Economic Forecast 2012 Overview

Advertising executive Patricia Courtois looks at 2012 for her firm, for the firm's clients, and, essentially, for the entire region's economy, in three words that could hold for hundreds of businesses: exciting, challenging, frustrating.

Welcome to 2012 — the year in which many hope will be marked by recession recovery. Still, executives and entrepreneurs from Tampa to Naples are going into the next year with a highwire mix of confidence and trepidation.

There is confidence, in varying degrees, that the job market will continue to improve, and consumer spending will return in force. But there's also a substantial hum of trepidation, considering all the factors that could impact the confidence in a negative way. So just like it was in 2010 and 2011, uncertainty is the word of the day in economic forecasting.

For example, Doug Sutter, with Sarasota-based Sutter Roofing, says even with a solid 2011 the cloud of uncertainty lingers over 2012. The firm's revenues are up 20% in 2011 over 2010, to about $30 million, but are still down from pre-recession days.

“We've got the best backlog we've had going into a new year in five or six years,” says Sutter. “But I'm still worried about 2012.”

State government officials are also worried about the 2012 economy. Forecasters recently reduced the state's projected tax revenues through early 2013 by $1.6 billion, according to the News Service of Florida. That means the state's budget gap for the next fiscal year could surpass $1.3 billion.

“We're not in any danger of a deficit this year or a special session this year, unlike other states,” Amy Baker, executive director of the Legislature's Office of Economic and Demographic Research tells the News Service. “But it does make their job going into session, crafting the budget for next year much, much more difficult.”

Here's a closer look at how Gulf Coast business leaders are forecasting the 2012 economy in their area.

Tampa Bay
Ian MacKechnie, founder of Amscot Financial, halted expansion of his company in 2009 amid a murky regulatory and economic environment. But Tampa Bay business leaders can look to the European transplant for a slightly positive outlook in 2012.

“I have quiet confidence,” MacKechnie says. “It may take two or three years to get out of this, but we will,” he says of the Gulf Coast.

MacKechnie has big plans for the coming year, regardless of the uncertainty that abounds. He plans to commence a seven-year expansion, which includes the construction of 175 new locations throughout Florida that will add more than 2,000 employees.

Several business leaders in the Tampa Bay region are feeling Ian MacKechnie's restrained jubilation regarding the economic outlook for 2012. For example, take Chris Adkins, director of sales and marketing at the Renaissance Vinoy Resort & Golf Club in St. Petersburg.

Adkins witnessed the fallout from the BP oil spill and impact on the area's tourism. The effects lingered, but he sees some improvement coming in 2012.

“I'm still seeing companies from our backyard like Tech Data and Raymond James spending money here,” Adkins says regarding business at the Vinoy. “But they are definitely being more cautious. Even with something as trivial as hospitality, they want the highest return on investment.”

The Vinoy also benefits from its proximity to the 2012 Republican National Convention, which will be held in Tampa for the first time. The event, which hits Florida for the first time since the Nixon years, is expected to bring $171 million in economic impact to the region, according to event organizers. Adkins hopes to capture some of those expected dollars.

Despite some strong indicators, Adkins explains the hotel had to shift its rates down to stay competitive. “There is still some angst from the leisure standpoint,” he says. But he still estimates 5% to 10% growth for the coming year.

“I think there will be recovery,” Adkins says, “but it will be slow and steady.”

Slow and steady recovery is not a sentiment shared by Scott Dobbins. In fact, the president of St. Petersburg-based Gulf Coast Commercial LLC is feeling bullish about 2012. His position at the commercial realty firm, which recently branched into business brokerage, gives Tampa Bay business leaders a reason to feel the same.

“We have seen an increase in revenues as well as transaction volume,” Dobbins says. “Looking at the last three years we're seeing an upward trend going into 2012.”

The increased demand for buying commercial property and businesses is due to baby boomers' notion of retirement shifting, he says. “The generation that is retiring right now wants to buy businesses,” he says, “and along with businesses, they're buying jobs.”

Dobbins explains that he is working with Canadians and Midwesterners who want to purchase properties in the Tampa Bay area for the lifestyle and economic
climate.

Although there may be some positive commercial realty and business brokerage in the fourth quarter of this year, Gary Sasso is hesitant to declare the economy will recover in 2012. The president and CEO of Tampa-based Carlton Fields takes a more pragmatic approach.

“I don't think we'll see a surge,” Sasso says. “I think we're facing a new era of gradual growth.”

Sasso believes he must pay close attention to the market to meet clients' needs in 2012. He says that the economic climate in Europe will create volatility for the Gulf Coast economy, which his firm will have to mitigate for those Carlton Fields represents.

Tampa Bay business leaders seem to agree the region will see some recovery in 2012, but not enough to burst into song and dance.

MacKechnie, winner of the Business Review's Entrepreneur of the Year award in 2006, is betting on a positive year. “Everybody sounds so negative, but when I came to here 25 years ago, I did it for a reason,” he says. “And I'll put my money on the Gulf Coast and all of Florida.”

Sarasota-Manatee
Longtime accountant Merrill Wynne is painfully aware of the economic punishment many businesses have felt in the Sarasota-Bradenton region.

Indeed, Wynne says his firm, Atlanta-based Habif, Arogeti & Wynne LLP, has heard many potential clients project 1% or 2% annual growth in 2012 — if their firms will grow at all.

