Global Firm Execs Are Bullish, Says KPMG Market Survey
Large global engineering and construction firms appear to be “surprisingly positive in their outlook toward the future,” according to a new survey of executives by consulting firm KPMG International Inc., New York City. About two-thirds expect profits to hold steady or increase in 2010, and 35% say they have not had to cut any staff. But respondents were mixed on benefits of stimulus programs, and results may be skewed by the high proportion of non-U.S. respondents.
KPMG’s survey results are based on what the firm says were “face-to-face interviews” conducted in mid-2009 with 108 CEOs and other senior executives of firms in 30 countries. The company would not disclose names of respondent firms, but the report notes that nearly 75% had revenue exceeding $250 million and more than 500 employees. A KPMG spokesman says only 12% of executives were from U.S.-based firms. The report also did not identify firms’ market niches.
Firms seem to be hanging on to backlog, with 53% of respondents reporting levels steady or rising in the last year. But only 15% predicted that government stimulus programs would help. Responses differed according to firms’ geography.
Even so, respondents appear not to be taking “drastic steps” to cut costs by reducing workforce benefits. More than two-thirds say they will not reduce staff in the next year, and 28% say they will not implement or even consider other ways to reduce staff expenses (see chart). “After years of struggling to attract good candiates, the industry is clearly loathe to now let them go,” says KPMG. “This marks a change of direction from previous recessions, when many employers made deep workforce cuts.”
KPMG also reports firms have boosted risk management, particularly checking financial stability of clients. “There is a perception that the global financial crisis has devastated the construction industry,” says Geno Armstrong, KPMG industry practice leader for the international sector. “While it has had significant impact on the way these companies do business, we found they view these conditions as an opportunity to get leaner.”