"To see continued growth in revenue, capital expenditures and hiring expectations is a testament to the strength of the manufacturing sector and its importance to the overall U.S. economy,” said Louise O’Sullivan, president and CEO of Prime Advantage.
Chicago, IL (PRWEB) April 01, 2014
Prime Advantage, the leading buying consortium for midsized manufacturers, announced the findings of its sixth annual Group CFO Survey, revealing financial projections and top concerns of its member companies’ CFOs in 2014. These CFOs remain optimistic about financial prospects and are focused on growth, as indicated by increased hiring, capital and R&D investments.
Summary of Findings
- Sixty-five percent of CFOs said they were more optimistic about the financial prospects for their companies in 2014
- For the second year in a row, 72 percent reported that they are planning capital expenditures in computer hardware and software, indicating a strong and sustained commitment to technology investments by small and midsized manufacturers
- Ninety-four percent said they were ready to comply with the Affordable Care Act
- In addition, 75 percent said the ACA forced them to change their health plan designs for 2014
- Top concerns and priorities in 2014 include worries about the effectiveness of the U.S. government, effectively managing competitive price pressures and maintaining margins
- Sixty-five percent said they have open positions that they are seeking to fill, but are having difficulty filling the jobs because of a lack of qualified labor
- Sixty-two percent of respondents forecast moderate growth for their key customers for the next 12 months, down from 73 percent in 2013.
Optimistic about the U.S. Economy and Growth Prospects in 2014
Sixty-five percent of respondents reported that they were more optimistic than they were last year about their companies’ financial prospects for the coming year (a slight increase from 2013’s result of 64 percent and stronger than the 46 percent surveyed in the December 2013 Duke/CFO Business Outlook survey).
Optimism about the U.S. economy remains, but it is a bit more tepid. Forty-six percent of CFOs feel more optimistic about the U.S. economy and 41 percent feel the same as in 2013. Fourteen percent feel less optimistic about the U.S. economy this year. Nearly all CFOs (97 percent) believe U.S. manufacturing will expand or stay the same (43 percent) in 2013. These numbers are very close to last year’s CFO survey, when 56 percent predicted expansion for the U.S. economy and 96 percent said the economy would either stay the same or expand.
The level of optimism that CFOs have about their own companies continues to climb. Eighty-nine percent of respondents rated their optimism about financial prospects for their own companies as moderate to high, up from 72 percent in 2013 and a 27 percentage point increase from projections in 2012.
Outlook on Key Customers and New Order Pipeline
CFOs believe that the business outlook for their customers is robust. All respondents expect to see growth from key customers this year. In addition, 54 percent report a higher new order pipeline this year than at this time last year. Just three percent see a decrease in their order pipelines this year, as compared to last year.
Plus, sixty-two percent of the CFOs with Prime Advantage member companies are predicting moderate growth from their key customers over the next 12-36 months.
Cutting operational costs and developing new products and services, the top priority cited in both the 2013 and 2012 CFO surveys, retained its position for 2014. The other top priorities are seeking new markets for products and services, cited by 62 percent of respondents, and developing new products and services in response to changing consumption patterns, cited by 54 percent of respondents.
Prime Advantage’s small and midsized manufacturing members also recognize that there will be challenges in 2014 that could impact growth objectives. Chief among these anticipated market challenges are worries about the effectiveness of the U.S. government (83 percent), healthcare costs (81 percent) and the U.S. budget deficit (70 percent). Last year, CFOs also picked healthcare costs and the U.S. budget deficit as their top concerns. Concerns about Europe, oil prices and the U.S. housing market, which were prominent in 2012, have subsided.
Employment and Capital Expenses
Prime Advantage member companies are again planning to increase the number of domestic employees in the year ahead, as indicated by 65 percent of respondents (up from 55 percent in 2013). Three in four companies are planning to increase wages and salaries this year. Steady corporate employment plans have also appeared in other recent industry surveys, such as Bank of America/Merrill Lynch’s 2014 CFO Outlook and Duke/CFO Business Outlook survey.
Yet, companies are still struggling with finding skilled labor, as 65 percent of CFOs report having open positions that are difficult to fill because of a lack of available skilled workers. The top three areas for planned capital expenditures are manufacturing equipment (86 percent), computer hardware (72 percent) and computer software (61 percent).
Top Internal and External Concerns: ability to maintain margins, price pressure from competitors
External concerns facing U.S. manufacturers for the most part remained the same. Sixty-five percent of CFOs said price pressure from competitors was the top external concern facing their businesses, followed closely by customer demand and federal government policies.
Ability to maintain margins, the chief internal concern of 2013, 2012 and 2010, retained its top position again, selected by 65 percent of respondents. The cost of healthcare, which was the leading concern of 2011, fell to third place at 41 percent, while the ability to attract and retain qualified employees has become the second greatest internal concern, at 51 percent.
“The manufacturing sector has continued to show healthy growth over the past few years, and we are so pleased that the midsized industrial manufacturing market contributes to this trend. To see continued growth in revenue, capital expenditures and hiring expectations, following another strong year in 2013, is a testament to the strength of the manufacturing sector and its importance to the overall U.S. economy,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage.
The Prime Advantage Group CFO Survey was conducted in February and March of 2014 using an online survey platform. Prime Advantage surveyed a cross section of finance executives from its member companies consisting of industrial manufacturing firms representing more than 25 different industries with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. Prime Advantage surveyed 497 financial executives that are employed by member companies to get the results for this survey study.
In the past ten years, Prime Advantage has paid more than $146 million in rebates and discounts to its manufacturing industry Members.
About Prime Advantage
Founded in 1997, Prime Advantage is a buying consortium for manufacturers with more than 750 Members and more than 125 Endorsed Suppliers. For more information on Prime Advantage, visit the website at http://www.primeadvantage.com. To request a copy of the Annual CFO report, visit http://www.primeadvantage.com/surveys.