To measure the economic temperature of business leaders here in Iowa, we had our reporters poll leaders from each of their beats, and we set up an online poll for all of our readers. We asked, “What do you think the impact will be of the economy on your particular industry?” This is the fourth year we’ve asked the same question, and although it’s an unscientific survey, there is one clear trend in the survey. Fewer people are worried about a recession, and more believe the Iowa economy will improve. About 68 percent of respondents thought the economy would improve either slightly or dramatically, up from 60 percent in 2014 and 56 percent in 2013. While 16 percent of respondents in 2014 were worried about a reession, only 10 percent in 2015 anticipate a slowdown. In general, after sorting through responses and reasonings, I can easily say, based on tone alone, this is the most optimistic our readers have felt in regard to the economy since beginning this survey.

– Chris Conetzkey, editor of the Business Record

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What will the impact of the economy be on your industry?

 

Leader Responses

Finance & Insurance

Improve slightly

Bob Skow
CEO, Independent Insurance Agents of Iowa

The Iowa insurance industry is strong for the most part. For the property and casualty companies, 2014 weather generally was good in the upper Midwest, including Iowa, and loss ratios dropped when compared to the previous couple of years, which is good news. 2015 looks great with one exception: What will the weather do? Bad weather patterns mean more loses. Liability exposures appear to be reasonable in the state, with cyber liability becoming a bigger concern. Workers’ compensation did not see anything negative happen in 2014, and rates on average will be down slightly in 2015. One of the most significant concerns for those who follow the industry is the ability for health insurance carriers to maintain rates at the same time losses are increasing. The situation with CoOportunity Health being placed in rehabilitation will create some market pressures, as those they insured end up elsewhere in the market. The remainder of Iowa health carriers are strong and have adequate reserves to get through claims pressures, but this is a wake-up call for those who think this is an easy business to be in and cover your claims costs. Adequate reserves are critical to maintaining strong carriers. Life insurance companies are very strong in the state, and every indication is 2015 should continue where 2014 left off for them.

Economic Development

Improve slightly

Debi Durham
Director, Iowa Economic Development Authority

The economy is on the right track, and I believe we’ll continue to see companies making significant sized investments in Iowa over the next year. Corporations are still sitting on capital, due in part to the uncertainty that has surrounded many federal policies in the past few years, and they are just looking to find the right time and place to deploy that capital. Iowa can take advantage of that desire to grow.

Ag & Environment

Improve slightly

Joe McGovern
President, Iowa Natural Heritage Foundation

During the economic downturn, INHF continued to see donors investing in conservation, because of the importance people place in water quality, soil conservation and economic development. As the economy improves, we see our donors asking that conservation funding be increased to fulfill the unmet needs of the state’s natural resources.

Law & Government

Improve slightly

Paula Dierenfeld
Mayor, City of Johnston

One of the most promising signs of a strong economy in Johnston is the 146 new lots that were created here last year. This is the first time since 2006 the number of new lots in Johnston exceeded the number of building permits issued. Another strong indicator? The total valuation of new construction in Johnston in 2014 was $137.3 million, a $17 million increase from 2013. Lithia’s new Audi showroom is included in that and is set to open very soon. We continue to aggressively market the Merle Hay Road Gateway Redevelopment area, a 123-acre area along Merle Hay Road with prime access to Interstate 35/80, and are optimistic we’ll see additional economic activity there in 2015.

Sales & Marketing

Improve slightly

Kendra Kelly
Director of Marketing, ARAG

ARAG, a leader in legal insurance, and other voluntary benefits providers will continue to see modest growth in 2015 as the dust settles after the initial rollout of the Affordable Care Act. Employers are looking for ways to enhance benefit offerings while keeping employees healthy and engaged. Increasing voluntary offerings like legal, pet and critical care insurance fills gaps left by health care reform – and creates a less-stressed and more productive employee. As human resources professionals learn that adding additional benefits is a win-win, the impact will be very positive to our industry.

Health & Wellness

Improve slightly

Jeff Maire
President, Iowa Medical Society

Uncertainty in government health care programs covering in excess of 1.1 million Iowans, coupled with escalating health care costs, tempers the 2015 economic outlook in the Iowa physician community. Medicare payment rates to Iowa physicians rank fifth lowest in the nation. Unless Congress acts before April 1, Medicare payments will be cut 21 percent. Iowa Medicaid physician payment rates are 18 percent less than Medicare, and are lower today than in the year 2000. Reduced federal funding to Iowa’s Medicaid program will put pressure on legislators to find program savings in 2015. New Medicare payment penalties, office and technology expenses and downward reimbursement will continue to challenge physician practices.

