Caterpillar's Rapp also warns against potential policy mistakes by government officials, such as turning too soon to fighting inflation, or applying fiscal restraints too early in a bid to bring down the federal debt. "We absolutely believe we need to control government spending, but it needs to be played out over a longer period of time," he says.
Accomplishing all those goals will be a tall order for a federal government that, over the past year, has found it increasingly hard to reach consensus on any major issue. Even so, many manufacturing executives remain optimistic about the long-term prospects for their sector.
"I absolutely believe U.S. manufacturing has the chance to improve in the area of global competitiveness," says Rapp. "The question is, are we going to make the tough decisions? The U.S. is in a position to compete, but it will require us to provide greater clarity on where we're going."
Randy Myers is a contributing editor of CFO.
Manufacturing CFOs Are Optimistic — Up to a Point
Their outlooks for 2012 vary based on what their companies make and where they sell.
"We were feeling really good through June and early July," says Jonathan Wolk, CFO of American Woodmark Corp., a $453 million cabinetmaker. "Then you could just see consumer confidence start to ebb with all the budget discussions that were going on. It really took the wind out of a lot of people's sails, the way the government was so ineffective at working together. Consumer confidence fell to 30-year lows and hasn't recovered. That's the backdrop we're operating in and, frankly, we're not sure what to expect for next year." (For more from Wolk, see "Rebuilding, Slowly.")
In Liberty Lake, Washington, Steve Helmbrecht Sr., CFO of $2.26 billion Itron, a provider of intelligent metering, communications, and utility software solutions, says his company anticipates year-over-year sales are likely to be flat to down in 2012, although growth should be stronger outside the U.S.
Robert Gold, CFO of privately held United Plastics Group, a maker of precision plastic products with a focus on the medical sector, says his firm expects fairly substantial growth in that market niche, but is uncertain about the outlook in other industries more directly influenced by the economic cycle.
At Navistar, a $12.2 billion maker of trucks, buses, and diesel engines, CFO Andrew "A.J." Cederoth says he expects that demand for trucking will expand in 2012 and that, as existing fleets continue to age, Navistar's manufacturing output will expand to meet that demand. Still, he predicts it will be a "below-average" year for truck manufacturing.
David Sylvester, CFO of $2.4 billion office-furniture maker Steelcase, says his company remains "reasonably confident about the short-to-mid-term outlook" as companies seek to modernize their offices, often for the first time in a decade after suffering through two massive recessions. "We expect year-over-year growth rates to moderate as we begin to compare against prior years," Sylvester says. "However, we, along with industry associations, continue to believe we will see growth again in 2012."
In Duluth, Georgia, NCR executive vice president for the industry solutions group and global operations Peter Dorsman says he's "cautiously optimistic" about the outlook for manufacturers in 2012. "We will continue to have challenges, whether it's the European debt crisis or other things," Dorsman says. "But we think you have to pick your head up once in a while and look at the longer term as well. That's what we try to do, and we're very excited about what could be." NCR, which had sales of $4.8 billion in 2010, is focused on self-service products such as ATMs and airport check-in kiosks, and Dorsman says the company is bullish about the opportunities in that area and well positioned to take advantage of any increase in demand.
Briggs & Stratton, a $2.1 billion maker of outdoor power products, expects sales for fiscal-year 2012 to be up about 4% to 6% from the year ended in June 2011. Still, says CFO Dave Rodgers, "we continue to take a cautious approach to the next 12 to 18 months. While we see things continuing to improve, with positive growth here in the U.S., it's going to be tough going for the next several quarters as consumers look to get back on their feet." He says the company continues to look for sales opportunities outside the U.S. — R.M.
Reader Comments» Post a comment