2015

Americas Economic Engine Study

Minneapolis/St. Paul Results

Background & Purpose

Deloittes Economic Engine Survey

Since 2011, Deloitte has undertaken a national research program with key executives from mid-market companies.
This ongoing, quantitative research has tracked their recovery from the financial crisis to the present time across an
array of insightful measures.
The Economic Engine research assesses:
Mid-market companies key business metrics,
Mid-market executives outlook for the success of their companies as well as the strength of the U.S., and
The specific strategies and tactics they are pursuing.

Fall 2015 Wave

For its latest Fall 2015 wave, Deloitte enlisted The Business Journals to conduct a parallel study among its midmarket subscribers in 11 markets across the country.
The purpose of this supplemental research was to provide Deloitte with individual market perspectives, and to
determine if and how the attitudes and behaviors in these markets might diverge from the overall national view.
The Business Journals individual market supplemental surveys were conducted from October 19 to November 23,
2015. This timing coincided with the field dates of Deloittes national study that was fielded from October 22 to
November 4, 2015.

Research Method

1,989 Interviews with The Business Journals subscribers across 11 markets

Boston (196), Washington, D.C. (174), Minneapolis/St. Paul (322), Atlanta (223), Houston (180),
Dallas (156), Charlotte (138), Seattle (189), San Francisco (154), San Jose/Silicon Valley (109),
Philadelphia (148)

Manager level+ of companies with $35M > under $1B in revenue

Email invitation from market Publisher to participate
Online Survey: 10-15 minutes in length
Incentive: Drawing for a $250 gift card
Fielded October 19 November 23, 2015
Significance Testing:

+/- 8% points vs. Deloitte Fall 2015 = Significant difference at the 90% confidence level or higher

National Overview

Deloittes Fall 2015 national economic engine study found that mid-market executives
have adopted an air of caution, a slight tapping of the brakes after several years of
strong forward momentum.
There is less strength of confidence in the U.S. economy, lower GDP growth rate expectations,
and tempered annual growth rate projections, with fewer expecting meteoric, fast growth of 25%
or higher.
The one area of investment that continues to hold steady is hiring. The majority (56%) grew
their workforces over the past year, and 61% plan for hiring growth to continue in 2016.

To download a copy of the full Deloitte report, Americas economic engine: Tapping the
brakes, please click on the following link: www.deloi,e.com/us/dges/tappingthebrakes
(active link will be provided in separate email)

Minneapolis/St. Paul Economic Engine Topics

EXECUTIVE SUMMARY
CONFIDENCE | GROWTH OUTLOOK
U.S. Economy, Company Success

BUSINESS GROWTH STRATEGIES (and Obstacles)

TALENT | TECHNOLOGY | TRUST | DIVERSITY

Executive Summary

Deloittes Fall 2015 national economic engine study found that mid-market executives have adopted
an air of caution, a slight tapping of the brakes after several years of strong forward momentum.
There is less strength of confidence in the U.S. economy, lower GDP growth rate expectations, and more
conservative annual growth rate projections, with fewer expecting meteoric, fast growth of 25% or higher.
The one area of investment that continues to hold steady is hiring. The majority (56%) grew their work
forces over the past year, and 61% plan for that hiring growth to continue in 2016.

The local market findings are consistent with this cautionary, macro view, and in Minneapolis/St.
Pauls case are even more pessimistic. Minneapolis/St. Paul mid-market executives are significantly less
confident that the national average that the U.S. economy will improve, and project the GDP rate to average
+1.95%, versus the national estimate of +2.7% (Note: Only Houston gave the GDP a lower rate at +1.70%).
Smaller businesses in Minneapolis/St. Paul have a similar low level of confidence in the economy as midsize businesses.

Similar to the national findings, Minneapolis/St. Paul mid-market executives confidence in the
success of their own companies is markedly more optimistic than their view of the U.S. economy.
However, their optimism is tempered and they estimate their revenue growth to be +8.0%, a level
substantially lower than the +13.3% national average. Despite this lower projection, they did increase the
size of their workforces in 2015, and plan to continue this expansion in 2016.

The leading strategy for mid-market business growth in Minneapolis/St. Paul is to continue driving
organic growth in existing markets, followed by establishing strategic alliances and mergers, and
developing new products and services. These are the lead national strategies as well.