Energy & Utilities

Improve slightly

Regi Goodale
Director of Regulatory Affiars, Iowa Association of Electric Cooperatives

The electric industry will continue to be a key driver in the success of Iowa’s economy. Owned by the members we serve, Iowa’s electric cooperatives are committed to providing reliable, affordable, safe and environmentally responsible energy. Iowa’s not-for-profit electric cooperatives power the lives of 650,000 people throughout all 99 counties, improving quality of life in rural and urban communities. The electric co-ops of Iowa will continue to invest in economic development in these communities and leverage the leadership and expertise of their partnership with the Iowa Area Development Group.

Transportation

Improve slightly

Todd Ashby
Executive Director, Des Moines Area Metropolitan Planning Organization 

As the economy in Iowa continues to improve, the demands on the transportation system will continue to grow as well; a safe, reliable and effective transportation system allows for this continued economic growth. A robust transportation network helps drive the state’s economic growth, both in the short and long term, allowing for a cost-effective way of moving people and goods. Developing adequate funding streams to meet the needs of the transportation system will also play a vital role in the state’s growth. 

HR & Education

Improve slightly

Rob Denson
President, Des Moines Area Community College

We will need to find more candidates for training for good middle-skill jobs that are and will open. It will be a great time for anyone underemployed to get a better job – if they have the training. 

Retail & Business

Improve slightly

Pat Brown-Dixon
Regional Administrator, Region 7, U.S. Small Business Administration 

We think business and retail, particularly on the small business side, will improve slightly. Nearly 98 percent of all businesses in Iowa are small. They’re the engine that drives Iowa’s economy, and as things improve for small business, the better our economy improves overall. In an encouraging sign, in Iowa, 35 percent of SBA-backed loans went to startup companies, which outpaced the national average of 30 percent. Moreover, SBA lending in Iowa for fiscal year 2015 is up 3 percent compared to this time last year as we continue working with our lending partners to help businesses get the financing they need to start, grow and expand.

Manufacturing & Logistics

Improve slightly

Andrew Hansen
Factory Manager, John Deere Des Moines Works

The general economy is not always a good indicator of what John Deere expects to happen in the sales of agricultural equipment. Deere’s forecast for the sales of farm equipment is based on the global agricultural market, which does not always trend with the general economy. When Deere announced our financial results in November, we projected overall company equipment sales to decrease about 15 percent for fiscal 2015, with worldwide sales of agricultural and turf equipment to decrease about 20 percent. At that time, we also said the decrease will be even more significant in the U.S. and Canada, where we said we expect industry sales for agricultural machinery to be down 25 to 30 percent for fiscal year 2015.

Culture

Improve slightly

Jeff Chelesvig
President and CEO, Des Moines Performing Arts

We anticipate another strong year in 2015, both in ticket sales and in donations. 

Tech & Innovation

Improve slightly

Brent Willett
Executive Director, Cultivation Corridor

The current commodity price headwinds ag producers are facing will continue to have short-term downstream effects on segments of the ag, ag technology and ag-bioscience economy in Central Iowa. Equipment manufacturers are expecting softer 2015 markets as producers pull back on capital projects.  Public and private R&D expenditures continue to gain steam in the ag and bio sectors, however, just one of several factors that suggest that the ag-bio economy in Central Iowa is structurally robust and positioned for significant sustained growth. Central Iowa’s ag-biocience economy will continue to outpoint many of its global peers, thanks to its level of diversification and research and development alignments with Iowa State University.

Real Estate & Development

Improve slightly

Richard Hurd
President, Hurd Real Estate Services Inc.

I believe the commercial real estate industry will continue to grow at a slightly higher pace in 2015.

Survey Responses

Ag & Environment

Improve slightly

Jason Scholbrock
Sustainability Specialist, DuPont Pioneer

A strengthening economy will continue to rebuild the ag industry following record commodity prices.

Finance & Insurance

Regress slightly

Hal Chase
Director, Farmers & Merchants State Bank

Positive finanacially but not socially or politically, if the gap between “rich” and “poor” widens.

Finance & Insurance

Improve slightly

Mike Elam
Sales Channel Manager, Delta Dental of Iowa

Local momentum for growth is good; however there will be a dampening effect from a slowdown globally and continued uncertainty around the impact of new and changing regulations.

HR & Education

Improve slightly

Rowena Crosbie
President Tero, International Inc.

Intangibles such as customer service, organizational culture and speed to adapt and innovate will continue to be important differentiators for companies. This translates to a greater focus and investment in the development of leaders and employees. 

Health & Wellness

Remain about the same

Sharon Johnson
Retired owner, The Johnson Group

Continual need for health care, particularly mental health services, as the pay gap continues to widen, the cost of groceries and utilities rise, local taxes continue to creep upward to cover public-sector budgets, and private-sector jobs remain static. We want better and are looking for good news, but there’s not much improvement in the lower-income sectors of the population.

Law & Government

Improve dramatically

Lyle Simpson
Attorney, Simpson, Jensen, Abels, Fischer and Bouslog P.C.

