Ipsos Reid

Ipsos Reid

January 26, 2005 06:00 ET

60% OF CEOS CONFIDENT THEIR WORKFORCE WILL EXPAND OVER NEXT 2 YEARS

And Most Expect Their Company To Do "Financially Better Next Year" (68%) And "Plan To Increase Business Spending" (55%) Attention: Business/Financial Editor TORONTO, ONTARIO--(CCNMatthews - Jan. 26, 2005) - Despite a climbing dollar, escalating oil prices, and other concerns about the future of the Canadian economy, six in ten CEOs in Canada (60%) say their workforce is likely to expand over the next two years (up sharply from 51% of CEOs who said this last year), and only 10% expect their workforce to be downsized. One-third (31%) say that their national workforce expectations remain unchanged.

Further, a good majority of Canadian CEOS (68%) are also confident that their own company is likely to do financially better in 2005 than it did last year (although this is down slightly from 72% who expressed this same view in 2003 about the 2004 outlook).

And over half (55%) of CEOs plan to increase business spending in the coming year, (consistent with the 53% who in 2003 indicated they would be increasing business spending in 2004). Only 6% of CEOs indicate that their business spending is likely to decrease, and 38% indicate that their business spending will likely remain the same.

But there are some underlying anxieties within the Canadian CEO community, as four in ten CEOs (40%) say that they expect the rate of inflation in Canada to "increase" in 2005, up by an impressive 24 points from the 16% of CEOs who thought this last year about 2004. And, while still a majority, a much smaller proportion of CEOs (58%) feel that inflation will "stay about the same" during 2005 (down 17 points from 75% who thought this last year about 2004).

These are the findings from the Tenth Annual Canada's Most Respected Corporations Survey sponsored by KPMG and conducted by Ipsos-Reid. The survey was conducted between September and November, 2004. The survey involved interviews of 263 of the leading CEOs in Canada.

Six In Ten CEOs (60%) Feel Their Workforce Will Likely Expand Over Next Two Years - Up Sharply From 51% Who Said This Last Year…

When considering their Canadian workforce over the next two years, 60% of CEOs indicate that they will likely be expanding, up 9 points from 51% in 2003. As for downsizing, 10% of CEOs see this in their plans for the next two years - almost exactly the same number for the last six years.

Seven in Ten (68%) Confident That Their Company Will Do Financially Better Than Last Year…

A majority (68%) of CEOs expect that their company will do financially better in 2005 than it did in 2004. This is down slightly from the 72% who held this view in 2003 looking forward to 2004.

Only 6% indicate that the financial outlook is likely to be worse than last year (5% in 2003) while 25% indicate the financial outlook will likely be the same as last year (up slightly from 20% in 2003).

The remaining 1% of CEOs "don't know" how their company will do next year.

Business Spending Is Buoyant As 55% Of CEOs Prepare To Increase Spending (Up From 53% In 2003 And 46% In 2002)…

With over half (55%) of CEOs planning to increase business spending in the coming year, it would seem that CEOs are maintaining their spending levels from last year (when 53% indicated they would be increasing spending in 2004). This contrasts with the 6% of CEOs who indicate that business spending is likely to decrease (down from 12% in 2003 projections for 2004), and 38% who indicate that their business spending will likely remain the same (up 5 points from 33% in 2003 projections for 2004). The remaining 1% of CEOs "don't know" their company's spending will increase or decrease.

Four In Ten CEOs (40%) Expect Inflation To "Increase" In 2005 - Up 24 Points From 16% Who Thought The Same Last Year About 2004…

Four in ten CEOs (40%) say that they expect the rate of inflation in Canada to "increase" in 2005, up by an impressive 24 points from the 16% of CEOs who thought this last year about 2004.

While still a majority, a much smaller portion of CEOs (58%) feel that inflation will "stay about the same" during 2005 (down 17 points from 75% who thought this last year about 2004).

Of remaining CEOs, 2% believe that inflation will "decrease" during 2004 and 1% don't know if it will increase or decrease.

Globalization And Taxes Top Issues List For CEOs…

When asked what they think is the most serious issue facing Canadian business, the top two responses have not changed from this year to last year. "Globalization/international competitiveness" (21%) tops the most serious issues list (unchanged from last year), while "taxation/corporate taxation" is the second most commonly mentioned choice (18%, also unchanged from last year).

The next four issues which are the most substantive on the list are "value of the Canadian dollar" at 17% (essentially unchanged from 16% in 2003); followed by "educated skilled workforce" at 17% (up from 10% in 2003); and "productivity" at 14% (up from 13% in 2003) and "fluctuation in the value of the currency" also at 14% (up from 7% in 2003).

Canadian CEOs Modestly Optimistic On National Economy…

Each year CEOs are given a choice of three potential economic scenarios, and this year's survey found that three-quarters of Canadian CEOs (74%) believe that, over the next year, the economy "will slow down but continue to have some growth"(73% felt this way in 2003), 24% think the economy will "grow strongly" in the coming year (23% said this in 2003), and only 1% believe that the national economy is likely to enter a recession (compared to 3% in 2003). The remaining 1% of CEOs "don't know" how they expect the economy to do in the next year.
In fact, CEOs are quite confident that there will not be a major economic downturn in the next two years. Eight in ten CEOs (79%) disagree with the statement that "I think there will be a major economic downturn in the next two years" (26% "strongly disagree", 53% "somewhat disagee") - down slightly from the 86% who disagreed with this statement in 2003.

Of the opposite opinion, are the 20% of CEOs who agree with this statement (16% "somewhat agree", 4% "strongly agree"). And the remaining 1% of CEOs "don't know" if they agree or disagree with this statement.

Most CEOs (59%) Feel Federal Government Has Created A Good Business Environment For Economic Growth And Development…

Most CEOs (59%) agree with this statement that "the Federal Government has created a business environment conducive to economic growth and development" (1% "strongly agree", 58% "somewhat agree"). This represents a slight rise in positive feelings towards the Federal Government over last year, when just half (50%) of business leaders agreed that the Federal Government had created a good business environment.

However, four in ten CEOs (41%) disagree with this statement - with 7% who "strongly disagree" and 33% who "somewhat disagree".

The remaining 1% of CEOs don't know if they agree or disagree with this statement.

Shareholders Have The Largest Gain Over Last Year In The Eyes Of CEOs…

When CEOs are asked who they think has benefited most during the past 12 months - in terms of management, shareholders, or employees - responses are varied.

Just over half of CEOs (53%) think that the collective group of management, shareholders and employees have all benefited the most during the past 12 months (up 19 points from the 34% who last year said this).

According to one in five Canadian CEOs (21%), "shareholders" have benefit most from the relatively good national economic performance of the past 12 months, down slightly from the 24% who last year thought shareholders had benefited the most from the previous 12 months.

One in ten CEOs believe that "management" (13%) have benefited the most during the past 12 months" (down 11 points from 24%), and 8% believe that "employees" have benefited the most during the past 12 months (down 6 points from 14%).

The remaining 5% of CEOs "don't know" who has benefited the most during the past 12 months.

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For more information on this news release, please contact:

John Wright
Senior Vice President
Ipsos-Reid Public Affairs
(416) 324-2900

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