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Corporate Executive Survey Commentary: A Lackluster Recovery

Ed McCallum, senior principal at McCallum Sweeney Consulting, says the Annual Corporate Survey indicates activity will pick up within one to two years, as the level of company investment as been lackluster.

Q1 / Winter 2013
27th Annual Survey of Corporate Executives and 9th Annual Survey of Consultants

Brett HunsakerSurvey Results Point to a "Positive Hold"
Brett Hunsaker, executive vice president and regional managing director at Newmark Grubb Knight Frank
Bill LuttrellEmergence of Big Data Affects Corporate Survey Respondents' Priorities
Bill Luttrell, senior locations strategist at Werner Enterprises
Ed McCallumA Lackluster Recovery
Ed McCallum, senior principal at McCallum Sweeney Consulting
Christopher B. SchastokCorporate Survey Results Mirror General Market Trends
Christopher B. Schastok, vice president at Jones Lang LaSalleg
Andrew ShapiroIncentives Are Still Important
Andrew Shapiro, managing director at Biggins Lacy Shapiro & Company
Thomas StringerCorporate Survey Reflects the New Economic Normal
Thomas Stringer, Business Advisory Services, Ryan & Company
The survey results have focused on a theme that is familiar to most consultants in our industry. Clients are still intending to make capital investment decisions; however, both the level of investment and the amount of new employment have been lackluster, and this trend could continue in the near future. In fact, consolidation activities have been more apparent recently in both industrial and office markets. These actions are being taken to both streamline operations as well as utilize existing capacity more efficiently. The 2012 survey indicates that the general belief is activity will pick up within one to two years, and judging from the minimal rate of significant new investment, I cannot disagree — although one bright spot we continue to hear from our clients is that there is a pending need for new capacity once confidence in the economy returns. Also, the cash reserves that are currently underutilized are quite large.

Of significant concern to our industry, as well as our clients, is the inability of the legislative and executive branches to agree on anything meaningful regarding the economy — and it is the opinion of this consultant that the blame and finger-pointing is shared by everyone. I hope, by the time publication of this article occurs, I will have fingers pointed at me as a negative worry-wart who is overconcerned with our legislators’ ability to work together; however, I suspect this will not be the case at all.

An encouraging realization from the survey comes from the comment that overseas manufacturers are having problems with product quality and rising labor and energy costs (each cited by a fifth of the Corporate Survey respondents), so much so that some are considering moving operations back to the United States. While this is encouraging from one perspective, it should be considered in the context of how important site selectors (and their clients) consider skilled labor. The availability of skilled labor factor was one of the highest ranked site selection factors (53.9 percent considered it “very important,” 35.5 percent considered it “important”), with highway accessibility (57 percent “very “important,” 33.1 percent “important”) listed as more significant. Economic development policymakers need to pay attention to the availability of skilled labor, since it will probably be the most important differentiating factor for site selection in the future.

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