Executive Summary

Obstacles to growth vary dramatically across the 11 markets studied. For Minneapolis/St. Paul,
economic uncertainty leads, but at a level on par with the national findings. Skills shortage, a
prominent barrier in many markets, is also strong in Minneapolis/St. Paul, and is followed by weak market
demand. The skills shortage found in Minneapolis/St. Paul is slightly more prevalent among its mid-sized
companies than its smaller businesses with under $35M in revenues.

Similar to other markets, Minneapolis/St. Paul mid-market executives leading technology investment
is data analytics/business intelligence, followed by the automation of business processes.
Minneapolis/St. Paul is in line with many of the other markets placing these items at the top of its list for
future technology investment.

In terms of diversity, mid-market businesses in Minneapolis/St. Paul are right in line with the national
average with nearly one-fifth (20.8%) of executive leadership positions being held by women and
minorities. While four out of ten (40%) have established programs in place to foster diversity (a level
comparable to the national average), significantly fewer are in the process of developing new programs (13%
versus 21%, nationwide).

Minneapolis/St. Paul Overview

Charlotte
US Economic Growth +1.95% (vs.
+2.72 national average)

+8.0%
Minneapolis/St. Paul

expected revenue growth

(vs. +13.3% national average)

Unemployment rate

Primary Growth Strategies

Obstacles to Growth

Growing existing markets

organically

Economic uncertainty (38%)

49%

Strategic alliances/
collaborative projects

13

Mergers & acquisitions

12

#1

20.8%

Women & Minorities in Executive

Leadership Positions
(vs. 19.2% national average

3.3%

Skills shortage (31%)

Weak market demand (28%)

Many (62%) agree that finding

employees with appropriate skills
& education is difficult.

61%

Leading Planned Tech Investments

#1

Data Analytics/
Business
Intelligence

#2
Automation of business
processes

Planning workforce growth

(vs. 61% national average)
8

2015

Americas Economic Engine Study

Minneapolis/St. Paul Results

CONFIDENCE | OUTLOOK
U.S. Economy
Business Success

Level of Confidence U.S. Economy Will Improve

Less than half of mid-market executives in Minneapolis/St. Paul (44%) are confident that the U.S.
economy will improve. Their confidence is significantly below the national level.

Extremely Confident
Very Confident

1%
11%

2%
10%

44%
Confident

32%

10%

48%

24%

36%

65%
31%

Somewhat Confident

41%

38%
25%

15%

14%

11%

Minneapolis/St. Paul

11 Market Average

Deloitte Fall 2015

Not Confident

What is your level of confidence that the U.S. economy will continue to improve over the next 24 months?

10

Expected Economic Growth in the U.S.

Half (52%) of mid-market executives in Minneapolis/St. Paul are expecting moderate to robust
growth for the U.S. economy, significantly lower than the national average. Only Minneapolis/St.
Paul and Houston executives project that the GDP will fall below 2% on average.
Grow Above Trend or
Robustly

6%

13%

(More than 3.5%)

32%
Grow Moderately (2% to 3.5%)

46%

52%

61%

66%

48%
34%

Grow Slightly (Less than 2%,

but more than 0%)

Show No Growth (0%)

Negative Growth

44%

35%

29%

4%
0%

3%
1%

4%
1%

Minneapolis/St. Paul

11 Market Average

Deloitte Fall 2015

Average:

+1.95%

At what pace do you expect the U.S. economy to grow over the next 12 months?

+2.28%

+2.72%
11

Level of Confidence Success of Company

By contrast, Minneapolis/St. Paul mid-market executives are quite confident that their companies
will be successful, matching the overall level found among mid-market executives nationwide (81%
vs. 86%). Nonetheless, their top two box intensity is not as great (38% vs. 53%).

Extremely Confident

12%

9%

Very Confident

26%

31%

80%

81%

Confident

43%

17%

36%

86%

40%
33%

16%

17%

3%

3%

3%

Minneapolis/St. Paul

11 Market Average

Deloitte Fall 2015

Somewhat Confident
Not Confident

11%

What is your level of confidence in the success of your company (based on revenue, profitability, and growth) over the next 24 months?

12

Estimated Revenue Growth Over Next 12 Months

Nearly all mid-market executives (96%) in Minneapolis/
St. Paul are expecting revenue growth, averaging
+8.0%. Businesses nationwide are more bullish,
expecting revenue increases of +13.3%.

