycle
Fifty-seven percent said their industries were either expanding (19%) or at least recovering (38%) from recession when the survey was conducted in September 2003. Two years ago, only 34% said their industries were in the expansion/recovery phase of the business cycle. Thirty-seven percent said their companies were still in recession, down from 43% last year, and only 6% said their companies were heading into recession.

Business Climate
Attitudes about New Jersey's business climate have declined. Only 28% agreed that New Jersey is a good site for business expansion. A significant majority of employers said New Jersey is worse than other states in its attitude toward business (74%), in requiring employers to pay more than other states in corporate taxes and fees (94%) and requiring higher regulatory compliance costs (86%).

However, a significant majority still believes New Jersey is better than other states in the quality of its public schools (69%), the quality of its workforce (66%), and as a place in which to live (64%).

Biggest Problems
Employers cited health insurance costs as their worst problem. This was followed by property taxes, frivolous lawsuits, state corporate and business taxes and state environmental regulations.

McGreevey Says No to Gas Tax Increase, Calls for Greater Savings, Efficiencies at NJBIA's Public Policy Forum
Governor James E. McGreevey chose NJBIA's Public Policy Forum on December 9 to announce his opposition to increasing the gas tax and asked the Department of Transportation to find savings and increase efficiencies to meet the state's transportation needs. In a bullish speech to more than 200 business leaders, McGreevey talked about a number of probusiness initiatives his administration has accomplished and continues to pursue. He then said that he did not want to risk the state's fledgling economic recovery with a gas tax increase.

"At this time, I cannot in good conscience say that we have exhausted every way to save money, that we have not reduced all unnecessary spending, or that we have done everything in our power to prioritize our spending on the most important safety and congestion projects," McGreevey said.

"In this period of economic uncertainty, as New Jersey's economy begins to rebuild, as New Jersey begins to emerge from a period of economic downturn, with small businesses struggling to create jobs, with families struggling to pay bills, I contend it is the wrong time to increase the gas tax, and I will not support it," McGreevey said.

While NJBIA believes the state's transportation system must be maintained, the Governor's approach to finding alternatives to hundreds of millions of dollars in increased gas taxes is a sound one.

McGreevey's speech was the highlight of a day-long event that featured legislative leaders Dick Codey, Leonard Lance, Alex DeCroce and John Wisniewski in a debate over legislative issues that was moderated by CN8 Correspondent Laura Jones. Similarly, NJN's Michael Aron presided over a panel of political experts who discussed the impact of the recent election. It featured PolitiFax publisher Nick Acoccella, Princeton Public Affairs founder Dale Florio, Public Strategies Impact Partner Harold Hodes and Rutgers Political Science Professor Alan Rosenthal. Also, Joel Naroff, Commerce Bank's chief economist; Dr. James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University; and Rae Rosen, senior economist with the Federal Reserve Bank of New York assessed the state's economic health. NJBIA also presented awards to J. Russell Cerchario of Schering-Plough Corporation and state Senator Leonard Lance for their contributions to the business community.

But the big news was McGreevey's position on the gas tax. The Governor said there are "too many families struggling to pay their bills and take care of their loved ones," to raise taxes at this time and that New Jersey had to "learn to do more with less." Instead, McGreevey called on Department of Transportation Commissioner Jack Lettiere to find savings, to cut costs, reduce bureaucracy and reprioritize the most important critical safety and congestion projects. "We're going to find a way to make this work with the revenues we have," he said.

McGreevey said that he has worked for the last two years to eliminate a decade of fiscal mismanagement, cut spending, balance the state budget and close budget deficits. Now, the economy is growing and creating real jobs. While there should be no increase in the gas tax, he said, maintaining a sound transportation system is essential and will continue to be an important administration priority.

The Governor also pledged to make economic growth a top priority of his administration in the year ahead. He reiterated his pledge to create 200,000 new jobs over the next five years and attract 500 new businesses. He also talked about his support for new laws making students more proficient in technology, expanding the Business Employment Incentive Program (BEIP), and creating a Healthcare Mandates Advisory Commission aimed at reigning in the cost of health insurance.

"New Jersey clearly has outperformed our neighbors," McGreevey said in reference to recent job growth.

"But we must continue to work hard with a focused vision to maintain this success. Economic development and job creation will be the cornerstone of the state of the state address and of our administration in the coming year."

Governor McGreevey Signs Into Law NJBIA-Backed Billto Create Healthcare Mandates Advisory Commission
Governor James E. McGreevey on November 24 signed into law legislation that will help reign in exploding health insurance costs by creating a Healthcare Mandates Advisory Commission. The bill, S-2275 (Bennett, Codey, Roberts), was one of NJBIA's top priorities and a key component of the Association's 2003 Economic Growth Agenda. The commission will examine the financial, medical and social impacts of all proposed legislative healthcare mandates before legislative action is taken. Currently, there is no formal mechanism to provide information on the financial impact of such mandates.

