Survey Finds Two-Thirds of U.S. Consumer Products Companies Outsourcing

More than two-thirds (68 percent) of large U.S. consumer products companies are currently outsourcing some portion of their workforce, according to a new PricewaterhouseCoopers (New York) Retail & Consumer Industry Practice report. Consumer products companies, concerned about rising energy costs and tight margins, also anticipate lower growth rates in the months ahead.

The report expressed less optimism about the domestic economy (53 percent were optimistic versus 67 percent among a cross-section of industries). Additionally, consumer products executives are expecting revenue growth of 6.2 percent over the next 12 months, well below the cross-industries average growth target of 8.6 percent.

“Large consumer products companies are tightening their belts, in part because of energy costs,” said John Maxwell, leader of PricewaterhouseCoopers’ Retail & Consumer Industry Practice. “Sixty-five percent of the consumer products executives we spoke to see the price of energy as a barrier to growth. In contrast, only 50 percent of the cross-industries executives we surveyed thought energy costs would hinder their growth.”

Forty percent of those surveyed named legislative/regulatory pressures as another major barrier. Concerns about higher interest rates and demand were voiced by 30 percent and 25 percent, respectively.

The impact of escalating energy prices can be seen in the hiring plans, gross margins and investment plans of companies surveyed. Sixty-five percent of consumer products companies view escalating energy prices as a potential barrier to growth, compared to 35 percent who do not see high energy prices as a barrier.

Source: PricewaterhouseCoopers

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