Collins The Trend Tracker
by Mike Collins
February 2nd, 2009

Survey of Manufacturing Company CFOs

I recently read the results of Bank of America’s 2009 CFO Outlook, which is an annual survey of some 600 chief financial officers of manufacturing companies (most of which are privately held with less than $200 million in revenue). As with most economic outlooks today, there was no shortage of negative opinions. The average rating given to the strength of the U.S. economy was a 46, on a scale of 1 to 100, where 100 is extremely strong. This is the lowest rating in the history of the survey. Out of every ten respondents, only three believe the U.S. economy will expand in 2009 and nine predict the credit crisis will have an impact on our nation’s economic performance.

However, the bad news never inspired anyone, so I combed the results looking for the silver lining. Roughly 64 percent of the responding CFOs believe that the Fed’s actions are helping the economy. Half of the respondents expect their revenues to increase in 2009 and seven out of ten expect to raise prices in 2009. The ability to increase prices in a doubtful economic period is, in itself, a sign of strength in the economy.

What do these CFOs have planned for the year ahead? Roughly half indicated that the state of the economy would have no impact on their growth and expansion plans and one out of ten said they would accelerate their plans. One out of every four respondents anticipates being involved in a merger or acquisition in 2009. Of these, about 85 percent anticipate being the buyer in a transaction. Checking the math on that, either some of the companies that will be acquired weren’t honest about it or they will be taken completely by surprise when a buyer arrives. Alternatively, it could mean that more demand for making acquisitions exists in 2009 than supply to satisfy that demand. That bodes well for manufacturing companies that decide they will seek a sale of their company in 2009.

Bringing all of this home to the door and window industry, I would be the first to acknowledge that things are likely tougher in this industry than in many others. The fact is, though, that times are tough all over. They should conduct a follow-up survey a year from now to ask the appropriate companies whether they’re glad they approached their work with positive expectations of the future and an unabated appetite to grow in a tough period. I think their answer would be a resounding “Yes.”

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  1. Michael, CFO’s are almost always pessimistic so no the best group to ask in my opinion. I see things already starting to improve. Not open flood gates but the dam is certainly starting to open, leads are up and sales are up. Home shows are generating twice the leads of last year as they are moving from Florida north. Financing is more available than just a month ago. We may not have a great year in 2009 but I’m quite sure it will be a hell of a lot better thn 2008, which is as bad or worse than anytime since I started in this business in the mid 1960’s.

  2. I was in Mammoth Caves once, in total and complete darkness. The tour guide lit a single match and it seemed like a beacon. Your comment reminded me of that moment, since I’m hearing so much lately that’s negative. It makes sense, though, and it is consistent with our current view that by late 2009 / early 2010, the recovery will be palpable across a broad group of companies.

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