Despite Economic Uncertainty, Companies Plan to Invest to Fuel Long Term Growth

              Survey Shows Companies Will Apply Experience from
             Previous Downturns to Guide Today's Spending Plans

    MARKHAM, ON, June 10 /CNW/ - Even in a slowing global economy, many
companies in Canada and internationally plan to invest in growth and say that
the experience of previous economic downturns is shaping a different attitude
this time around. This is according to the results of a survey of 370 senior
financial executives from around the world, conducted by CFO Research Services
in collaboration with American Express.
    The first annual American Express/CFO Research Global Business & Spending
Monitor shows that, despite a pessimistic view of the economy and relatively
conservative spending plans, companies continue to pursue growth strategies
while seeking efficiencies by controlling discretionary spending and
redeploying investments to organizational, technology and process
    "While it is hard to deny the uncertainty in today's economic climate,
companies around the world are looking for ways to maintain their growth
momentum," said Andrew Pilkington, Vice President and General Manager, Global
Commercial Card and Merchant Services Canada at American Express. "In Canada,
the mood is far more optimistic about domestic economic prospects than in the
US. Companies are looking to preserve the bottom line by prudently managing
expenses while also looking to proactively drive top-line growth."

    Learning from Actions in Previous Downturns

    In this challenging economic environment, companies are looking back to
their actions during previous downturns to help guide them towards growth this
time around. Of the companies surveyed, 70% say their investment priorities
have changed, at least moderately, in light of recent economic developments
(69% in Canada).
    "The biggest learning and difference from the last downturn in 2001 is
that companies see that cutting investments too deeply can be
counter-productive in the long term," says Andrew Pilkington. "The survey
suggests the way to long term prosperity is to build positive momentum rather
than put on the brakes during uncertain times."
    Respondents are more likely to say that in the previous downturn they
should have invested more to achieve efficiencies in production capabilities,
administrative process', and in expanding market reach (or ways to reach more
customers) than in other investment areas. These are the same areas where
respondents indicate they plan to invest more in the next 12 months - trends
that are consistent from companies globally across all regions and industries.

    -   Looking back on the last downturn that affected their companies, 38%
        of Global respondents believe they should have invested more to
        improve production process efficiency (42% in Canada); 34% should
        have invested more to improve administrative process efficiency (33%
        in Canada); and 34% should have increased their investment in
        expanding market reach (29% in Canada).
    -   In contrast, only 23% say their companies should have invested more
        in product or service development (22% in Canada), and only 18% say
        they should have invested more in new production capacity (20% in
    -   Today, 57% of respondents plan to invest more to improve production
        process efficiency over the next 12 months (56% in Canada); 56% plan
        to invest more to expand market reach (55% in Canada); and 55% plan
        to improve administrative process efficiency over the next 12 months
        (55% in Canada).

    Getting More out of Travel with Less

    Companies are looking to get more from their travel dollars. In previous
downturns, one of the biggest discretionary areas typically affected has been
travel. This time around it is being identified as an important factor for
growth however companies are looking to find efficiencies in order to spend
less. Most survey respondents expect business travel frequency to stay the
same or increase. At the same time, respondents (except those in Asia) are
more likely to say they expect their companies will spend less on travel in
the coming year than to say they expect to spend more on travel. Taken
together, these results suggest that companies will seek to economize on
travel and to tighten controls on travel spending.
    "With travel expenditures among the top costs for companies, we're seeing
a major shift in the level of focus and attention being given to creating
efficiencies in this area," says Lyell Farquharson, Vice President and General
Manager, Business Travel Canada, American Express. "Companies are looking to
strike a delicate balance between maintaining momentum to be competitively
positioned for economic recovery and being as efficient as possible in
managing travel expenses."

    -   77% of respondents say the level of domestic travel will stay the
        same or increase in the next 12 months (75% in Canada). However, 33%
        of respondents also indicate they will be looking to restrict or
        tighten its corporate spending policies around domestic travel in the
        next 12 months. (31% in Canada).
    -   39% of respondents are likely to restrict travel such as conferences,
        management retreats and training events - travel that is not critical
        to business growth (33% in Canada).

