The most recent quarterly C-Suite survey interviewed 150 top executives from Canadian corporations and was conducted between January 29th and February 12th, 2009 by the Gandalf Group and sponsored by KPMG on behalf of CTVglobemedia Publishing Inc.
My interest in the C-Suite surveys are two-fold:
- As an owner of a business that provides consulting services to small-medium sized businesses I look to utilize resources, statistics and raw data of much larger companies to reveal current trends that individual business owners are facing in any economic climate.
- As a Do-It-Yourself (DIY) investor I am keenly interested in the behaviour of a broad group of corporate executives in order to gain a sense of opportunities or threats to the operations and profitability of the businesses I own shares in.
There was some very interesting data that the most recent C-Suite survey collected on how executives view the current economic environment, the challenges they are facing and what behaviours/actions they anticipate taking over the next 12 months to better position their businesses for future success.
As I outlined in a few recent posts (I & II) the ability to access credit and the cost of capital is a prohibitive barrier many executives are facing in their daily operations with two-thirds stating it is now more difficult to access credit than ever in their careers. Of the 150 executives who responded to the survey when asked what the biggest challenge facing their company currently they responded:
Access to capital: 35 (23%)
Market fluctuations: 29 (19%)
Economic conditions: 20 (13%)
Organizational challenges: 9 (6%)
Human Resources/Labour: 5 (3%)
With reference to access and cost of capital respondents stated that financing is not only expensive, but the terms and conditions on the loans are restrictive when compared to only six months ago.
An additionally important point I took from reading the survey was the goal of corporate survival with 53% of respondents stating they were concerned about their company’s ability to survive versus only six months ago. What startled me was the candid response of executives that they are conscious that this focus on corporate survival over the short-term will directly impact their ability to perform over the long-term. 40% stated they will be cutting staffing levels over the next 12 months to cut fixed costs and additional cuts to spending, hiring and marketing are already being initiated.
“In response to the worrying economic environment, more companies are trimming their sails by curtailing hiring, or even cutting staff. Almost 40 per cent are planning reductions. And executives are expecting a long siege – almost half say it will be one to two years before they are able to rebuild their company’s market value. To hold on, many are also cutting capital spending, marketing, training and R&D, and some may resort to bankruptcy protection.”
85% stated in the survey that they expect rebuilding the market value of their companies to take longer than six months.
Investors should create their own impressions from this data and form opinions on whether it should/should not affect your investing activities. What is clear to me is that there are clear hurdles facing many Canadian companies, public or private, that will impact returns on investment for individual investors.
If you want more information on the C-Suite survey Marty Cej will be presenting more information tonight on the Business News Network (BNN) at 8:30 pm (ET) on Monday evening.