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Poll: CEOs’ Confidence in Local Economy Hits Three-Year Low

Confidence levels among CEOs of small- to mid-sized U.S. businesses are at a three-year low. In San Diego, the No. 1 cause for concern is staffing.

Vistage International, a Torrey Pines-based executives organization, polled 1,900 of its members recently on their thoughts about the economy.

The results of the survey, which included responses from 82 San Diego chief executives, were released this month.

Among San Diego respondents, 37 percent said finding, training and retaining qualified staff is their No. 1 concern, followed by 22 percent who said they are most concerned with the overall stability of the economy, including the war in Iraq, budget deficits and the housing market.

Rounding out the top three concerns were growth issues.

A total of 21 percent of San Diego respondents are concerned about growing too fast or too slow.

Vistage has been releasing quarterly confidence indexes since 2003. Since its highest peak in the fourth quarter of 2004, the index has fallen nearly 23 points.

“The biggest thing that this is telling us is that confidence with CEOs is the lowest we’ve seen since we started the Index three years ago,” said Dan Barnett, Vistage’s chief operating officer. “And they’re losing confidence at a significant measurable rate.”

Dennis Rethmeier, owner of Western Pump Inc. since 1988, faults a culmination of things for the uncertainty.

“I think it’s a general hangover of some kind now,” said Rethmeier, whose company constructs and services various types of commercial gas stations.

Interest rates, energy costs, the war in Iraq and key upcoming elections, both on the state and national levels, are just a few of the things being blamed.

Feeling The Pressure

“For the first time, I was leaning towards negative,” Rethmeier said. “I’ve been mostly optimistic because I had not seen a dip in my business but now I can see it’s slowing.

“I think we are going to have a recession, it’s more than just a leveling off,” Rethmeier added.

Western Pump employs about 50 people.

Another local small businessman feeling the pressure is Guy Iannuzzi, chief executive officer of Mentus, a Mira Mesa-based advertising agency founded in 1980.

Iannuzzi, who employs about 20 people, feels especially qualified to gauge the market because marketing budgets are usually the first things cut in tight times.

“A company like mine is a very, very good compass of the economy,” Iannuzzi said. “Like I like to say, we’re the first ones out of the lifeboat when things get rough.”

Iannuzzi specializes in biotech and life science companies, and says his business has been “booming” the last two years but the pace has slowed in the last two quarters.

California, in particular, Iannuzzi said, is not producing as many new clients for him, with most of his new business coming from out-of-state.

“This is not a good election year for California,” Iannuzzi said. “Projects are not declining but they are being cut back.”

But not everyone agrees with the Vistage report.

Odd Man Out

Tom Campanaro co-founded Engineering Fitness International Inc. in 1974. The Miramar-based company sells exercise equipment to consumers, rehabilitation facilities and commercial fitness gyms and is best known for the Total Gym.

While Campanaro agrees it’s getting harder and harder to find new staffing, he’s extremely optimistic about his company’s growth potential.

Campanaro said he expects his business to increase 10 percent to 15 percent in the next 12 to 14 months, largely because when the economy goes down, gym memberships go up as people look for stress relief.

Campanaro sees how others might be more sheepish about the future. He believes the constant threat of terrorist attacks may be to blame.

Although the Vistage survey did not explicitly poll respondents about the terrorism factor, it was grouped into questioning about the overall stability of the economy, which ranked among the third top concern in San Diego and the fourth nationally.

Looking Forward

When it comes to the next 12 months, the Vistage survey found that locally, only 15 percent of those polled expect things to improve in the next 12 months compared to 44 percent who expect things to stay the same and 41 percent who expect things to worsen.

The somewhat evenness of the results prove there’s no need to panic yet, according to Vistage’s Barnett.

“They’re not saying that things are going to get really bad, they’re just saying it’s going to get worse than it is today,” Barnett said.

Iannuzzi of Mentus agrees.

“It isn’t that we look forward and things are black,” Iannuzzi said. “It’s just that we’re not as excited as we were.”

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