No silver lining for global metals CEOs says PricewaterhouseCoopers

Published at 09:57 AM on 03 February 2009

A difficult economic climate, plummeting demand and lack of access to credit are just some of the difficulties facing global metal CEOs currently. The steel sector has given back all of the pricing gains that were achieved in 2008. The aluminium sector has also been experiencing considerable pricing pressures and it is suspected a number of global producers are operating at a loss. These are a glimpse of the findings of the 12th Global CEO Survey metals cut by PricewaterhouseCoopers which included input from 25 global metals CEOs. Only 44% of them are confident about prospects for revenue growth in the coming year compared with 64% of the total survey sample.

Jim Forbes, global metals leader, PricewaterhouseCoopers, commented:

“It is no surprise that metals CEOs are more gloomy than their peers in other industries surveyed by us with the above findings. Even in areas where there is still demand for metals, many customers cannot access Letters of Credit to support their orders.”

That said, 80% are optimistic about their long-term outlook and believe they can increase their revenues over the next three years. Joint ventures and strategic alliances are high on the agenda with 76% of respondents expecting an increase in collaborative business arrangements in coming years. 36% are focussing on new geographic markets, in marked contrast with the total survey population of 17% and 24% see existing market penetration as key.

Jim Forbes, global metals leader, PricewaterhouseCoopers, commented:

“Due to the current crisis, only 4% of metals CEOs see mergers and acquisitions as their main means of growing revenues – a view that makes sense, since tumbling metals prices have already called the economics of several recent acquisitions into question.”

Metals CEOs are more likely than CEOs in other sectors to see low-cost competition as a serious problem – 56% versus 48% of total survey sample.

Increased pressures on natural resources is one of the issues that most concerns 80% of metals CEOs yet only 36% think that scarcity of natural resources is a commercial threat. 48% are concerned that the world’s dependence on carbon-based energy sources could have a deleterious impact on their companies.

Managing supply chain risk is fundamental to remaining profitable in the metals industry with 88% rating efficient sourcing or supply chain management as critical to them. 80% regard information about sourcing and supply chain management as critical or important, and they are generally happier with the quality of the information they get than executives in other sectors. But there is still room for improvement; 45% of respondents would like further details, while 15% say that the information they get is inadequate.

Talent and skills are not as high on the agenda as last year with 28% planning to increase the number of employees and only 20% considering downsizing. 32% are somewhat or extremely concerned that lack of people with the skills they need will have a negative impact on their companies’ growth, compared with 66% last year. However, 60% are worried about declining colleague and university enrolments in the sciences and technologies.

In the longer term, metals executives will have to ensure that they address systemic risks such as climate change and the impact of demographic shifts on the talent pool. At present, metals CEOs typically place less weight on ensuring the wellbeing of future generations or satisfying society’s needs (as distinct from those of investors) than their peers in other industries. As we enter an era in which the corporate community is expected to assume a wider array of responsibilities, the industry will have to extend its horizons.

Jim Forbes, global metals leader, PricewaterhouseCoopers, commented:

“What's next for the metals industry? Some companies – especially those serving the sectors that are most affected by the economic downturn – will certainly face tough times. The CEOs who head these companies will need to focus on cutting costs and conserving cash.”


Notes to Editors:

For more details go to www.pwc.com/ceosurvey 


For more information contact:

Elaine Bailey
Consumer and Industrial Products & Services PR Senior Manager 
Tel:020 7212 5133 
Mobile:07834 318 350 

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