CEO Business Climate Survey 2011 - Silicon Valley Leadership Group

SILICON VALLEY
CEO
SURVEY
BUSINESS
CLIMATE
2011
Introduction
Key Findings
SILICON VALLEY
CEO
SURVEY
BUSINESS
CLIMATE
2011
Business Climate 2011
After three years of
deep economic retrenchment,
Silicon Valley’s
innovation economy has
been clearly re-ignited.
It’s not a full-throttle
recovery, but results of
two surveys of CEOs from
established and private, Carl Guardino Ken Wilcox
startup companies show renewed optimism and deepening growth
– including in hiring. The two words that sum up results of the Silicon
Valley Leadership Group’s 8th Annual “CEO Business Climate
Survey” and Silicon Valley Bank’s “Startup Outlook:” Very optimistic.
For example, two-thirds of the responding established company
CEOs stated they have added jobs over the past year, nearly double
the 2009 and 2010 responses. Only one-tenth shed jobs last year.
And 55 percent of the respondents expect their job growth in Silicon
Valley to be better in 2011 than in 2010. Only 5 percent expect it
to be worse. Among the startup companies, 83 percent plan to
create new jobs this year.
This year’s results are particularly impressive because a record
number of executives participated in the surveys. The “CEO Survey”
was answered by 175 of the Leadership Group’s 340-member
CEOs at the polling time. The separate “Startup Outlook” was
completed by 375 executives from private startup and high growth,
U.S.-based technology and life science companies.
Several perennial issues continue to dominate the list of concerns
by Leadership Group member CEOs including high employee housing
costs, employee recruitment costs, education, taxes, transportation
and health care. For the second year in a row, the state budget
was cited as the No. 4 business challenge. This issue makes it very
difficult for companies to do long-term planning and makes recruitment
more difficult. New to the “CEO Survey” this year were questions
about pensions. An overwhelming majority of the CEO respondents
think public employees should have “undefined” pensions,
such as 401(k)s. Nearly half of the respondents believe that public
employees should work at least 20 years before qualifying for
pensions.
CEO faith in Silicon Valley’s strengths remains enthusiastic,
among companies of all sizes. Respondents cite access to skilled
labor, our entrepreneurial mindset, proximity to customers and
competitors, access to venture capital, along with world class universities
and our wonderful climate, as the creative foundation that
drives our innovation and global successes.
Last year at this time, Silicon Valley executives were guarded.
This year, it appears that another economic wave is just off shore.
Working together we can continue to build a stronger tomorrow and
to meet the challenges still ahead.
The 2011 Business Climate Survey is produced
by the Silicon Valley Leadership Group.
Job Growth
Two-thirds of the companies surveyed have added jobs
over the past year, nearly double the 2009 and 2010
responses. Only one-tenth cut jobs last year.
More than half (55 percent) of the respondents expect
their job growth in Silicon Valley to be better in 2011 than
in 2010, with only 5 percent expecting it to be worse.
Strengths of Silicon Valley
1. Access to skilled labor
2. Entrepreneurial mindset
3. Proximity to customers and competitors
4. Access to venture capital
5. World class universities & climate/weather (tie)
Business challenges
1. High housing costs for employees
2. Employee recruitment/retention costs
3. Business taxes
4. State budget structure
5. Business regulations
Cost of living challenges for workers
1. Housing costs
2. High taxes
3. Traffic congestion and Health care (tied)
4. K-12 education
Actions local government should take to strengthen Silicon
Valley’s business climate
1. Improve K-12 public education
2. Reduce public pension costs
3. Approve more affordable home developments
4. Ease local street and road congestion
5. Streamline permit approval process
Actions state government should take to strengthen Silicon
Valley’s business climate
1. Improve K-12 education
2. Reduce public pension costs
3. Continue research and development tax credit
4. Adopt a multi-year budget cycle
5. Help create more affordable housing
Actions federal government should take to strengthen
Silicon Valley’s business climate
Other
1. Comprehensive tax reform
2. The federal deficit
3. H1-B visa/green card reform
4. Climate change legislation to reduce greenhouse
gases and increase energy security
5. Deferral/repatriation of foreign earnings
Local executives continue to name housing costs as the
number one problem for their employees.
Strong support exists for increasing motor vehicle fees
and gasoline taxes to improve California’s
transportation system.
By fairly one-sided margins, Valley executives want to
see more resources dedicated to K-12 public education,
higher education and transportation; local executives
want to see fewer state dollars dedicated to prisons,
health and human services, and state employee labor
costs.
One-sixth of the companies moved jobs out of state
during 2010; of that number, nearly half did so because
of reduced labor costs.
Two-thirds of respondents believe that the Patient
Protection and Affordable Care Act of 2010, a.k.a.
national health care reform, should remain in place.
An overwhelming majority believe that public employees
should have “undefined” pensions, such as 401(k)s.
Nearly half of the respondents believe that public
employees should work at least 20 years before
qualifying for pensions.
Survey respondents place more faith in Governor Jerry
Brown than the state legislature and regulators for
providing a healthy business climate. Three-fourths of the
respondents are critical of the legislature’s performance
- the highest negative rating in the history of the CEO
Business Climate survey.
01 Introduction
Key findings
02