In a national survey of U.S. manufacturing chief financial officers and senior controllers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd., there are serious concerns about inflation, as 66 percent say their company intends to raise the sales price for their goods over the next six months, up from 35 percent six months earlier.
“This was to be expected given the increase in commodity raw material costs experienced by most manufacturers over the past 12 months” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products. “With the precipitous increase in these commodity prices in recent months, manufacturers have no choice but to pass along such increases to their customers. While they have done a good job of improving operational efficiencies and driving down costs over the past three years, manufacturers simply could not drive down their conversion costs enough to absorb these raw material price increases.”
When asked about specific pricing concerns, 96 percent identified raw materials (e.g., cotton, metals, petroleum-based products), up from 62 percent six months earlier; and 58 percent identified energy, up from 33 percent six months earlier.
While still not robust, 47 percent intend to increase head count (up from 18 percent six months earlier), and 58 percent are optimistic about their own company over the next six months (up from 35 percent).
Regarding the Japan disaster, 90 percent say it will impact the U.S. economy and most believe that Japan will not fully recover for 1-3 years.
Grant Thornton LLP conducted the biannual national survey from March 22 through April 6, with 318 U.S. CFOs and senior controllers participating, of which 50 were from manufacturing companies.
Over the next six months, do you expect the U.S. economy to:
|
|
October 2010
|
April 2011
|
|
Improve
|
29%
|
41%
|
|
Remain the same
|
58%
|
43%
|
|
Get worse
|
13%
|
16%
|
Over the next six months, do you expect your company’s financial prospects to:
|
|
October 2010
|
April 2011
|
|
Improve
|
35%
|
58%
|
|
Remain the same
|
55%
|
32%
|
|
Get worse
|
10%
|
10%
|
Over the next six months, do you expect prices or fees charged by your company to:
|
|
October 2010
|
April 2011
|
|
Increase
|
35%
|
66%
|
|
Remain the same
|
60%
|
34%
|
|
Decrease
|
5%
|
0%
|
Over the next six months, do you expect your headcount to:
|
|
October 2010
|
April 2011
|
|
Increase
|
18%
|
47%
|
|
Remain the same
|
60%
|
39%
|
|
Decrease
|
22%
|
14%
|
Are you concerned about a double-dip recession?
|
|
October 2010
|
April 2011
|
|
Yes
|
64%
|
65%
|
|
No
|
36%
|
35%
|
How long do you think it will take the Japanese economy to recover fully from the recent earthquake and tsunami?
|
Less than a year
|
4%
|
|
1-3 years
|
46%
|
|
3-5 years
|
34%
|
|
Longer than 5 years
|
14%
|
|
Don’t know
|
2%
|
Do you believe that the U.S. economy will be impacted by the situation in Japan?
|
Greatly impacted
|
10%
|
|
Somewhat impacted
|
80%
|
|
No impact
|
10%
|
About which type(s) of pricing pressure are you most concerned? (You may select more than one.)
|
|
October 2010
|
April 2011
|
|
Raw materials (e.g., cotton, metals, petroleum-based product)
|
62%
|
96%
|
|
Energy
|
33%
|
58%
|
|
Employee benefits
|
80%
|
58%
|
|
Company insurance (not including health care)
|
6%
|
2%
|
|
Other
|
2%
|
10%
|
