The Economy

Springtime for the Economy?

The latest Duke/&splt;em class=&doublequot;italic&doublequot;>CFO&splt;/em> business outlook survey shows that finance chiefs are in a sunnier mood.
Kate O'SullivanMarch 9, 2011

CFOs’ optimism about the economy has climbed back to 2007 levels, according to the most recent Duke University/CFO Magazine Global Business Outlook Survey, now in its 60th consecutive quarter. Finance chiefs also expect a double-digit jump in earnings and plan to boost spending in several key categories during the next year.

Fifty-six percent of U.S. finance chiefs surveyed in March say they are more optimistic about the economy than they were last quarter, up from 50% in December. They plan to increase capital spending by 12% on average in the next 12 months, and say spending on technology, research and development, and marketing and advertising will also grow. (For full survey results, see

Al Blazek, finance chief at Dunham’s Sports, a Midwestern sporting-goods retailer with stores in 13 states, says he’s “reasonably optimistic” about the future. “It seems like people are pushing away from more expensive purchases, which could be a negative for places that sell very expensive things but has given a lift to us,” he says. “We have gotten some new customers who might not have crossed our threshold before.”

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At Douglas Machine, a manufacturing company based in Minnesota, CFO Tom Wosepka says he’s more confident about his company’s outlook than about the economy in general, but adds he expects “continued relatively modest growth” in the United States, with more opportunities for faster growth in emerging markets. The company currently exports about 10% of its products, capital equipment used in packaging consumer goods. Douglas Machine also recently expanded into a new end market, making equipment used by biotech firms, and the move has accelerated the company’s growth, says Wosepka.

The Missing Ingredient: Jobs
Still, despite growth expectations, CFOs remain reluctant to hire. On average, they plan to increase their domestic full-time workforce by just over 1% in the next year. Finance chiefs in the transportation and energy sectors will do more hiring, expanding their staffs by nearly 5% on average, while communications and media firms and mining and construction firms continue to plan layoffs.

Bill Helenberg, finance chief at Precision Machine Works, a maker of aerospace parts, says the company is “trying to avoid massive hiring,” making do instead with adding overtime as needed and working as efficiently as possible. “There’s no point in building up your production workforce when there’s so much uncertainty out there,” says Helenberg. The company is hiring selectively, seeking highly skilled machine maintenance staff, who are proving difficult to find.

Indeed, certain skill sets are in demand, even as overall hiring remains weak. Finance executives say their companies are seeking skilled and professional workers above all, followed by salespeople, engineers, and product-development staff. Wosepka says Douglas Machine has been continually trying to hire staff ranging from machinists to genetic scientists. The task has been challenging, in part due to the company’s suburban location, he says, and has grown more difficult as the market has tightened recently.

Top Concerns
Consumer demand once again leads the list of external, macroeconomic concerns, while the ability to maintain margins is the top company-specific concern. Many CFOs faced with rising input costs are finding that continued soft demand limits their ability to pass along price increases, resulting in a squeeze on margins. In industries that were hard hit by the recession, scrambling competitors also make pricing a challenge. “We’ve seen some competitors get really hungry,” says Wosepka. “Unfortunately, when you have desperate competitors, it does not help your ability to price.” The most exciting hookup apps, according to many women, are ones that let you hookup with a potential sex partner. The Grindr and iContact hookup apps are the most popular on the platform because they allow one to place an ad that will eventually lead to meeting. These two apps have increased together2night their user base by attracting many college students. When one wants to use Grindr or iContact for hookups, there are some things to keep in mind.

Finance chiefs are growing more worried about inflation, citing the cost of fuel and of nonfuel commodities among their top concerns. They expect to increase their prices by just 2% on average over the next 12 months, however. “Inflation is a concern from a long-range perspective,” says Blazek, who adds his business has noted the skyrocketing price of cotton. “But in the short run, there are just too many dampening activities out there to have inflation get out of control.”