Minneapolis
/St. Paul

11 Market
Average

Deloitte
Fall 2015

Any Growth

96%

95%

91%

Average Growth Rate

8.0%

9.4%

13.3%

40%
35%

33%
31%
27%

21%
17%
15%

15%
8%
1%

3%

31% or
Higher

4%

4%

14%

7% 6%

6%
1% 2%

1%

21%-30%

16%-20%

Minneapolis/St. Paul

11%-15%

6%-10%

11 Market Average

What would you estimate your business revenue growth to be over the next 12 months?

0-5%

3% 3% 3%

Negative No response

Deloitte Fall 20152

13

Level of Uncertainty re: Factors Driving Future Business

Prospects
The majority of mid-market Minneapolis/St. Paul executives (60%) find their level of uncertainty
with factors that could impact their businesses unchanged versus a year ago. By contrast,
business owners nationwide have a higher degree of increasing uncertainty.

Much higher

5%
7%
8%
28%
30%
36%

Higher

About the same

45%
7%
7%
9%

Lower

Much lower

60%
56%

0%
0%
1%

Minneapolis/St. Paul
11 Market Average
Deloitte Fall 2015

The level of uncertainty in terms of factors that drive future business prospects (e.g., taxes, regulations, credit availability and the economic outlook) is

14

Level of Confidence U.S. Economic Improvement &

Company Success Among Mid-Size & Smaller Companies
Minneapolis/St. Pauls mid-market and smaller business executives show the same confidence
level in the improvement of the U.S. economy. In terms of the success of their own companies,
mid-size businesses are slightly more optimistic.
Confidence in Improvement of
U.S. Economy
Extremely Confident
Very Confident

1%

3%

11%

10%
42%

44%
Confident

32%

Confidence in Success of Own

Company

29%

12%

11%

26%

25%
74%

81%

Somewhat Confident

Not Confident

41%

15%
$35M-$1B

36%

43%

22%

16%

Under $35M

38%

22%

3%

4%

$35M-$1B

Under $35M

What is your level of confidence that the U.S. economy will continue to improve over the next 24 months?
NOTE: A 6%-7% difference between mid-size and smaller companies is statistically significant at the 90% confidence level or higher

15

2015

Americas Economic Engine Study

Minneapolis/St. Paul Results

BUSINESS GROWTH
STRATEGIES

16

Companys Main Growth Strategy Next 12 Months | Obstacles

Minneapolis

Obstacles to Growth

Primary Growth Strategies

Growing existing markets
organically

49%

Economic uncertainty (38%)

Skills shortage (31%)

Strategic alliances/
collaborative projects

13

Mergers & acquisitions

12

Weak market demand (28%)

Seattle
Growing existing markets
organically

46%
Skills shortage (34%)

Develop new products/

services

13

Increased productivity

13

Increased regulatory
compliance (25%)
Economic uncertainty (25%)

What is your companys main growth strategy over the next 12 months? (Please select only one) What is your companys main obstacles to growth? (Please
choose up to three)

17

Companys Main Growth Strategy Next 12 Months

For Minneapolis/St. Paul mid-market executives, the leading strategy for business growth is to
continue driving organic growth in existing markets. Other approaches are to engage in
strategic alliances, to undertake mergers & acquisitions, and to develop new products and
services.

Growing existing markets organically

31%

Strategic alliances and collaborative

projects

13%
14%
16%
12%
9%
8%

Mergers and acquisitions

11%
12%
16%

Development of new products & services

7%
9%

Increase productivity
Strengthen management team
Entry into new markets globally
Minneapolis/St. Paul

49%
45%

14%

4%
5%
4%
3%
3%

10%

11 Market Average

What is your companys main growth strategy over the next 12 months? (Please select only one)

Deloitte Fall 2015

18

Obstacles to Company Growth

The leading obstacle to future growth for Minneapolis/St. Paul executives is economic
uncertainty, followed by skill shortages and weak market demand. Only four markets view
economic uncertainty so strongly as a barrier, the others are Washington, D.C., Atlanta and
Houston.
38%
35%
40%

Uncertain economic outlook

Skills shortage
Weak market demand

24%

Cost of keeping up with technological

advances

19%
18%

Health care costs

14%

Cost of raw materials & other input costs

(including energy)

Availability and/or cost of credit

Minneapolis/St. Paul

29%

6%
5%
6%

11%

32%
27%

18%

9%
10%

34%
27%

15%

10%

11 Market Average

What is your companys main obstacles to growth? (Please choose up to three)

28%

21%
20%

Increased regulatory compliance

Budget cuts by government (federal, state,

municipal)

