It may be of little consolation, but manufacturing executives can go to bed at night knowing that the same concerns that are pressuring their businesses are doing the same to corporate America in general.
Specifically, higher energy costs and a lack of qualified workers are among the two major concerns of executives at large multinationals across the country, according to the latest Management Barometer, a quarterly survey from PricewaterhouseCoopers.
The good news, however, is that these executives overall are feeling more confident about their businesses. Substantially more are expecting positive growth over the next 12 months, and their average revenue target is 24 percent higher, at 8.9 percent, versus 7.2 percent last year. Higher spending is seen for major new investment, and more companies are planning new hiring.
“Though confident, these executives have growing concerns about key cost factors, led by energy prices that are seen as potential barriers to growth,” said Greg Garrison, Pricewaterhouse-Coopers’ managing partner – U.S. operations. “But to an extent, these concerns are being offset or counterbalanced by lessoned worries about regulation, profitability, access to capital, and taxation.”
| Types of increased investments expected. To view chart larger, click here. |
Surveyed executives showed less concern this year than last about legislative and regulatory pressures, decreasing profitability, capital constraints, and increased taxes. Worry about market demand also remains relatively low.
Not surprisingly, costs continue to increase for the multinationals, driven primarily by higher energy prices. What may be surprising, at least to the manufacturing community, is that of the 50 percent of companies that reported higher costs, 40 percent increased their prices.
For the companies where escalating energy prices are seen as a potential barrier to growth, new hiring and revenue growth expectations are both lower than all other companies surveyed.
| Potential barriers to growth. To view chart larger, click here. |
"In the end, these executives' confidence about their company's performance over the next 12 months may stem from what they see as a steady economy and their ability to manage their costs of greatest concern," Garrison said. "With net-favorable gross margins over the past five quarters, they have reason to be upbeat about future cost-related challenges." PricewaterhouseCoopers will issue its Manufacturing Barometer on Aug. 22.