Among law firms, it will shift litigation away from foreclosures for banks. That is good. There will be significantly more business development and certainly an increase in home acquisitions and business financing issues. There will be more startup businesses. Estate planning will drop, but, sadly, estate conflict issues will continue to increase. We will encourage more clients to consider ways to maintain family harmony to overcome the problem that estates tend to bring the very worst out of some people when both parents are deceased. That is avoidable with proper planning if parents would prepare an effective estate plan.

Law & Government

Improve slightly

Chris Sackett

Managing Member, BrownWinick Law Firm
The changing economy will force the legal industry to continue evolving and innovating to be responsive to client needs and provide “value” and “solutions” as measured or determined by clients, not lawyers.

Law & Government

Improve dramatically

Jeffrey D. Stone
Member, Whitfield & Eddy PLC

All indications are that construction will increase dramatically this year, with a corresponding increase in legal work associated with construction.

Transportation

Remain about the same

Mona Bond
Environmental Director, Manatts Inc.

Iowa’s infrastructure needs immediate attention. The lack of maintenance is more costly than addressing issues as they occur.  Infrastructure can be good roads, bridges, building maintenance, sewers, water lines – anything that is designed to keep persons functioning and working.

Real Estate & Development

Improve slightly

Rick Tollakson
President and CEO, Hubbell Realty Co.

Real estate development and construction will continue to improve as long as we maintain a low interest rate environment and job growth continues.

Real Estate & Development

Improve dramatically

Kevin Crowley
Chief Operating Officer/Manager, Iowa Realty Commercial

Low inventories and increasing construction costs will keep an upward pressure on rents. 

Real Estate & Development

Improve dramatically

Bob Darr
Realtor, EXIT Realty North Star

A return to normal market conditions. Rates are still low, inventory is picking up, and higher-end homes are selling faster.

Real Estate & Development

Improve dramatically

Joe Benesh
Senior Architect, Shive-Hattery Architects + Engineers

I feel that the building industry is set to take off. As the economy improves, more funds will be freed up for continuing to develop the built environment. 

Sales & Marketing

Improve slightly

Tom Flynn
President, Lessing-Flynn Advertising

I see advertising and marketing continuing to pick up in 2015. With the improving economy, companies are looking to gain market share and improve brand recognition. New startup opportunities are also increasing, creating even more potential. It should be a good year in our industry.

Sales & Marketing

Improve slightly

Josh Fleming
Brand Counselor, Meyocks

Marketing tools, and specifically the targeting techniques brands have at their disposal today, are unprecedented. The ability for brands to further differentiate themselves from the competition will lead not only to more advertising dollars spent, but greater overall return on investment than in prior years.

Sales & Marketing

Improve dramatically

Keith Snow
President, B2E Direct Marketing

I can see businesses are ready to spend money again and are opening up their marketing budgets. It will be a good year.

Sales & Marketing

Improve dramatically

Connor Flynn
Chairman, Lessing-Flynn Advertising

Improvement dramatically depends a lot on how several issues in Washington, like the Keystone Pipeline, the reduction of federally imposed burdens on businesses (especially startups and small businesses) and a health care law designed to improve efficiencies, reduce fraud and manage costs. There are many growth areas developing in the advertising and marketing communications industry. Companies that are early adopters and actively engaged in them will reap the rewards.

Sales & Marketing

Improve slightly

Ronald Hanser
President and Principal, Hanser & Associates

With the Iowa (and national) economy strengthening in 2015, growth should be double-digit for well-established public relations firms that serve clients nationwide.

Tech & Innovation

Improve slightly

Kristi Peterson
Sales Manager – Iowa, ADP

Due to the Affordable Care Act, companies will need systems to share data related to payroll, benefits, human resources and time collection. This consolidation of data will provide better analytics for a company to drive revenue and make more strategic decisions about the needs of its workforce. Data is great but only if you can dig into it, see trends and be able to react with an objective source of truth.

Tech & Innovation

Improve slightly

Michael Sadler
Assistant Vice President of Public Policy, CenturyLink Inc.

Small businesses will make investments to improve their productivity through technology.

Tech & Innovation

Regress slightly

Anonymous
I am concerned that the decline in crop prices will have a negative spin throughout the state.

Manufacturing & Logistics

Regress slightly

Anonymous
Lower commodity prices have a great trickle-down effect for many layers in Iowa.

Finance & Insurance

Remain about the same

Anonymous
The ag sector will produce 20 to 30 percent less revenue than the past three to 5 years on average, and that will be weight on the Iowa economy effecting Iowa manufacturing through lower CAPX spending. However, the strong balance sheets with relatively low leverage in the agriculture sector will provide financial wherewithal to sustain most operations over the next few years.  Lower fuel prices and low interest rates will be beneficial for retail consumer spending, new construction, and home ownership, and that will help to support the overall economy in Iowa.