INDUSTRIAL LEADERS SEE NEGATIVE
THROUGH FIRST HALF OF 2002
New NAM Chairman Says Outlook Underscores Need For
Source: The National Association of Manufacturers
November 1, 2001
The nation’s manufacturers
foresee very little economic growth through the first half of next year,
and only modest gains thereafter, according to a survey of the board
of director of the National Association of Manufacturers taken at their
semi-annual meeting October 30-31.
President Bush met with
the NAM directors, promising to work with business to get the economy
growing again, and calling upon Congress to quickly enact economic stimulus
legislation. The directors were addressed also by Secretary of State
Colin Powell, Secretary of the Treasury Paul O’Neill, Secretary of Commerce
Donald Evans, Senator Ted Kennedy (D-MA), and Environmental Protection
Agency Administrator Christine Todd Whitman, among others.
"Coming on the heels
of yesterday’s reported decline in Gross Domestic Product, the expectations
of the CEOs reflected in the survey paint a grim picture of the months
ahead," said Jerry Jasinowski, President of the NAM. "More
than 60 percent expect their industry to be in recession in the fourth
quarter of 2001 through the first quarter of 2002, and another 30 percent
anticipate growth to be less than 2 percent in the same period."
More than a fourth of the
industry experts participating in the survey projected negative GDP
growth in the first half of 2002, and another 60 percent said growth
would come in between 0 and 2 percent. They expect things to pick up
in the second half of next year, but modestly. A full 86 percent of
the CEOs said they expect growth in the second half of 2002 to be less
than 2.5 percent, with the majority of them projecting it will be less
than 2 percent.
"Forecasts of growth
from 2001 to 2002 in capital investment in software, computers and telecommunications
equipment are anemic with more than 70 percent predicting it would be
between 0 and 5 percent, and more than 20 percent saying it would be
negative," Jasinowski said.
"The forecast of capital
investment growth for other equipment, such as machine tools and vehicles,
was a little stronger, but not by much," Jasinowski said. "A
fourth said growth would be negative, about 60 percent said it would
be between 0 and 5 percent, and the remainder said it could be upwards
of 10 percent or more."
of earnings growth tracked the generally dim view of near term economic
growth and capital investment. About half of the CEOs expect their earnings
in the first half of 2002 to grow 3 percent or less, and another 23
percent said earnings growth would be at most 5 percent. Most of them
predicted earnings would fare better in the second half of 2002: only
22.4 percent said growth would be 3 percent or less, 38.8 percent said
it would be 3.1 to 5 percent, and the remaining 40 percent expect earnings
to grow by more than 5 percent.
"This is a business
and capital recession," said Donald Wainwright, new Chairman of
the NAM, and Chairman and CEO of Wainwright Industries of St. Louis,
Missouri. "President Bush recognizes that a strong economy is key
to our successful prosecution of the war on terrorism. He proposes to
focus on capital formation enabling businesses to grow and create jobs.
Yesterday, the NAM Board of Directors passed a resolution supporting
a three-part strategy to defeat terrorism, strengthen homeland security
and stimulate economic growth.
"The economy is basically
in good shape, but is floundering because business leaders and consumers
are uncertain about the future," Wainwright said. "The economy
needs a jumpstart, and President Bush’s economic stimulus plan is just
the ticket. It will get business into gear so it can lead the country
out of the recession. This legislation is not about tax breaks for business,
it is about capital formation, it is about productive investment, and
it is about economic expansion.
"This survey underscores
the critical need for an aggressive economic stimulus plan. Time is
of the essence. We fully support President Bush in his appeal to Congress
to rise above partisanship for stimulus legislation as quickly as possible,"
The NAM believes also that
promoting exports must be part of the economic stimulus equation. "Our
meeting with the President and Secretary of State Colin Powell underscored
the importance of the United States taking a more aggressive position
in the global economy," said Harold Wiens, Executive Vice President,
Industry Markets, of 3M. "Congress must pass Trade Promotion Authority."
The survey is based on responses
from 65 corporate CEOs from all sizes of enterprises who serve on the
NAM Board of Directors.
The National Association
of Manufacturers – 18 million people who make things in America – is
the nation’s largest industrial trade association. The NAM represents
14,000 members (including 10,000 small and mid-sized companies) and
350 member associations serving manufacturers and employees in every
industrial sector and all 50 states. Headquartered in Washington, D.C.,
the NAM has 10 additional offices across the country.
Be sure to visit
our award-winning web site at www.nam.org for more information about legislative, policy and workplace developments
affecting manufacturers, employees and the economy.