CEOs plan to invest in operational effectiveness, innovation and R&D
VANCOUVER, March 11, 2013 /CNW/ - Forest, paper & packaging (FPP) CEOs
are less confident about revenue growth over the next 12 months than
their peers in other sectors, but are more optimistic about their
company's revenue prospects in the next three years, according to PwC's 16th Annual Global CEO Survey released recently in Davos, Switzerland.
"The CEOs of forest, paper and packaging companies are a resilient
bunch. Recently they've faced challenges such as shifting demand and
markets, a bumpy economy, overcapacity, environmental issues and rising
costs," said Bruce McIntyre, Leader of PwC's Forest, Paper and Packing
practice in Canada. "CEOs have identified their top three priorities:
enhancing operational effectiveness; investing in innovation and R&D;
and developing new business models."
Improving operational effectiveness and investing in R&D
McIntyre says, "FPP CEOs are intensely focused on trimming any fat from
operations." The survey found 92% of sector CEOs have implemented a
cost-reduction initiative in the past 12 months, and 89% are planning
to in the coming 12 months. This result is higher than the overall
average of 70% of CEOs across all sectors in the PwC survey. Some of
the cost reduction reported was through staff cuts, which are expected
to continue, with 18% of FPP CEOs reporting plans to cut their
workforce by more than 8% this year.
R&D and innovation is a top priority for 42% of FPP CEOs in the next 12
months—a full 10% higher than the overall average across the entire CEO
Survey. Almost three-quarters of the FPP CEOs said they will make
changes to increase capacity for innovation and R&D.
Targeting pockets of opportunity
Half of the FPP CEOs surveyed have entered into a new strategic alliance
or joint venture in the past year, 34% completed a cross-border M&A and
32% completed a domestic M&A. "The high degree of transactions and
partnerships reflects the broadening uses being found for fibre such as
bioproducts, biofuels, and textiles."
CEOs reported plans to conduct even more deals in the coming 12 months,
with 58% contemplating a strategic alliance or joint venture, 47% a
cross-border M&A, and 34% a domestic M&A.
Other key findings from the FPP CEO Survey include:
Every FPP CEO surveyed said that customer service was a key
differentiator, the only sector in the full survey where 100% reported
that customers influence their strategy.
Seventy-five per cent of FPP CEOs worry that energy and raw material
costs could pose a threat to growth, far more than the average across
the overall survey sample.
Ninety-five per cent reported that supply chain partners are influencing
their strategy, and the large majority of CEOs are increasing efforts
to engage with them.
Nearly three quarters (71%) of FPP CEOs plan to increase their company's
focus on reducing their environmental footprint, while 18% will
continue at their current levels.
McIntyre concludes: "While trends for the FPP sector are very similar in
Canada to those found worldwide, there are some notable differences. We
don't think staff reductions will be as severe in Canada; in fact we're
hearing concern from some Canadian forest products companies about the
looming shortfall of qualified labour. If the US housing market
rebounds and demand from China continues to grow we could have a labour
shortage in Canada."
For PwC's 16th Annual Global CEO Survey, 1,330 interviews were conducted
in 68 countries during the last quarter of 2012, including 38 FPP CEOs
in 15 countries. This year's survey looked at key items on CEO agendas
around the world including confidence in growth, current threats like
the availability of talent, approaches to leadership and the need to
rebuild trust. By region, 449 interviews were conducted in Asia
Pacific, 312 in Western Europe, 287 in North America, including 120 in
Canada and 167 in the U.S., 165 in Latin America, 95 in Central &
Eastern Europe, 50 in Africa and 32 in the Middle East.
The full survey can be downloaded at www.pwc.com/ceosurvey. Copies are also available from the media contacts noted in this
release, including related charts and information graphics to help
illustrate your stories.
To watch a video clip of PwC Canada CEO Bill McFarland's address to the
Economic Club of Canada, please visit: http://www.pwc.com/ca/en/audit-assurance/bill-mcfarland-economic-club-canada-speech.jhtml.
Forest products CEOs and other industry leaders will discuss these
topics at PwC's 26th Annual Global Forest and Paper Industry Conference
on May 9, 2012 in Vancouver, Canada. Please visit: www.pwc.com/ca/forestconf
Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at http://www.facebook.com/pwccanada.
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SOURCE: PwC Management Services LP
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