Optimism, challenge and change in store for 2010: CME survey

A new decade, new challenges and a new sense of optimism. That’s how Canadian manufacturers and exporters are viewing business operations in 2010, according to a survey of 688 respondents this month.

“2009 was anything but normal for Canada’s manufacturers and exporters,” explains CME president and CEO Jayson Myers. “In fact, the past 12 months have reset and rewritten the instruction manual to business success in Canada.”

Consider the record for 2009:
• 30 percent evaporation in sales to our largest export market
• Loss of more than 200,000 jobs in Canada’s largest business sector, five per cent in January 2009 alone
• 20 percent reduction in manufacturing sales across Canada
• A volatile currency and continued appreciation of the Canadian dollar
• Ongoing credit/financing problems

“The lesson of 2009 is that business as usual is simply not an option,” Myers says. “We have hit the reset button and now we have to define the new normal.”

According to a CME survey of 688 CEOs, Canada’s manufacturers and exporters believe that 2010 will be better than 2009, but all companies, regardless of size, are struggling to find their niche in the new normal.

The recession took its toll on Canada’s largest business sectors. Only 18 percent of companies were able to increase employment over the past year while 62 percent reduced their workforce and almost one-fifth cut their number of employees by more than 30 percent.

Looking forward to the end of the first quarter of 2010, 56 per cent of companies expect to maintain their current levels of employment while 27 percent plan to expand to their workforce. Only 17 percent estimate that they will have to trim employees in the first three months of the year.

In terms of sales, 43 per cent anticipate new orders to increase in the first quarter of the New Year with 41 percent expecting to maintain the existing volume levels as today. Only 16 percent expect orders to decrease further, with just three per cent expecting a reduction of more than 30 percent.

“I do believe that in comparison to 2009, manufacturers and exporters do have reason to be more optimistic about 2010,” Myers says. “In reality, could it be any worse than the last 12 months? — I really don’t think so.”

Nevertheless, there are still many causes for concern in the economy that could hinder companies’ abilities to take advantage of the fledgling recovery.

The most pressing challenges identified by Canadian companies include:
• Keeping costs under control
• Responding the strength and volatility of Canadian dollar
• Expanding into new markets
• Improving workforce productivity 

“A volatile currency acts like a direct price cut on export sales,” Myers says. “It’s wreaked havoc on the profitability of Canadian companies this year. I am warning our members that the Canadian dollar could reach and even exceed par by June 2010.”

With respect to business planning, the priorities for manufacturers and exporters in 2010 are:
• Improving cash management and profitability
• Expanding sales and developing new markets
• Developing and marketing new and improved products

“Manufacturers and exporters realize that they operate in a global economy where the new normal has been reset,” Myers explains. “They understand that not just diversifying markets, but products as well, are critical to their future business success.

“The new normal for Canadian manufacturing and exporting is innovative; creative; market driven and efficient,” Myers says. “Leadership will make the difference in the next 12 months as we lay the foundation for the future of the Canadian economy. We have to ensure we get it right, because our future prosperity depends on it."
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