T.E.C. (The Executive Committee) Ltd.

T.E.C. (The Executive Committee) Ltd.

December 05, 2006 10:00 ET

T.E.C. (The Executive Committee) Ltd.: CEO Confidence in the Nation's Economy Plummets to Record Low

Bleak 2007 outlook won't affect employee year end bonuses/gifts

CALGARY, ALBERTA--(CCNMatthews - Dec. 5, 2006) - The nation's business leaders lost their confidence in Canada's economy and don't see an improvement in the 12 months ahead, according to a survey done by TEC Canada, Canada's premier chief executive development organization. This quarter's confidence score of 108.8 percent is nearly 10 points lower than last quarter's score of 118.5, and is a full 2.5 points lower than the previous record low of 111.3; recorded in the third quarter of 2003.

But the outlook for 2007 isn't all bleak. Although our CEOs' confidence in our nation's economy has taken a major hit, they're not planning on taking any drastic measures to offset this outlook at this point. Fifty-six percent of them plan to increase their firm's fixed investment expenditures and 56 percent plan to increase their number of staff over the next 12 months. Additionally, 79 percent of respondents anticipate an increase in sales, while 62 percent anticipate an increase in their firm's profitability.

Canada's workers can still expect to find something extra in their stockings from their bosses this year. When asked to compare this year's bonus/gift or profit sharing to last, 74 percent of respondents said it would be larger or about the same. And a whopping 87 percent of them stated that their employees can anticipate equivalent or greater raises to those of 2005.

Canadian bosses also gave their perspectives on the strength of the dollar. Twenty-one percent of respondents believe that the loonie will soar even higher next year, while 56 percent believe that it will remain about the same as current levels.

The wallets of Canadian consumers, however, may take a hit on the home front next year. When asked about plans to increase prices for Canadian products and services, 53 percent of survey respondents stated they anticipate an increase.

This quarter again saw staffing identified as the most significant business issue faced by Canadian companies and a lack of qualified job candidates as the number one problem affecting hiring over the last five months. Listed by 40 percent of respondents, staffing also took the number one spot when asked what had the most unexpected impact on their businesses during 2006.

On a more personal note, Canada's business leaders listed more success in their businesses as their primary wish for 2007. More personal time was identified by 20 percent of respondents and more family time took the number three spot with 17 percent.

For over two years, the TEC Confidence Index has forecasted annual changes in the economy, including job creation and price increases. The quarterly survey continues to serve as an accurate snapshot of Canada's economic landscape.

Over 100 CEOs of small to mid-size businesses took part in the survey and shared their views on current economic trends, issues affecting business and Canada as a whole.



TEC Confidence Index Component Questions

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2005 2005 2005 2005 2006 2006 2006 2006

Index Score: 116.2 112.4 112.1 121.9 122.4 117.6 118.5 108.8

Current Economic
Conditions 125 117 125 136 134 142 134 94
Expected Economic
Conditions 109 96 102 109 119 110 106 80
Planned Fixed Investment 136 144 130 149 146 144 147 149
Planned Revenue Growth 174 171 166 176 181 167 177 173
Expected Profit Growth 156 155 146 159 155 143 147 148
Expected Change in
Employment 147 138 148 159 158 151 154 150

NOTE: All component questions are scored as the percent giving favorable
replies minus the percent unfavorable plus 100. The TEC Confidence Index is
the sum of the components calculated as a percentage of the level recorded
in the Q2 2003 survey.


ABOUT THE CANADIAN TEC CONFIDENCE INDEX

Canadian businesses with annual sales between $1 million and $900 million represent the most vital component of the nation's economy. This small to mid-size business sector creates 75 percent of all new jobs and generates 50 percent of revenue. The opinions of these business leaders provide a clear snapshot of current economic, market and industry trends and demonstrate their plans for growth over the next 12 months. These insights provide a leading indicator for employment, capital expenditure, sales and revenue trends.

The Q4 2006 TEC Confidence Index is a compilation of responses from more than 100 Canadian CEOs of small to mid-sized companies, surveyed November 16 - November 24, 2006. The TEC Confidence Index is the only comprehensive report of their opinions and projections. TEC Canada conducts the TEC Confidence Index quarterly.

