CHICAGO-Prime Advantage, a buying consortium for mid-sized manufacturers, announced the findings of its fourth annual Group CFO Survey in late March, revealing financial projections and top concerns of its member companies’ CFOs in 2012. The group says that CFOs continue to see solid signs of the economic recovery in U.S. manufacturing. While member companies are planning more hiring, wage increases, and capital expenditures, the availability of skilled workers is a growing challenge.
The summary of findings shows:
Sixty-nine percent of executives are more optimistic about their companies’ financial prospects in 2012 (compared to 67% in 2011)
While more CFOs are optimistic about their own financial prospects, fewer respondents are more optimistic about the U.S. economy than in 2011, with 67% feeling better about 2012 than the prior year (compared to 74% in 2011)
Fifty-nine percent of manufacturers expect moderate to high growth from their key customers in 2012
Nearly 95% of CFOs plan to invest in manufacturing equipment and 63% in computer hardware this year
CFOs report that customers are less affected by tight credit, with 24% of respondents in 2012 stating customers are not affected by the cost or availability of credit (compared to 14% in 2011)
Health insurance premiums increased for most respondents, but at a lesser rate, with only 33% indicating an increase of more than 11% (down from 48% measured in 2010)
Top priorities in 2012 include cutting operational costs, developing new products and services, and long-term strategic planning (which rose 13 points from 2011).
CFOs are more optimistic about the financial prospects for their own companies now than in the last two years, Prime Advantage says, (the level of optimism is 79/100 in 2012, compared to 63/100 in 2011). Only 2% of respondents are less optimistic about 2012. This number is higher for Prime Advantage members than the recent similar surveys, conducted by Duke/CFO Magazine (67/100) and Bank of America (50/100). The majority of CFOs report increases in their own new order pipelines, with 57% citing more new orders now than at this time in 2011. Manufacturing CFOs are also optimistic about the business prospects of their key customers this year, with 55% expecting to see their customers’ businesses grow moderately in 2012.
Respondents are slightly less optimistic about the overall U.S. economy, with 67% more optimistic and 12% less optimistic (compared to 74% and 3%, respectively, in 2011).
However, nearly all manufacturing CFOs (98%) believe manufacturing will stay the same or continue to expand in 2012. These mixed sentiments are consistent with a recent GE Survey in which respondents were optimistic about their own companies and industries, and slightly less optimistic about the U.S. economy.
When asked to cite the top potential threats to U.S. economic growth, 90% of the CFOs were most concerned with the European fiscal situation (90%), followed by the U.S. budget deficit (69%) and the cost of healthcare reform (68%).
To request a copy of the Prime Advantage 2012 CFO Outlook Survey, visit: www.primeadvantage.com/cfooutlook .