NACM Monthly Survey: Most See More of the Same, Expansion in 2009

With all the doom and gloom surrounding the current state of the U.S. market, including, most recently, a worse-than-expected jobs report, responses from credit professionals participating in NACM's November survey paint a picture of clearer skies on the horizon or, at the very least, an economy that has reached the bottom. In response to the question "What do you expect your business to do next year?," 39.8% of survey respondents said "stay the same," 32.7% said "expand," and a still statistically significant 27.5% said "contract." While the results were certainly less than optimistic, they illustrate that situations and expectations vary widely across the field and that much of the differences in what to expect in 2009 come down to company position, industry and geographical region.

"I wouldn't expect our business to expand as a result of the economy, but more-so because of our newness in the industry as well as our logistic position in our market compared to our competitors," said one participant, who noted that proximity to customers may have an effect on business. "People will continue to become more cost conscious. Our organization's prices are very competitive, but we can provide cheaper freight rates because we are so much closer to our customers than many of our competitors." Other respondents noted that their location in parts of the country that have been largely unaffected by the current crisis has allowed them to look forward to expansion in the coming year. "In the Houston area the economy is still strong and even next year still looks good," said one respondent.

"I expect to see our business expand with new product launches," said one participant, who added that an expansion in business doesn't necessarily mean easier credit management. "I do believe short payment deductions will increase as customers use suppliers as interest free banks to improve their working capital positions in light of the present economic issues."

Many respondents who expected their business to remain the same next year noted their ties to the as-yet unrealized recovery of the housing market. "We are in the building industry and do not anticipate much change in 2009," said one participant. "I anticipate the housing market will remain flat. We may see a small increase in sales and building, but nothing significant," said another. Among the 27.5% of respondents that thought their business would contract in 2009, their expectations were tied to the performance of their industry, including sectors other than construction and residential building. "We are a manufacturer in the food service industry," said one respondent. "People are eating more at home and less in restaurants. We expect that to continue until the economy turns around."

"We are a non-profit, so we have seen some slowing in donations this year, and if the economy does not improve, I am sure it will continue into the next year," said another participant, who added that there have been bright spots in performance. "Because people are not traveling as far away from home, the Zoo and Wild Animal Park have become popular places for people to come, and so our annual passes sales have increased."
NACM's December survey asks participants for their opinions on the bailout of the "Big 3" automakers that is currently being considered on Capitol Hill. To participate, visit www.nacm.org.

Jacob Barron, NACM staff writer

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