2010 manufacturing outlook
by December 11, 2009 8:38 am 61 views
Despite giving the current economy low marks, financial executives at U.S. manufacturers are more optimistic than in recent years about the nation’s economic outlook, according to a Bank of America Merrill Lynch survey released Dec. 8.
Two-thirds of the 601 executives surveyed said the economy will expand in 2010 — a big jump from the less than one-third who voiced optimism a year ago. However, financial executives gave the current economy a score of 44 out of 100, the lowest in the 12-year history of the annual CFO Outlook.
"While the global recession has tested many companies, the survey responses show that most CFOs now anticipate growth in the year ahead. Conditions may still be challenging for some businesses, but the broader view is much more optimistic than a year ago," Laura Whitley, commercial product delivery executive at Bank of America Merrill Lynch, said in the report.
Survey results were compiled from phone interviews of 601 CFOs, finance directors and other executives selected randomly from U.S. manufacturing companies with annual revenues between $25 million and $2 billion. Interviews were conducted from mid- August to mid-October. The margin of error is +/-4%.
SURVEY FINDINGS
• 59% expect the manufacturing sector to expand next year, which is more than double the 25% a year ago. In addition, 61% of CFOs expect revenue growth in 2010, up from 50 percent last year.
• Nearly 90% of CFOs said recent actions by the Federal Reserve have helped the economy, but less than 25% said the federal stimulus package has been helpful.
• More than half said they have delayed or canceled expansion plans, up from 38% last year and the highest ever in survey history.
• Top financial concerns were revenue growth and cash flow, a departure from the previous No. 1, the cost of materials and energy.
• Nearly half of CFOs expect a higher cost of capital, yet almost 70% are considering financing, with working capital and capital expenditures listed as the top reasons.
• More than 60% said they have no plans to change the size of their labor force.