Experts see challenges ahead for businesses, government

The coming year holds special challenges for suburban businesses and state government, while nationally an oil and natural gas production boom will push the U.S. closer to independence from foreign sources.

Those were some of the conclusions a panel of experts told suburban business executives and entrepreneurs Thursday at the second Newsmakers Forum: Business Outlook 2014 held at Moraine Valley Community College in Palos Hills. The event, hosted by the Daily Herald Business Ledger, drew about 75 professionals from the south and west suburbs.

Overall, small-to-medium sized businesses are optimistic about 2014, anticipating growth between 4 and 6 percent for the year, according to Bill Hubly, managing principal of Corbett, Duncan & Hubly PC in Itasca.

“Most entrepreneurs are upbeat and continue to be in what they expect in 2014,” Hubly said.

However, he tempered that optimism with a number of concerns affecting business, ranging from the continued gridlock in Congress over the federal budget and debt ceiling, to the continued rollout of the Affordable Care Act. Businesses are already feeling negative effects of the ACA, he said, as premium costs have risen dramatically for some.

“We’re starting to see it now and it’s not pretty,” he said, adding some of his clients have seen costs go up more than 15 percent. “That’s a tough cost to absorb.”

Hubly said the biggest challenge to business owners will be the ability to make decisions in the face of a quickly changing global economic environment. He challenged the audience to focus on a number of key areas to improve decision-making abilities that will help their business adapt and survive the changes.

“It’s harder to predict what’s going to happen next,” he said. “You’re going to need to make decisions quicker and more regret-free.”

This week’s passage of the pension reform package by the Illinois General Assembly was a “significant event” for the state, said Illinois Chamber of Commerce President and CEO Doug Whitley.

“The Illinois fiscal problem has been so bad for so long, our General Assembly and our governor are finally recognizing it and tried to take steps toward fixing it,” Whitley said. “That should be interpreted by employers and taxpayers and outside observers that Illinois is working on the problems.”

While the reform package addresses the massive pension problem, it does not solve it, Whitley said, and lawmakers must continue to reform the state’s system, as well as address pensions in local governments and the judicial system. He did not expect that to happen next year — an election year — but could see it addressed in 2015 or 2016.

Despite the well-publicized problems with the state’s fiscal situation, Illinois remains a healthy, thriving state that has a lot of advantages for business, Whitley said, citing the state’s location, transportation access, energy costs, international trade, education and medical resources, and cultural diversity.

“We’re doing everything we’re already doing in spite of our government not being a good partner,” he said. “Despite of all the failed government from the previous decades, we are well positioned to go forward.”

Mike Adkinson, vice president, equity analyst/portfolio manager at First American Bank, focused on the new energy boom in the U.S. that, for the first time since the 1990s, has put the country in the position of producing more oil than it imports and has turned a projected natural gas shortage into a national surplus leading to lower natural gas prices.

While new oil and gas are being extracted through the controversial fracking process, Adkinson noted the technology has improved since its inception in the 1940s. The result is that domestic oil production has surpassed imports over the past year, and some analysts predict the U.S. could be producing more oil than Saudi Arabia by 2015.

However, don’t expect oil prices to drop, he added, as the cost of fracking and global demand will keep prices away from historic lows. But the boom will put the U.S. in the position of being a significant oil exporter.

“In terms of balance of trade and being a little bit more homegrown with energy, it does help us out quite a bit,” Adkinson said. “It’s not a panacea to lower energy prices, but it will make us more independent.”

The discovery of large natural gas basins, especially on the East Coast, has also turned a projected shortage of natural gas 10 years ago into a surplus today, he added. That has led to a significant drop in gas prices, Adkinson added.

“We’ve gone in 10 years from saying there’s a shortage to now planning to export gas,” he said.

Presenting sponsors for the Daily Herald Business Ledger Newsmakers Forum were Corbett, Duncan & Hubly PC and Fifth Third Bank. Corporate sponsors were American Slide Chart/Perrygraf, NIU College of Business and Moraine Valley Community College. Marketing partners were the Orland Park and Tinley Park chambers of commerce and the Small Business Advocacy Council.