December 10, 2009
by Joe Terrett, Editor
Manufacturers are venturing beyond North America for sales.
Everyone is breathing a sigh of relief that 2009 is drawing to a close, not that 2010 is shaping up to be a blockbuster year. The prognosticators are pronouncing prospects for growth incremental at best and manufacturers will still have to contend with a strong dollar, various escalating costs and sluggish demand from the US.
Nonetheless, the results of a survey of Canadian manufacturers conducted in October by PLANT, Canada’s Industry Newspaper in partnership with sponsors Grant Thornton, a global accounting and consulting firm, and the Italian Trade Commission, shows companies are cautiously optimistic about the year ahead and intend to look for opportunities outside their North American comfort zone.
As expected, 2009 revenues tumbled for almost two-thirds of the companies. Just 20% saw increases and 16% managed to maintain the status quo. But looking ahead, 53% of them anticipate revenues to increase, 28% say revenues will stay the same and just 13% are looking at a decrease.
Fifty-eight per cent of the companies forecast orders increasing compared to 18% that foresee a decrease and 22% the predict orders will hold steady. More than half (53%) expect pricing to stay the same while 23% see increases and 21% decreases. Profit expectations are pretty evenly split: 37% are looking at a fatter bottom line, 31% expect profits to decrease and 29% say they will be unchanged.
The survey, sent to company owners, senior executives and senior operations people from all goods producing and processing industries yielded 503 responses. Seventy-one per cent came from companies earning revenues of less than $100 million per year and 66% of them employ less than 100 people. Medium-sized firms were represented by 21% of respondents and large manufacturers by 7 per cent.
When asked about their biggest challenges, 32% of respondents cited maintaining and increasing sales. Next on the list but far back at 7% were financing and cash flow issues followed by the volatility of the loonie and cost control, each at 6 per cent.
The top five constraints to increasing revenue from outside the Canadian market were competition (47%), currency fluctuations (41%), market demand (36%), transportation and logistics issues (30%) and 21% each for protectionism and government policies.
In 2009, virtually all of their revenues—almost 93%—came from the North American market.