ABOUT TEC CANADA

T.E.C. (The Executive Committee) Ltd. is a part of an international organization for chief executives (CEOs), managing directors, business owners and bottom line decision makers offering confidential business advisory sessions and professional support. Established in 1985, TEC Canada currently has over 750 members across the country, coast to coast.

TEC members constitute 60 plus think-tank/peer groups. Each group is led by a specially trained TEC Chair (generally a former CEO or President) who is committed to helping members enhance their leadership skills, find new intellectual capital, grow their business and achieve better work-life balance. Every group, which is composed of non-competing peers, meets in a monthly one day session. Additionally, TEC Chairs hold individual one-to-one sessions with their members designed to address their individual needs.

ABOUT VISTAGE INTERNATIONAL (FORMERLY KNOWN AS TEC INTERNATIOANL)

Vistage International Inc., formerly known as TEC International, helps companies solve business problems, achieve better results and outperform the competition. Since 1957, only Vistage members have had access to a comprehensive suite of services that includes peer-group sessions, one-to-one executive coaching, best practices from recognized experts and the collective wisdom of more than 13,000 business leaders. Vistage member companies grow, on average, at a rate 2.5 times faster than they did prior to joining (source: D & B 1998-2003). For more information, visit www.vistage.com.



TEC Confidence Index
Q4 2006

126 Respondents - 28% Response Rate
Margin of Error +/- 8.7%
November 16 - November 24, 2006

1. Compared with a year ago, have overall economic conditions in Canada
improved, remained the same, or worsened?

Response Total Response Percent
a. Improved 30 24%
b. About the same 58 46%
c. Worsened 38 30%
Total Responses 126

2. During the next 12 months, do you expect the overall economic conditions
in Canada will be better, about the same, or worse than now?

Response Total Response Percent
a. Better 16 13%
b. About the same 69 55%
c. Worse 41 33%
Total Responses 126

3. Are your firm's total fixed investment expenditures likely to increase,
remain about the same, or decrease during the next 12 months?

Response Total Response Percent
a. Increase 70 56%
b. About the same 48 38%
c. Decrease 8 6%
Total Responses 126

4. Do you anticipate that your firm's sales revenues will increase, remain
about the same, or decrease for the next 12 months?

Response Total Response Percent
a. Increase 100 79%
b. About the same 18 14%
c. Decrease 8 6%
Total Responses 126

5. Do you expect your firm's profitability to improve, remain about the
same, or worsen during the next 12 months?

Response Total Response Percent
a. Improve 78 62%
b. About the same 30 24%
c. Worsen 18 14%
Total Responses 126

6. Do you expect your firm's total number of employees will increase,
remain about the same, or decrease during the next 12 months?

Response Total Response Percent
a. Increase 71 56%
b. About the same 47 37%
c. Decrease 8 6%
Total Responses 126

7. Do you expect the value of the Canadian dollar, compared with the U.S.
dollar, to be stronger, about the same, or weaker during the next 12
months?

Response Total Response Percent
a. Stronger 26 21%
b. About the same 70 56%
c. Weaker 30 24%
Total Responses 126

8. Do you expect prices for your product(s) or service(s) to increase,
remain about the same, or decrease during the next 12 months?

Response Total Response Percent
a. Increase 67 53%
b. About the same 51 40%
c. Decrease 8 6%
Total Responses 126

9. When do you plan to increase your firm's total number of employees over
the next 12 months?

Response Total Response Percent
a. Q4 2006 4 3%
b. Q1 2007 19 15%
c. Q2 2007 19 15%
d. Q3 2007 8 6%
e. Steadily throughout the next 12
months 31 25%
f. I do not plan to increase my total
number of employees over the next
12 months 45 36%
Total Responses 126

10. Which of the following factors has had the most significant impact on
hiring in the last five months?

Response Total Response Percent
a. Oil/energy prices 5 4%
b. Healthcare costs 1 1%
c. Lack of qualified candidates 50 40%
d. Rise of the Canadian dollar 8 6%
e. Uncertainty of the growth rate of
the overall economy 6 5%
f. Offshoring (outsourcing outside of
Canada) 2 2%
g. Booming economy in Western Canada 26 21%
h. None of the above has impacted
hiring in the last five months 17 13%
i. Other, please specify 11 9%
Total Responses 126