    Path to Progress: Invest in Marketing and M&A

    To boost growth and maintain profitability, finance executives say their
companies plan to take some of the following steps:

    -   Respondents are more likely to say they plan to increase spending on
        marketing, advertising, and PR services than any other spending
        category (32% globally, 27% in Canada). These are services that, by
        definition, help companies reach more customers.
    -   Similarly, respondents say their companies plan to take a relatively
        conservative approach to capital allocation in the coming year.
        Respondents are more likely, however, to say they plan to increase
        capital allocation to M&A (29% globally, 27% in Canada) -- a strategy
        often pursued to expand market reach -- than to any other allocation
    -   Companies will look to improve efficiency by reducing discretionary
        spending, such as on indirect line items (37% globally, 35% in
        Canada), and pursuing a combination of organizational, technology,
        and process improvements.
    -   56% of respondents indicate they anticipate headcount growth in the
        next 12 months (71% in Canada), while most of these respondents (46%
        globally, 60% in Canada) indicate it will only be modest growth.

    Rising Energy Costs Threaten Performance

    The rising cost of energy proves to be an urgent concern among respondents
globally, outstripping other worries that could affect the production and
delivery of goods and services, including the cost of capital, labor and raw
materials, by a fairly large margin.

    -   42% cite the cost of energy as an urgent concern (38% in Canada);
        compared to 22% that cite labor costs (22% in Canada) and 26% that
        say the cost of capital is of urgent concern (18% in Canada).

    When asked about factors that affect the demand for goods and services,
survey results suggest that respondents' anxiety is evenly distributed between
reduced appetite for consumer goods (30% globally, 20% in Canada), unfavorable
currency exchange rates (30% globally, 29% in Canada), and high interest rates
(30% globally, 24% in Canada).
    Although economic prospects vary by region, only about one in five
respondents say they expect substantial growth in their primary industry and
for their individual company over the next year.

    -   Canadian respondents tend to be far more optimistic about domestic
        economic prospects than their US counterparts, with 64% predicting
        economic expansion in Canada for the coming year (vs. 28% in the US).
    -   In fact, 20% of Canadian respondents say they anticipate substantial
        industry growth in the next 12 months, compared with only 3% in the

    At the same time, over three-quarters of respondents (75% in Canada)
report that a sustained downturn in the US economy would have at least some
impact on their company's growth prospects

    About the Survey

    In April and May 2008, CFO Research Services surveyed 370 senior finance
executives at large and global companies across a wide range of industries in
Canada, the United States, Mexico, Europe, Asia and Australia. Company
revenues ranged from $500 million to more than $20 billion. The survey
explores companies' investment priorities and spending plans over the next 12
months, as well as how their strategic priorities have shifted in light of the
current economic environment. These results are among the findings of the CFO
Research Services study, which includes the survey and interviews with senior
executives at large companies around the world. CFO Research's full report on
the results of this program will be published in late June.

    About American Express in Canada

    American Express in Canada operates as Amex Bank of Canada and Amex
Canada Inc. Both are wholly owned subsidiaries of the New York based American
Express Travel Related Services Company, Inc., the largest operating unit of
the American Express Company. Amex Bank of Canada is the issuer of American
Express Cards in Canada. Amex Canada Inc. operates the Corporate Travel,
Travel Services Network and Travellers Cheques divisions in Canada. American
Express opened its first offices in Toronto and Hamilton in 1853 and now
employs 3,700 Canadians coast-to-coast.

    About CFO Research Services

    CFO Research is the sponsored research unit of CFO Publishing Corp.,
which publishes CFO magazine in the United States, Europe, China, and Asia.
CFO Publishing is an Economist Group business.

For further information:

For further information: Lauren Dineen-Duarte, American Express Canada,
(905) 474-8169,; Aimee Lazarus, Hill and
Knowlton Canada, (416) 413-4601,

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