"Year after year, employers are hit with health insurance premium increases of 15 percent, 20 percent or more. It is consistently the number one problem facing our members," NJBIA President Philip Kirschner said in a public statement immediately after the bill was signed. "This new law is designed to address that. On behalf of the business community, I want to thank Governor McGreevey and the many legislators who worked so hard on this."

Legislative mandates require employers to provide coverage for specific conditions, whether or not employees want or need them. Such mandates now account for as much as 20 percent of the entire insurance premium. Since NJBIA members pay an average of $6,325 per employee for health insurance, these mandates on average cost businesses $1,265 per employee.

The cost of these mandates is becoming increasingly hard for employers to bear as health insurance premiums skyrocket. NJBIA member companies paid an average premium increase of 15 percent in 2002 and are expecting a similar increase this year.

Each mandate may not seem very costly by itself. Taken together, however, they are a tremendous financial burden on employers of every size, as well as on employees and taxpayers. For more information contact Melanie Willoughby at 609-393-7707, ext. 205 or mwilloughby@njbia.org.

California Car Clears Budget Panel, Dec. 15 Senate Vote Scheduled
Legislation creating a so-called "Clean Car" program in the state Department of Environmental Protection (DEP) was released December 11 by the Senate Budget and Appropriations Committee. NJBIA opposes the bill, S-2351 (Bennett/Adler). The committee amended the bill to include a study commission, eliminate sales taxes for hybrid vehicles and sunset the measure's provision in four years. At press time, the measure was scheduled for full Senate consideration on December 15.

The bill would impose California's strictest-in-the-nation automobile emission standards on all cars sold in New Jersey. Furthermore, the bill would require in the future at least 10 percent of the vehicles manufacturers produce and retailers offer for sale in state to be zero-emission vehicles or hybrid vehicles that use a combination gasoline and electric power. To implement the program, the bill would create a Clean Car Division in the DEP.

NJBIA opposes this bill because there is no evidence that this program will protect air quality any better than existing emissions standards. The DEP has stated that this legislation will not provide any emission reductions under the State Implementation Plan (SIP), which is used to measure real reductions in primary air pollutants.

Furthermore, the state should not be telling businesses what kind of cars they should sell. In this case, there has been little consumer demand for such cars. For more information, contact Jim Sinclair at ext. 236.

Meet Our Members
This new feature will provide profiles on the people and businesses that make NJBIA one of the most dynamic organizations in the state. To learn more about what NJBIA can do for you, visit the Get Involved section.

Russ Cerchiaro
Schering-Plough
Union, NJ

Everyone wants to protect the environment. But complying with environmental regulations and dealing with the bureaucracy are expensive, time-consuming tasks.

Russ Cerchiaro, a long-time member and past chairman of NJBIA's Environmental Quality Committee, has dedicated himself to making environmental protection efficient and effective.

As manager of EHS Regulatory Affairs, Communications, and Outreach for Schering-Plough Corporation of Union, Cerchiaro is responsible for making sure that Schering-Plough meets high environmental standards. He has put that experience to work cooperating with various government agencies to help them revise environmental programs.

His work recently earned Cerchiaro NJBIA's 2003 Leonard C. Johnson Award for service to NJBIA, presented December 9 at the Public Policy Forum.

"Russ has spent countless hours bringing the business community's perspective to bear on the environmental laws and regulations that we all have to live with," NJBIA First Vice President Jim Sinclair said. "He has pushed for efficiency and common sense in the environmental policies of the state. Because of Russ's tireless efforts, we have a regulatory structure that is much more effective and much easier to comply with."

Cerchiaro is a long-time member and past chairman of NJBIA's Environmental Quality Committee and has long been recognized as one of the most influential people in New Jersey for his work as an environmental professional.

Cerchiaro led an industry effort that successfully reformed New Jersey's air statutes and regulations, and worked on several pieces of major environmental legislation. He continues to serve on several industry workgroups that are reshaping state environmental programs such as air permitting, site remediation, DEP/EPA incentives, and natural resources damages.

Quote of the Month
"In this period of economic uncertainty. I contend it is the wrong time to increase the gas tax, and I will not support it."

NEW NJBIA Benefits Report
An Employer's Survival Guide to Employee Benefits
You know how your products and services stack up against the competition. You may have a good idea of how your salaries and wages compare to those of your competitors. But do you know where you stand on benefits?

Employment benefits like health insurance, paid vacation and retirement plans now account for almost a third of employee compensation, according to the US Department of Labor. In today's competitive world, businesses need to know how their benefits packages rate.

That's why NJBIA compiled its first ever Benefits Report. Based on responses from 688 New Jersey companies, this publication provides answers to 173 different benefit questions in five separate categories. Results are broken down between small and large companies as well as hourly production and maintenance, office nonexempt, and salaried exempt employees.

Make your business more competitive. Order your copy of the NJBIA Benefits Report today! The publication is available at a cost of $95 each for NJBIA members and $200 each for nonmembers (plus 6% NJ sales tax). To order your copy, contact Christine Lopez at NJBIA at 609-393-7707, ext. 224, or clopez@njbia.org..

Mark your Calendar

Meet The Decision Makers 2004

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