Alliance of Chief Executives Survey Shows Strong Job Growth and Economic Optimism for California in 2004.

Business Editors

WALNUT CREEK, Calif.--(BUSINESS WIRE)--Jan. 21, 2004

Northern California Chief Executives Bullish on Growth Despite Ongoing Concerns About Cost of Worker's Compensation, Health Care, and

Cost of Living

Seventy-five percent of Northern California CEOs remain positive that the California economy will see moderate to strong growth in 2004, and more than 80 percent plan to hire new staff this year according to a survey released by the Alliance of Chief Executives, an exclusive Northern California-based leadership organization whose interactive forums enable chief business executives to initiate the changes they seek in their businesses and their approaches to leadership. According to a survey of nearly 250 Northern California business leaders, the cost of worker's compensation, health care, and cost of living remain the biggest impediments to business growth, although 82 percent believe California's new Governor, Arnold Schwarzenegger, is the man to improve the business climate throughout the state.

The annual survey of the Alliance of Chief Executive members revealed that 76.3 percent of survey respondents see strong economic growth (more than 7.5 percent) to moderate economic growth (2.5 to 7.5 percent) in 2004. Despite recent worries among economists that a rise in the economy has not translated into sustained job growth, 81.5 percent of Alliance members surveyed indicated they plan to expand their workforce, primarily in sales and marketing (81 percent) and operations (73.5 percent). This is compared to an estimated loss of 6.2 percent of the Northern California workforce since April 2000. According to Alliance members, the biggest challenges to hiring in the Northern California are the cost of living (69 percent), finding candidates with the right skills (54 percent), and reasonable salary expectations (54 percent). At the same time, 39.5 percent of chief executives surveyed indicated they will outsource more of their operations, primarily in the areas of payroll (60.5 percent), IT support (45.5 percent), and human resources (29.1 percent).

"In many ways, Northern California, specifically Silicon Valley, serves as an economic barometer for the rest of the nation," said Bart Penfold, president of The Alliance of Chief Executives. "Northern California includes mega companies from the Fortune 500 and start-ups from all industries, and our membership covers all market sectors. Since March of 2001, Silicon Valley has lost some 158,000 jobs, and the Bay Area has lost more than 216, 000 jobs, so the optimism displayed by Alliance members gives me confidence that we'll see some real growth this year."

The biggest impediments to growth identified by Alliance members are worker's compensation (87 percent) and the rising cost of California health care (85 percent), with over regulation, the cost of real estate, taxes, transportation costs, and energy costs weighing in with less than 40 percent response each. Northern California chief executives also believe Governor Schwarzenegger will address many of these problems, with 81.9 percent of Alliance members expressing confidence that the new governor will improve the business climate in the state.

How much business will remain in the state? According to the Alliance of Chief Executives survey, 30 percent of those surveyed will increase their offshore operations, primarily in manufacturing and software development, although 70 percent said their offshore services will remain the same.

Finally, the survey showed that 52 percent of companies will not raise prices in the near future, and 4 percent actually plan to lower prices. Of those surveyed, 68.8 percent also indicated they will invest more in Information Technology, indicating that they companies are once again investing in their information infrastructure.

Methodology

This data was compiled from surveys sent to 230 members of The Alliance of Chief Executives in order to gather data on business trends and issues that were most critical to local executives. Out of the 230 members, 101 executives replied to the survey (43.4 percent). The respondents are made up of chief executives - CEOs, presidents, managing partners, chairmen, and business owners - from Northern California companies serving industries that include manufacturing, sales and marketing, technology, food and beverage, retail, and biotechnology.

About The Alliance of Chief Executives

The Alliance of Chief Executives is an exclusive Northern California-based leadership organization whose interactive forums enable chief business executives to initiate the changes they seek in their businesses and their approaches to leadership. The Alliance fosters peer-to-peer exchanges where hundreds of experienced and diverse executives collectively share their vision, review their business and management problems, and discuss creative solutions. Founded in 1996, the Alliance has a membership of more than chief executives from public and private companies in various industries including technology, manufacturing, advertising and public relations, biotechnology, electronics, financial services, legal, retail, and food and beverage. The Alliance has been named as one of the "Fastest Growing Companies" in the Bay Area by the San Francisco Business Times and one of the "Top 50 Fastest Growing Private Companies" by the East Bay Business Times - proof of its value and success in the business community.