CEO predictions for 2003

CEO predictions for 2003

By Harry S. Dennis III, for SBT

Where do you begin? The stock market in 2002 was the third consecutive year that, as one pundit said, "clawed everyone."

On the other hand, the economy grew at a 4% clip in the third quarter. Fourth-quarter growth, many "econs" say, is anticipated to be half that.

Well, it’s been traditional each year in this column that I report what our TEC members are saying as we launch 2003. We’re only looking at viewpoints in Wisconsin and Michigan. So here are the viewpoints.

We surveyed 540 TEC members and got a 30% response. First on the list was the status of the US economy. Forty-nine percent believe a rebound will occur in the second or third quarter of 2003. Only 6% think it will happen in 2004.

Better than half surveyed see a growth rate of 1% to 2%. And because of that expectation, the outlook for capital expenditure and operating expense increases/decreases for the next two quarters is as follows. Nearly 40% see a decrease in capital expenditures, and 53% report that they intend to reduce their operating costs from figures a year ago.

No matter how you cut the mustard, our members are telling us that we are not out of the woods, at least for the next two quarters. But for the year as a whole, a more positive picture emerges:

— 54% indicate that they will increase capital expenditures by 10% or more.

— 49% plan to increase their employee base by 5% or more.

— 88% see their revenues increasing from 10% to more than 20%.

Very interesting is that only 12% of our members report that they intend to "retrench" over the next six months. Fifty percent state that they are repositioning to accelerate growth, and nearly a quarter of them intend to make capital investments to make that possible.

A war against Iraq looms in everyone’s thinking. Seventy-eight percent of our TEC member sample sees such a war as having no impact or a mild negative impact on their business. And if you think high-energy prices are a concern, it ranks far behind concerns about higher taxes and the lack of qualified, skilled labor.

Home security remains an issue with 40% of the respondents saying that they are more concerned than they were a year ago. On the other hand, 78% report that home security issues have no impact on their businesses.

Here is an interesting data point: nearly 90% expect to see health insurance costs increase by at least 20% this year!

For the manufacturers out there, concerns about business moving offshore, specifically to China, remain alarming. One-third of the respondents see offshore, low-cost labor as a major threat to their businesses. A similar percent intend to increase outsourcing to compete with the offshore problem.

One TEC member said it best: "They can import manufactured goods into our country duty free; we export goods to their country and pay the piper!"

Where are most TEC businesses included in our survey focusing their efforts in this new year? Three categories surfaced as major priorities:

1. Sales, marketing and customer efforts

2. Financial efforts (internal)

3. Launching new products

So where does this leave us now in 2003? Actually, this year’s survey was far more positive than last year’s survey for companies in our neck of the woods. Sure, we have our disappointments. But if you read the press, you cannot help but note that much of the news deals with big local area companies making changes that are condemning to our local Wisconsin/Michigan economy (e.g., Briggs recently moving its 9HP line back to Alabama, affecting a net 47 jobs).

The news about small and medium-size businesses is not that bad at all in the grand scheme of things. We are tough and getting tougher. I keep hearing these fundamentals over and over again:

1. Stay very close to the customer.

2. Everything is negotiable.

3. Hire smart.

4. Fire smart.

5. Keep a close eye on the cash.

6. Build for the future, not the past.

7. Use trusted advisors!

Until next month, stay warm, smile, and enjoy great business progress in our new year!

Harry S. Dennis III is the president of TEC (The Executive Committee) in Wisconsin and Michigan. TEC is a professional development group for CEOs, presidents and business owners. He can be reached at 262-821-3340.

Jan. 24, 2003 Small Business Times, Milwaukee

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