11. What is the most significant business issue that you are currently
facing?

Response Total Response Percent
a. Energy costs 3 2%
b. Staffing (finding, hiring, retaining
and training) 63 50%
c. Growth (growing too slowly or
growing too quickly) 22 17%
d. Financial issues (financing, cash
flow, profitability) 18 14%
e. Economic uncertainty (concern for
local and national economy, budget
deficit, housing market) 13 10%
f. Other 7 6%
Total Responses 126

12. During 2006, which of the following issues had the most unexpected
impact on your business?

Response Total Response Percent
a. Energy costs 8 6%
b. Staffing (finding, hiring, retaining
and training) 49 40%
c. Growth (growing too slowly or
growing too quickly) 26 21%
d. Financial issues (financing, cash
flow, profitability) 13 10%
e. Economic uncertainty (concern for
local and national economy, budget
deficit, housing market) 16 13%
f. Other 12 10%
Total Responses 124

13. Do you see China's growing economy as an opportunity or threat to your
business?

Response Total Response Percent
a. No effect on my
business 48 38%
b. An opportunity 43 34%
c. A threat 32 26%
d. Other 2 2%
Total Responses 125

14. Do you see India's growing economy as an opportunity or threat to your
business?

Response Total Response Percent
a. No effect on my
business 69 55%
b. An opportunity 41 33%
c. A threat 16 13%
d. Other 0 0%
Total Responses 126

15. How important will online technology be to the growth of your business
in 2007?

Response Total Response Percent
a. Very important 32 25%
b. Somewhat important 66 52%
c. No effect on my
business 25 20%
d. Don't know 3 2%
Total Responses 126

16. What are you willing to do to help reduce global warming (choose all
that apply)?

Response Total Response Percent
a. Support legislation to reduce
greenhouse gas emissions 55 19%
b. Conserve energy 85 30%
c. Install more insulation 31 11%
d. Use more fuel efficient vehicles 44 15%
e. Use more public transportation 8 3%
f. Use alternate energy (solar, hydro,
etc.) 35 12%
g. Set-up company carpools 5 2%
h. Other 6 2%
i. Not a concern 16 6%
Total Responses 285

17. Of the following, what is your primary wish for 2007?

Response Total Response Percent
a. More time with my
family 21 17%
b. More success in my
business 59 47%
c. Improved health 13 10%
d. More personal time 25 20%
e. Other 8 6%
Total Responses 126

18. What effect will the federal government's tax policy on income trusts
have on your business?

Response Total Response Percent
a. Strong positive
effect 1 1%
b. Mild positive effect 7 6%
c. No effect 92 74%
d. Mild negative effect 21 17%
e. Strong negative
effect 4 3%
Total Responses 125

19. What effect will the federal government's tax policy on income trusts
have on you personally?

Response Total Response Percent
a. Strong positive
effect 2 2%
b. Mild positive effect 4 3%
c. No effect 70 56%
d. Mild negative effect 43 34%
e. Strong negative
effect 6 5%
Total Responses 125

20. How will your 2006 bonus/gift or profit sharing compare with 2005?

Response Total Response Percent
a. This year's bonus/gift or profit
sharing will be larger than last year 52 41%
b. This year's bonus/gift or profit
sharing will be smaller than last year 18 14%
c. This year's bonus/gift or profit
sharing will be about the same as last
year 41 33%
d. We will not give a holiday bonus/gift
or profit sharing this year 15 12%
Total Responses 126

21. How will your employee salary increases compare to 2005?

Response Total Response Percent
a. They will be more than last year 58 46%
b. They will be the same as last year 52 41%
c. They will be less than last year 11 9%
d. We don't give salary increases 5 4%
Total Responses 126

22. How large will your 2006 employee salary increases be?

Response Total Response Percent
a. We aren't giving 2006 salary
increases 14 11%
b. 0% - 1% 4 3%
c. 2% - 3% 49 39%
d. 4% - 5% 41 33%
e. 6% and up 17 14%
Total Responses 125

23. Are you willing to be contacted by the media?

Response Total Response Percent
a. Yes 28 22%
b. No 98 78%
Total Responses 126


NOTE: Two graphs are viewable on the CCNMatthews' website at the following link: http://www.ccnmatthews.com/docs/1205TEC_graphs.pdf

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