31%
31%

18%

Deloitte Fall 2015

19

Obstacles to Company Growth Cross-Market Comparison

Rank Order of Obstacles to Company Growth

Deloitte
Fall
2015

Boston

Philadelphia

Wash,
DC

Atlanta

Charlotte

Dallas

Houston

Minn/
St Paul

Seattle

San
Fran

Silicon
Valley

Uncertain economic
outlook

Healthcare costs

Increased regulatory
compliance

Weak market demand

Cost of raw materials

Cost keeping up tech

advances

Skills shortage

Budget cuts by
government

Availability/cost of credit

What is your companys main obstacles to growth? (Please choose up to three)

20

2015

Americas Economic Engine Study

Minneapolis/St. Paul Results

Talent | Technology |
Trust | Diversity

21

Talent Recruitment
Finding skilled talent is an issue in Minneapolis/St. Paul as it is across the U.S. The majority of
Minneapolis/St. Paul mid-market executives (62%) agree that it is difficult to find educated and
skilled employees.
It is difficult for us to find new employees with the skills and education to
meet the needs of our business
62%

Minneapolis/St. Paul

12%

50%

20%

15%

3%

60%

11 Market Average

14%

Strongly agree
Agree

46%

19%

19%

2%

Neither agree not

disagree
Disagree

64%

Strongly disagree

Deloitte Fall 2015

17%

47%

21%

14%

2%

Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needs
of our business.

22

Talent Recruitment & Unemployment Rates CrossMarket Comparison

The skills issue does not appear strongly correlated with unemployment rates, e.g., Charlotte and
Minneapolis/St. Paul both cite similar levels of skills shortage, but have dramatically different
unemployment rates.
Skills Shortage and Unemployment Rates
80%
70%

9.0%
64%

62%

60%

59%

61%
55%

60%

62%

58%

67%

67%

58%

7.0%

52%

6.0%

50%
40%
30%

5.5%

5.3%

5.1%
4.0%

4.3%

8.0%

5.0%

5.3%
4.5%
3.8%

20%

4.3%
3.3%

4.0%
3.9%

3.8%

3.0%
2.0%

10%

1.0%

0%

0.0%

Agree - Difficult to Find Skilled Employees

Unemployment Rate

Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needs
of our business.
September 2015 Unemployment Rate by MSA, Bureau of Labor Statistics; National rate = 5.1% (9/15)

23

Talent Recruitment Among Mid-Sized and Smaller Companies

Mid-size business executives in Minneapolis/St. Paul experience the skills shortage to a higher
degree than the level found among smaller businesses with under $35M in revenues.

It is difficult for us to find new employees with the skills and education to
meet the needs of our business
62%

$35M-$1B

12%

50%

20%

15%

Strongly agree

3%

Agree
Neither agree not disagree
Disagree

55%

Strongly disagree

Under $35M

16%

39%

29%

15%

1%

Please indicate your level of agreement with this statement: It is difficult for us to find new employees with the skills and education to meet the needs
of our business.
NOTE: A 6%-7% difference between mid-size and smaller companies is statistically significant at the 90% confidence level or higher

24

Change in Size of Full-time Domestic Workforce: Last 12 Months

Talent difficulties or not, Minneapolis/St. Paul mid-sized
executives are growing their full-time workforces. Nearly
two-thirds (62%) grew their staffs last year.

More than 10% smaller

Between 5% & 10% smaller

Smaller

Less than 5% smaller

19%

20%

14%

No change

19

19

30

Bigger

62

61

56

4%
6%
4%
8%

13%
12%
19%
19%

30%
26%
25%

34%

20%
23%
22%

Between 5% & 10% bigger

Minneapolis/St. Paul

Deloitte
Fall 2015

2%
2%
2%

Less than 5% bigger

More than 10% bigger

11 Market
Average

Smaller

No change

Bigger

Minneapolis/
St. Paul

8%
9%

12%

11 Market Average

Deloitte Fall 2015

How has the size of your full-time domestic workforce changed over the last 12 months? How do you expect it to change over the next 12 months?

25

Change in Size of Full-time Domestic Workforce: Next 12 Months

The majority of Minneapolis/St. Paul mid-sized businesses
plan workforce growth moving forward as well. Six in ten
(61%) plan to grow the number of full-time employees in the
next 12 monthssimilar to the national average.