Wynne, however, remains undaunted about local expansion plans. The firm, which entered the market in 2010, plans to open a wealth management division in Sarasota next year, and move that unit and its local accounting business into a 3,000-square-foot office. Says Wynne: “We've been pleased at the progress we've made so far.”

Several other Sarasota-Bradenton companies have made recession recovery progress. But despite some specific turnaround examples, few entrepreneurs or executives are ready to project a return to boom, or even really good times, in 2012.

For example, Patricia Courtois, a principal and chief operating officer at Sarasota-based Clarke Advertising and Public Relations, says the housing and construction industry is still suffering. “What might have been perceived as an upside six months ago,” says Courtois, “is now wiped out.”

That means a host of businesses that rely on housing, from law firms and advertising firms to retailers and restaurants, could be stuck in the struggle. Courtois says “it has not been easy” to drum up new business in the environment. “We are completely at the mercy of the marketplace,” says Courtois. “As people's marketing budgets take a hit, so do we.”

Courtois says one positive development she has seen, which she predicts will carry over to 2012, is a growth in professional services firms that seek branding and marketing work. “They are finding the dollars,” she says. “The need to differentiate is greater than ever before.”

The differentiation factor could push growth at some other local businesses.

Sarasota entrepreneur Kristen Horler, founder and CEO of Baby Boot Camp, a franchise-based stroller fitness program for postnatal women, hopes to continue to plug that theme in 2012. Horler says 2011 was a strong year, at least in terms of recovering from the 2009-2010 slowdown. Horler projects the firm will grow revenues 20% to 25% next year, with the largest expansions on the east and west coasts of Florida.

Another local executive who is confident in a solid 2012 is Walt Augustinowicz. His firm, Englewood-based Identity Stronghold, makes and sells ID badge holders, wallets and credit card sleeves that protect users against Radio Frequency Identification (RFID) technology theft.

The firm's products debuted in Walgreen's earlier this year, which drove growth 20%, to nearly $4 million in annual sales. “Things have been going pretty good,” Augustinowicz says.

He hopes things will go even better in 2012, based on a new commercial the company hopes to air later this year. “If the commercial tests well,” says Augustinowicz, “we could possibly double or triple.”

Lee-Collier
Past economic downturns have fostered the entrepreneurial spirit, and this recession is no exception.

Consider Kristine Graham, who, with her husband Eric Graham, acquired the franchise rights to the Fort Myers and Naples areas of Arcpoint Labs.

The Grahams were both laid off in the recession and decided to become entrepreneurs. After evaluating various franchises, they settled on Arcpoint Labs, which provides workplace drug testing. They opened an office in Fort Myers in August, which has proved successful in its first few months. “We plan to expand into Naples as soon as we can,” she says.

In addition, some of these new entrepreneurs are Baby Boomers who are moving to Florida but aren't ready to retire. “They have money to spend and too much energy to be retired,” says Karen Mosteller, the consulting partner at Fort Myers-based accounting firm Markham Norton Mosteller Wright & Company.

Mosteller says she's helping five nascent companies started by baby boomers in the region. Industries vary from a bed-and-breakfast inn to a liquor store and home-health business.

Baby boomers have something many of their younger counterparts don't have: cash. That's key, because banks remain cautious about lending to startups.

But another advantage for entrepreneurs is that property prices have fallen considerably, giving them opportunities to enter the once-costly market. Banks continue to sell commercial real estate they foreclosed on at low prices and that's not likely to change in 2012, says Rachel Zucchi, partner and managing director with RKL Appraisal and Consulting in Naples.

The recession has forced existing firms in a broad range of industries to remain entrepreneurial. When Grant Phelan's Texas Tony barbecue restaurant in Naples didn't meet expectations when it opened recently, the restaurateur quickly moved away from counter service and added a bar. Now that it's performing better, Phelan plans to replicate it with another restaurant in Fort Myers.

Grant Phelan and his father, Tony Phelan, operate a successful chain of seven seafood restaurants called Pincher's Crab Shack from Sarasota to Naples. Phelan expects 4% to 5% growth in 2012, but says the business demands constant vigilance to costs. “If you rest on your laurels, you'll get passed,” says Phelan, who is scouting additional Pincher's locations.

Business owners who have successfully navigated the recession say next year's outlook depends in large part on forces beyond their control, such as the stock market and the presidential election.

“If the markets are doing well, our customers have the money to spend on our products,” says Ron Brodeur, president of Brodeur Carvell, a custom clothier in Fort Myers. “My prediction for 2012 is based on what happens with the financial markets. There's no certainty, and that seems to be the factor in the businesses I speak with.”

In many cases, companies that operate in the region might report flat sales if they didn't launch new initiatives. For example, Michael Wynn, president of Sunshine Ace hardware stores, says his company recently started selling supplies to commercial painters from its Bonita Springs store, which will contribute to his company's projections of single-digit annual percentage growth in 2012. “We projected there was pent up demand,” he says.

Specialty manufacturers with exposure to national and international markets say they're likely to fare better than companies that depend on the health of the local economy. That's especially true if they do business in fast-growing emerging markets in Asia and South America.

Ted Bill, president of Pelican Wire Company in Naples, says he's projecting 30% increase in sales next year to domestic and international industrial customers. He welcomed Congress' approval of a trade agreement with South Korea, where he has customers.

What could hamper Pelican's future growth is the lack of skilled manufacturing labor in Naples, despite the relatively high unemployment rate. “It's a struggle to find good people,” he says.