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Manufacturers Optimistic About their own 2014 Prospects

April 3, 2014
But concerns about government policies dampen optimism for economy as a whole.

Sixty-five percent of the CFOs surveyed by Prime Advantage, a buying consortium for midsized manufacturers, said they were more optimistic about their financial prospects in 2014. And 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. Other Prime Advantage findings:

  • 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.

While optimism about the U.S. economy as a whole remains, 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.

New Order Pipeline

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 surveyed are predicting moderate growth from their key customers over the next 12-36 months.

Top Priorities

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.

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.

Prime Advantage surveyed 497 financial executives that are employed by member companies to get the results for this survey study.

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