A survey of CFOs by Prime Advantage, a manufacturing buyers’ consortium, finds companies more upbeat in 2010, but concerned about where they will find customers.
Prime Advantage, a consortium that seeks to leverage the collective buying power of its 600 manufacturing members, today said that a recent survey of CFOs at small and mid-sized industrial companies revealed a streak of optimism tempered slightly by trepidation in a still-recovering economy.
The consortium’s second-annual Group CFO Survey, conducted in January among 36 financial executives at mid-sized manufacturing companies, found that two-thirds of respondents were more optimistic about the economy than they were a year earlier, while 64% felt similarly upbeat about their own companies’ prospects this year.
But the credit crisis that wracked smaller businesses in 2009 remains a concern, according to the results. Ninety-one percent of the CFOs reported that their own customers or prospects “have been affected by the cost or availability of credit.”
The results of the survey also seemed to buoy some economists’ predictions that employment recovery will significantly lag the overall economic rebound. Among the survey participants, 57% said that by 2011 or 2012, the workforce at their factories will still be smaller than it was in 2007.
Mid-sized manufacturers are coping with the cost pressures of weakened demand in a variety of ways, with 70% saying they continue to reduce operational expenses. Most popular among the tactics was inventory reduction, cited by 79% of respondents. Fifty-two percent have focused on bettering their purchasing and sourcing efficiencies, while 48% are working toward asset and inventory optimization.
And the SMBs aren’t neglecting sales opportunities as they trim budgets. As demand patterns change, 55% of companies are at the drawing board, developing new products and services, while 52% said finding new markets was a corporate priority.
The biggest internal business concern was healthcare costs, with 28% citing it. One-quarter reported that their ability to forecast was the prime concern, and 22% said maintaining employee morale and productivity was the top issue.
Looking outside the four walls, 61% of the executives said uncertainty about customer demand was their foremost concern. But that figure was 15 points lower than it was in the 2009.
The survey included manufacturers with sales of $10 million to $10 billion, with the majority ranging from $20 million to $500 million. Respondents hailed from 25 different industries.
