Iowa CEO Survey: Talent Recruitment Biggest Concern

A big-picture look at the sentiments of Iowa business leaders indicate that talent recruitment remains the biggest challenge for most (51%), followed by rising input costs (22%), according to ABI’s 2024 CEO survey. The hot topic of artificial intelligence (AI) accounted for two of the seven questions on the survey, with results showing the up-and-coming technology is already being woven into Iowa business operations. More than 70% of the CEOs responding indicated they were either exploring or had already implemented AI applications in their businesses but few had put policies in place governing the use of AI by employees.

With a presidential election looming, more CEOs responding are pessimistic (32%) than optimistic “about the current direction of our state/country,” with 43% either neutral or unsure on the question. A quarter of respondents say higher interest rates are affecting capital allocation decisions or causing re-evaluation of investment plans. Less than 10% cite serious disruptions on international operations due to global hotspots like Israel, Ukraine and China.

Asked for their views on the economy for the second half of 2024, respondents tilted slightly toward the positive. On a 1-10 scale with 1 being most negativeand 10 most positive, 61% of CEOs’ responses fell in the 6-10 range.

Not all businesses are affected equally by such factors as interest rate fluctuations, global conflicts, tech issues and other factors. Company leaders interviewed for this article unanimously agree that the business climate in Iowa is positive, but their views on the economy at large tend to differ according to factors affecting their specific industry.

Top Concerns Vary
As a top concern, “talent recruitment is an opportunity for any business,” Chad Reece, vice president of government and industry relations for long-time Forest City RV Manufacturer Winnebago Industries. “With the advent of advanced technologies used in manufacturing, that talent pool has to evolve.”

When it comes to attracting talent, “the state of Iowa is in better shape than some other,” Mr. Reece says. He credits state efforts to “entice employees to choose Iowa” and programs by universities and community colleges to train the workforce with up-to-date skills.

Even within the leisure industry, the top business concern is different for Scott Hottle, CEO & president of Standard Golf. “It’s input costs by far,” says Mr. Hottle, leader of the employee-owned Cedar Falls golf course supplier since 2012. “If there’s anything that keeps us awake at night, that’s it.”

“We publish a catalog once a year. For the first time in our history last year, we did not put pricing in it,” says Mr. Hottle. Due to “lots of customer backlash,” Standard went back to fixed pricing in its current catalog despite the risks of having to anticipate price fluctuations on raw materials like steel and plastic nearly a year in advance.

Osmundson Mfg. President & CEO Heather Bruce is not losing sleep over either raw material prices or recruiting. Her concerns are more basic: “Nobody’s buying anything. I need sales, more than I’m worried about my costs.”

The fourth-generation owner of the Perry-based tillage and planting products producer, Ms. Bruce says “We had three years during Covid when everything was gravy in the farming industry. Inflation caught up, interest is up. With the culmination of all that, farmers aren’t buying right now.”

Rising Interest Rates A Broad Concern
Osmundson, which is opening a second manufacturing facility in Mayfield, Kentucky, doesn’t typically take on much debt for capital projects, but rising interest rates are still a major concern. “It affects us because it affects our customers,” says Ms. Bruce.

Osmundson’s immediate customers are original equipment manufacturers (OEMs) in the agriculture industry such as Iowa-based Kinze Manufacturing. Its ultimate consumers are the farmers who buy the big-ticket items and replacement parts that OEMs sell. Interest rates affect purchasing decisions at both levels.

Like Osmundson, Standard Golf doesn’t borrow often but watches how interest rates impact distributors. The concern, says Mr. Hottle, “is that they stay functioning and healthy.” Winnebago’s product lines represent “discretionary recreational purchases, so interest rate levels are an obvious factor,” says Mr. Reece. Despite higher rates, “interest in recreational vehicles remains,“ he says. “There is a cyclical element to many segments. The RV industry is recently coming off record-breaking years, and now we are seeing more market normalization.”

Global Volatility Matters
One of many Iowa manufacturers involved in global markets, Osmundson experienced immediate effects when Russia invaded Ukraine in 2019. “We were growing very well before Covid and when the war came, nobody was able to sell there at all,” says Ms. Bruce. “Ukraine is the breadbasket more than Iowa is for Europe,” says Ms. Bruce. She holds onto hope for a positive outcome “as long as Ukraine is able to put up a fight.”

Winnebago’s market is focused in the U.S. and Canada, but “when international markets are affected, we’re all impacted in some way,” says Mr. Reece.

Standard Golf’s biggest challenge from international instability was difficulty last year in obtaining empty shipping containers for supplying its warehouse in Holland. Some of its vendors were hampered by supply chain issues of past years.

AI Use In Early Stages
“AI is at the top of most everybody’s list,” says Mr. Reece. “I don’t know that everyone has a full understanding of the total scope of possibilities. We are exploring all those opportunities. He declines to go into specifics on how Winnebago is using AI, but is clear that his company is “setting parameters around usage.”

“AI is a powerful tool, but you have to remember when you engage on a platform that is not locked inside your company, you may be sharing data that is proprietary,” he says. “There are steps you can take to mitigate that risk.” Ms. Bruce takes a more skeptical approach. “Nobody is truly using the actual AI. We’re all using some form of generative AI. Just the next buzzword in the industry, I would argue.“ Osmundson has policies in place regarding AI use, as it does with other tech platforms such as social media, she says. “We don’t bump into it too much at this stage,” says Standard Golf’s Mr. Hottle. “We’ve dabbled in it with some of our marketing pieces, sort of let AI do
some marketing verbiage on a real small scale.” With limited use, Standard Golf hasn’t seen the need to establish policies around the use of the technology.

State Of Nation, Economy
All three leaders are high on Iowa’s business climate and efforts by the state government in that area, but range from pessimistic to neutral on the nation’s direction and economic outlook for the rest of 2024.

“The economy either needs to be in recession or bypass one. We’re teetering. That’s where we’ve been all of 2024,” says Ms. Bruce. “My hope is that we’ll be in full recession in 2025, or we’ll be coming out of it.

”She’s similarly dour on choices facing voters in the 2024 presidential election. “We need candidates younger than 80 to be running our country. We the people need to do something different. We can’t be doing the same thing over and over and expect different results. That’s what we’ve been doing the last 20 years.”

Mr. Hottle is slightly more upbeat. “The national path is concerning. It just seems like it’s not the direction you’d like to see. They seem like they are still wanting to get their hands in your business. I’m hoping they can change their direction a little bit.”

He expressed cautious optimism for the rest of 2024. “I’m hoping we missed the recession bug. I don’t think it’s going to be as bad as people anticipated.”

Standard’s business has been steady, but could be better, he says. “A robust economy gets people in a good mood, makes them want to entertain people on the course. We are in the entertainment business. It does affect us if things are looking a little sour.”

Winnebago’s Mr. Reece, a 36-year company veteran, takes a longer view. “National election cycles are interesting. This one doesn’t differ. What we have going is that we are pretty optimistic about the long-term demand and desire for outdoor recreation. The election will happen, the American
people will decide, and after the election, the American people will move forward.”

As for the economy, he says, “As we move forward past the election cycle, I think we will see improvement, but it is going to take a little time.” ABI