More than 10% smaller

Between 5% & 10% smaller

Smaller

Less than 5% smaller

Minneapolis
/St. Paul

11 Market
Average

Deloitte
Fall 2015

10%

12%

12%

No change

29

24

27

Bigger

61

64

61

Smaller

1%
1%
2%
1%
2%
3%
8%
9%
7%
29%
24%
27%

No change

Bigger

Less than 5% bigger

29%
18%
20%
23%

Between 5% & 10% bigger

More than 10% bigger

Minneapolis/St. Paul

39%
37%

4%
7%
9%
11 Market Average

Deloitte Fall 2015

How has the size of your full-time domestic workforce changed over the last 12 months? How do you expect it to change over the next 12 months?

26

Technology Investments in Next 12 Months

The leading planned technology investments in Minneapolis/St. Paul are in data analytics/
business intelligence, process automation and cloud computing.

48%
43%
45%

Data analytics/Business intelligence

36%
36%
34%

Automation of business processes

31%
32%

Cloud computing/software as a service

27%
25%
24%

CRM

17%
17%
24%

Enterprise application suites

Robotics

5%
3%

Additive Manufacturing (3D)

3%
2%

Other

3%
4%
1%

Don't know/Not sure

45%

Minneapolis/St. Paul
11 Market Average
Deloitte Fall 2015

16%

9%

16%
20%
10%

Which investment(s) in technology is your company most likely to make in the next 12 months? Please choose up to three.

27

Technology Investments in Next 12 Months CrossMarket Comparison

Data analytics/business intelligence is the leading technology investment across most markets, followed
by the automation of business processes. Minneapolis/St. Paul was in line with this popular plan for
future technology investments.

Rank Order of Planned Technology Investments Next 12 Months

Deloitte
Fall
2015

Boston

Philadelphia

Wash,
DC

Atlanta

Charlotte

Dallas

Houston

Minn/
St Paul

Seattle

San
Fran

San Jose/
Silicon
Valley

Cloud computing/
software as a service

Data analytics/Business
intelligence

Automation of business
processes

Enterprise application
suites

CRM

Robotics

Additive manufacturing
(3D)

Which investment(s) in technology is your company most likely to make in the next 12 months? Please choose up to three.

28

Level of Trust in Business vs. 12 Months Ago

One-fifth (19%) of Minneapolis/St. Paul business leaders believe that the publics trust in
businesses has increased over the past 12 months. The large difference versus the national
findings may be due to the longer time frame that the national study incorporated (24 months).

19%

Minneapolis/St. Paul

1%

18%

60%

18%

3%

20%

Substantially more
Slightly more

11 Market Average

2%

18%

55%

22%

3%

Same
Slightly less

42%

Deloitte Fall 2015

12%

30%

Significantly less
37%

17%

Among the general public, how would you define the level of trust in business (in general) compared to 12 months ago?
NOTE: The national study used a 24 month time frame in their question.

3%

29

Executive Leadership Positions Held by Women & Minorities

Across the U.S., roughly 19% of executive
leadership positions in mid-sized companies are
held by women and minorities. Minneapolis/St.
Pauls average level is slightly higher at 20.8%.

More than 50%

Average % of
women & minorities
in executive
leadership positions

Minneapolis/
St. Paul

11 Market
Average

Deloitte
Fall 2015

20.8%

19.3%

19.2%

6%
7%
5%

31%-50%

16%
15%
13%

21%-30%

16%
13%
19%
16%
16%

11%-20%

Minneapolis/St. Paul
23%

11 Market Average
Deloitte Fall 2015

15%
17%
18%

5%-10%

21%
22%
19%

Under 5%

Don't Know/Not Sure

3%

10%
10%

What percentage of your companys executive leadership positions (C-suite or senior management) are held by women and minorities?

30

How Companies Foster Diversity and Inclusion

Four in ten Minneapolis/St. Paul mid-market executives have programs in place that foster
diversity and inclusion in their companies; another 13% have programs in development.

40%

41%

42%
35%

34%
31%

21%

13%

13%

12%

12%
6%

Established programs in place

Comply w/ regulatory
requirements w/o program

Minneapolis/St. Paul

Developing programs

11 Market Average

Dont Know/Not sure

Deloitte Fall 2015

Please select the one response that most closely describes how your company fosters diversity and inclusion: We have demonstrated commitment, with
established programs in place (e.g., leadership development, mentoring, targeted recruiting & retention); We are in the process of developing programs that focus
on building a diverse & inclusive culture & workforce; We comply with regulatory requirements, but dont have dedicated programs at this time.

31