O'Keefe in the News

State poll bullish on biz, sour on politics

State poll bullish on biz, sour on politics

January 11, 2016

As published by Tom Henderson in Crain’s Detroit Business

West Michigan and Southeast Michigan are divided by most of the width of the Lower Peninsula — and divided on many of the issues of the day, according to a poll by Lansing-based EPIC-MRA.

But they are united on some things — they think Gov. Rick Snyder is doing a better job than President Barack Obama, and they are united in their disdain for the state Legislature, with not one of the 400 respondents thinking it is doing an excellent job.

Terrorism is barely a blip on the radar screen when it comes to issues business leaders thought would impact their firms.

And, though it may seem counterintuitive, leaders in both regions are generally satisfied with the business taxes they pay.

See complete survey results here.
The poll of business owners, officers and managers was conducted on behalf of Honigman Miller Schwartz and Cohn, Crain’s Detroit Business and MiBiz, a publication based in Grand Rapids, with 200 people polled in each region.

Detroit-area business owners and executives are more optimistic than their West Michigan counterparts when it comes to the economy and the state’s business climate. For example:

When asked if Michigan’s economy will improve this year, get worse or remain the same, 62 percent in Southeast Michigan said it would be better and 5 percent said it would be worse, compared with 52 percent who saw improvement and 7 percent who saw deterioration on the west side.

“I’m pretty satisfied with where the Michigan economy is heading,” said Tom Donnellon, a partner in Bloomfield Hills-based Maestro Media Print Solutions Group. “Overall, we’re progressing as well as could be expected.”

Julie Cribley, the executive director of Recycle Livingston, a nonprofit recycling center in Howell, disagrees.

“I’m making less now than I was 20 years ago,” she said. “Wages haven’t kept up with inflation. People aren’t doing better. The state hasn’t done enough to keep jobs here.”
When asked about prospects for their own businesses over the course of this year, 54 percent in metro Detroit said they would improve, and only 3 percent said they would get worse, compared with 42 percent and 8 percent, respectively, in West Michigan.
Asked when they thought the next downturn in their industry would be, Detroiters were less worried. Ten percent said it would come within the next year, and another 10 percent said it would be between 13 and 18 months from now. Fifteen percent of West Michigan respondents said a downturn would happen this year, and 14 percent said it would come in the six months after that.

Forty percent of Detroiters do not anticipate a downturn in the foreseeable future, compared with 36 percent in West Michigan.
And when asked to rate the state’s business tax climate, 3 percent in metro Detroit thought it was excellent and 42 percent thought it was pretty good, compared with 1 percent and 36 percent, respectively, on the west side. Each region agreed at 11 percent that it was poor.

When asked about the taxes assessed against their businesses, 44 percent of respondents in West Michigan and 43 percent in metro Detroit said they were about right, with 1 and 3 percent, respectively, saying they were too low. Thirty-eight percent in each region thought they were much or somewhat too high, with 16 percent and 17 percent, respectively, undecided.

Though Detroiters were more optimistic about the economy, fewer Detroit-area businesses plan to hire, and more might do layoffs. Thirty-three percent of metro Detroit respondents said they planned to hire this year, and 4 percent were considering layoffs, compared with 37 percent and 2 percent in West Michigan.

Donald Kunz, Honigman Miller Schwartz and Cohn: “People are worried about interest rates, about China, about the presidential election.”
“The survey results are consistent with what I hear from the clients I work with,” said Donald Kunz, chairman of the corporate department and leader of the insurance transaction practice group at Honigman. “My clients are cautiously optimistic, but definitely cautious. People are worried about interest rates, about China, about the presidential election. There are a lot of X factors out there.”

Kunz said that while the auto industry “had a fabulous year in 2015” and he and clients expect 2016 to be another strong year, they know that because of the length of this economic recovery, a downturn is to be expected at some point.

“We haven’t had a downturn in a long time, and anyone who has worked in Michigan for some time knows a downturn is coming,” he said.

Couple the worries about an eventual downturn with the high multiples business owners are currently getting when they sell their businesses, and Kunz expects 2016 to be a busy year for M&A activity locally.

A political divide

West and Southeast Michigan disagreed over the job being done by Obama. More than twice as many Detroit-area business leaders thought the president was doing an excellent job, though the percentage was still low, 11 percent compared to 5 percent in West Michigan. Twenty-five percent here thought he was doing pretty good, compared with 18 percent in West Michigan.

Forty-one percent in metro Detroit rated Obama’s job performance as poor, compared with 47 percent in West Michigan.

“He’s expanded government tremendously since he’s taken office. There is chaos and terrorism around the world, debt is mushrooming and the welfare state is expanding. And then there’s the unaffordable care act,” said Donnellon.

“I’m watching him take on gun control as one the last things he wants to do. Something has to be done,” said Cribley, an acknowledged fan of Obama. “I felt the same way about health care. It may not be perfect now, but it’s a start. He’s at least trying.”

“The president is not pro-business, and that’s a problem,” said Patrick O’Keefe, president and CEO of Bloomfield Hills-based O’Keefe & Associates Consulting LLC.

“One thing that’s very disappointing is they haven’t figured out how to get capital back into this country from companies who make profits overseas. They’re still taxed too heavily,” he said.

O’Keefe said that while Democrats have a reputation for being for working men and women, Obama’s policies have hurt the middle class. “Can you have a strong democracy without a strong middle class?” he asked.

More metro Detroiters also rated Snyder’s job performance as excellent, 22 percent compared with 17 percent. Add in those who thought his performance was pretty good, and the governor’s total positive rating was 68 percent here and 73 percent on the west side of the state.

Only 6 percent here and 4 percent in West Michigan thought he was doing a poor job.

“He’s doing a good job for business and for the Michigan economy,” said Donnellon. “He’s genuine, and he wants what’s best for the state.”

“I have zero respect for him,” countered Cribley. “And the way he ignored Flint for so long when they knew there was high lead levels in the water was terrible.”

Obama and Snyder came off as objects of adulation compared with the state Legislature, which got a total negative rating of 71 percent from metro Detroiters and 60 percent from West Michiganians.

Not a single person polled in either part of the state gave the Legislature an excellent rating. Twenty percent in the Detroit area said it was doing pretty good, 37 percent it was doing just fair and 34 percent said it was doing a poor job, compared with 28 percent in West Michigan who said it was doing a pretty good job, 34 percent who rated it just fair and 26 percent who rated it poor.

“They’re not working to pass legislation favorable to their constituents. They’re worried about their re-elections,” said Donnellon.

“You’d like to think with a majority in the House and Senate, they could move in lockstep toward reform, but they’ve been unable to do that,” said O’Keefe.

One of the most high-profile acts by the Legislature in 2015 was the package of bills that will provide $1.2 billion in funding over the coming years to fix the state’s roads and bridges.

Respondents were sharply divided over the bills. In metro Detroit, 20 percent said they strongly approved of what was passed, and 24 percent strongly disapproved. Thirty-four percent somewhat approved, and 10 percent somewhat disapproved.

In West Michigan, 18 percent strongly approved, and 20 percent strongly disapproved. Thirty-seven percent somewhat approved, and 16 percent somewhat disapproved.

When asked what the criticisms were of the roads package, 25 percent in metro Detroit opposed tax and fee increases, and 16 percent said improvements were going to take too long.

In West Michigan, 22 percent opposed tax and fee increases, and 9 percent said improvements would take too long.

“It’s too little, too late,” said O’Keefe. “It doesn’t generate the money needed for years, and here they are patting themselves on the back. It’s the emperor who has no clothes.”