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A survey of North Bay’s leading accounting professionals found most believe the economy will improve modestly or at least remain flat going into 2012. But hiring, if any, will be selective, they said.

The survey was conducted while gathering information for the Business Journal’s annual “Spotlight: Leaders in Accounting.” Representatives from 14 of the North Bay’s largest accounting firms responded and shared how their clients expected conditions to evolve in the next six months.

To the question of whether their clients expected the economy to “improve,” “stay the same” or “decline” over the next six months, seven said the economy will improve, with many adding the caveat that growth will be modest. Six expected the economy to remain flat, and one said the economy would decline.North Bay leaders in accountingProfiles of accounting leaders selected from the Oct. 24 Business Journal list of the largest North Bay accounting firms.

The second question asked if clients were expecting to “hire additional people,” “keep employment flat” or “reduce the work force” over the next six months. Eight said that employment would likely remain flat while six said firms expected to hire more staff, though some said it would be highly selective and levels were likely to be low.

Responses were anonymous in order to protect the confidentiality of clients, yet many of those surveyed expanded on the subject of hiring and the economy when asked to share the business trends they expected in 2012.

“Twenty-twelve will likely be a year of continued moderate growth,” said Ty Pforsich, managing partner for Moss Adams’ Greater Bay Area region. “This economy will continue to be challenging. Those companies which have a focus on execution and seizing strategic opportunities will continue to succeed.”

Responses shared several common threads: construction and other industries tied to housing are likely to see the least pick up in 2012. Those industries that are experiencing growth are likely to grow slowly, though specific trends vary across industries in the North Bay. Hiring levels are also very industry specific, and those who are hiring are likely to do so in a very selective manner, they said.

According to the Nelson Family of Companies, which maintains the largest staffing operation in the North Bay, industries that are hiring include technology, food and beverage, engineering and manufacturing. Spokeswoman Courtney Dickson said that Nelson executives saw weaker hiring in office and middle management but that there was demand for talent.

“I see mixed signals; the construction industry will continue to perform poorly over the next three to five years, while the manufacturing, retail and service industries will start to gain momentum at a slow pace,” said Jim Andersen, partner in the Consulting & Business Valuation Practice Group at Burr Pilger Mayer.

Robert Eyler, who directs the Center for Regional Economic Analysis at Sonoma State University, agreed that the outlook was in line with what he’s heard from the business community, though he added that he sees a greater sense of optimism.

“Next year being an election year muddies the waters a little bit concerning business investment decisions," he cautioned. "And how our state government is uncertain as to its funding future does not help."

For the North Bay's signature industry, wine, the environment will continue to be challenging.

“The last couple of harvests have stressed the wine producers' ability to maintain and possibly grow their inventories." said Kevin Alfaro, managing partner at Brown Holder Alfaro & Co. "For those that are still maintaining upward sales trends, the below-average harvest will hamper their ability to grow."

Rob Morris, who manages Frank, Rimerman + Co.’s St. Helena office, said most wineries can expect another year of a slow recovery.

“I see 2012 being a lot like 2011, with slow recovery for a majority of wineries and continued growth of ultra-premium wine sales. However, wineries that have yet to see growth in their direct-to-consumer business will be hard pressed to grow in 2012,” he said.

Meredith Rennie of Zainer Rinehart Clarke CPAs said that she sees a variety of trends across industries, some up and some down, but a general sense of caution about the future. “Budget cuts are the norm,” she said, and the nonprofit world is also feeling the pressure.

“I work with many not-for-profit organizations with uncertain funding sources. The decline in government funding as well as reductions in charitable giving have had significant impact on decision making,” she said.

Businesses across the board are looking to “run leaner” in 2012, said Norm Capper, managing partner at Friedlander Cherwon Capper, LLP. Many will use new technology and updated business and production models to “run tighter ships” while taking a close look at how they’ve extended themselves financially in the past.

“We also see that more businesses are learning to live without debt or with less debt. Those businesses that have relied on debt to mask substandard profitability or losses will no longer be able to afford the luxury,” he said.

Another trend -- If the economy continues to improve through 2012 -- Mr. Capper said that businesses will start losing over-skilled employees who took “any job available in this bad economy.”

“The job matching problem is the bane of our economy,” said Mr. Eyler of SSU. “There are jobs out there that those seeking work are either not qualified for or pay too low in the mind of the worker seeking a job. In either case, the two sides of the market are not moving towards each other quickly or easily.”

For the year ahead, Mr. Eyler said, "much depends on how certain businesses can be about investing and hiring for long-term demand,” he added. “Without that clear foresight that goods and services I (companies) produce will be demanded, it is difficult to make a large step forward.”