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Gearing up for growth?

Feb. 26, 2010
“Both the year-on-year movement and rank order of challenges suggest that CEO focus has moved from crisis reaction to preparations for recovery. Clearly, CEOs in the U.S. in particular are returning their focus to the road to growth. We’re seeing a ...

Both the year-on-year movement and rank order of challenges suggest that CEO focus has moved from crisis reaction to preparations for recovery. Clearly, CEOs in the U.S. in particular are returning their focus to the road to growth. We’re seeing a similar trend in the overall business questions we capture from our members.” –Jonathan Spector, CEO of the Conference Board

I hold no special crystal ball that forecasts the future; heck, at times I flub up basic mathematics and suffer headaches when wading through the complicated calculations of data that comprise economic projections.

Yet there seems to be a sense that things are improving, economically speaking. Not that jobs are suddenly springing out of the Earth in legion, replete with hefty health care benefits, mind you. Nor that the almost Herculean challenges choking our nation’s course (such as our $14 TRILLION worth of federal government debt, which is expanding faster than a batch of E. coli on a hot summer day) are suddenly dissipating. No, we’ve still got plenty to worry about.

But despite all that, there seems to be – at least incrementally – pockets of news indicating a shift may be occurring in our economic fortunes. Truckers are still pressed to find decent-paying freight, fuel prices are rising and equipment costs shot up due to the 2010 emission requirements, yet in a broader sense the groundwork for a recovery is being laid. Confidence is rising among CEOs at many U.S. corporations that stronger growth lays ahead – and that could very well lead to better freight volumes for truckers sooner rather than later.

Take, for example, the recent results of The Conference Board’s CEO Challenge 2010 Survey; it indicates that most of the CEOs polled appear to be emerging from recession mode and priming for a return to growth.

"In our late 2008 survey, worries about global economic performance, business confidence, geo-financial instability, and integrity of capital markets leapt up into the CEO Top 10 issues, but each has now dropped at least 10 places," said Linda Barrington, managing director of human capital at the Conference Board and one of the report's authors. "This year, all the challenges that jumped into the Top 10 in the crisis have now jumped back out."

Now, only about 200 CEOs, chairmen, and company presidents participated in the Conference Board’s survey – not exactly a huge representative sample of the U.S. business landscape, mind you, but broad enough to provide some interesting insights.

In this latest survey – fielded from October through December 2009 – growth-oriented challenges started making the CEOs list of top concerns, such as how to sustain and steady top-line growth, improve customer loyalty/retention, and grow profits. All of those received higher ratings as "greatest concerns," Barrington said. Also moving up were corporate reputation for quality products/services, and stimulating innovation/creativity/enabling entrepreneurship.

Interestingly, the challenge posed by increased government regulation is a growing concern among CEOs, rising from 19th place in the 2008 survey to 6th on this one in the U.S., while in Europe climbing from 28th place to 6th, particularly in the financial services industry.

"U.S. and European CEOs are bracing for the potential regulatory aftermath of the near collapse of the global financial system and the associated recession," Barrington noted.

On top of this change in CEO outlooks comes other news that the U.S. economy expanded faster than expected in the further quarter last year. According to a revised look at the numbers by the Bureau of Economic Analysis (BEA) within the Department of Commerce, real gross domestic product – the output of goods and services produced by labor and property located in the U.S. – increased at an annual rate of 5.9% in the fourth quarter of 2009; higher than the BEA’s original 5.7% GDP estimate.

“The GDP estimates released today are based on more complete source data than were available for the ‘advance’ estimate issued last month,” the BEA noted. “The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, an acceleration of exports, personal consumption expenditures (PCE), and an upturn in non-residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased as well."

Motor vehicle output added a 0.44 percentage point to the fourth-quarter change in real GDP after adding 1.45 percentage points to the third-quarter change, the agency noted. Final sales of computers subtracted 0.01 percentage point from the fourth-quarter change in real GDP after subtracting 0.08 percentage point from the third-quarter change, BEA added.

On another front, the Commerce Department’s broader effort to try and ramp up exports from the U.S. added a new layer via an expanded partnership between the agency and United Parcel Service, designed to increase U.S. exports among small- and medium-sized businesses.

The department has tagged UPS with identifying small- and medium-sized companies that currently export to just one market. The Big Brown is supposed to go and analyze data about the companies, suggesting new markets based on factors including industry, geography, currency, and market access opportunities.

From there, the U.S. companies will be directly connected with trade specialists from the U.S. Commercial Service (USCS), a division of Commerce’s International Trade Administration. These trade experts, who are stationed in 77 countries around the world, will design targeted strategies to help identify new market opportunities and find additional buyers in existing markets to expand the companies’ ability to sell their products and services.

“Increasing the export of American products and services to global markets can help revive the fortunes of U.S. companies, spur future economic growth and support jobs here at home,” noted Commerce Secretary Gary Locke (seen here at left). “The Commerce Department, with its network of trade specialists posted around the world, and UPS, with its global reach, can be a significant resource for these companies.”

UPS has worked with Commerce’s export-promotion arm since 2007 and counseled more than 18,000 customers on how the USCS can help them boost exports and the hope is this expanded partnership will produce more of same.

In the end though, I think, it’s really more about attitude than anything else – something Jim Walton, president and CEO of PR firm Brand Acceleration talked about the other day in one of his business missives.

“Something has changed,” he said. “During the fourth quarter of 2009 there were hints of new economic activity, but 2010 seems to be different. Over and over, I hear the same thing. Activity is up – significantly! My construction industry friends are talking about increases in the number of RFPs [request for proposals], new funding for tabled work, and a flurry of new prospects. Attitudes are better; people are optimistic and they’re beginning to have fun again.”

Walton (at right) said if you watch the news, they’re still talking gloom and doom – but on the front lines of business, good things are beginning to happen.

“Everyone I talk with believes that the only reason for the rush of business activity is because people have had it with the malaise and have decided to move on with life,” he explained. “Businesses, tired of waiting, are saying, ‘Let’s get back to work.’ They are beginning to build again and there are indications that furloughed workers are being called back. They’re making things happen.”

Walton also touched on something the general news media almost always overlooks in its economic reporting: the resiliency of the American people. “We can be beaten, battered, lose everything and still fight our way back with a vengeance,” he stressed. “Given the freedom to do so, Americans will change the world. Throw in a little economic turmoil and some political anger and they’ll do just that.”

Not a bad outlook for 2010 if I say so myself.

About the Author

Sean Kilcarr 1 | Senior Editor

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