In its latest quarterly report on U.S. banks, the FDIC said lower provisions for loan losses, reflecting an improving trend in asset quality, lifted fourth-quarter net income of FDIC-insured U.S. banks. Fourth-quarter earnings totaled $26.3 billion, an increase of $4.9 billion (23.1%) compared with the same period of 2010.
Insured institutions set aside $19.5 billion in provisions for loan losses in the fourth quarter, a decline of $13.1 billion (40.1%) from fourth quarter 2010. The FDIC also noted that overall revenues continue to exhibit weakness for the third time in the last four quarters, with net operating revenue posting a year-over-year decline caused primarily by a $4.4 billion reduction in non-interest income.
The regulator said full-year 2011 net income rose to a five-year high. Net income totaled $119.5 billion, an increase of $34 billion (39.8%) from full-year 2010 earnings. This is the highest annual net income total since the industry earned $145.2 billion in 2006. The improvement in full-year net income was made possible by an $81.1 billion reduction in loan loss provisions.
To read the full FDIC Quarterly Banking Profile, click here.
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Wednesday, February 29, 2012
Why America Will Become The Next Comsumer Electronic Powerhouse.
By computer, he's not not talking about smart devices like the Nest thermostat, which are mostly a few microprocessors with a very simple embedded OS and maybe a wireless antenna so you can tap into them via the Web.
He's talking about devices with a complete operating system and an actual user interface -- fully interactive, and able to run applications from third parties.
It has already started with TV. Apple, Google, Microsoft, and a bunch of startups like Boxee are changing the way we interact with video on our television sets. Instead of a simple channel changer, we now have on-screen menus with video from all kinds of sources, voice and gesture controls from Microsoft (and soon from Apple), and -- yes -- apps.
He believes this kind of interactivity will soon be seen in many other kinds of devices, from things you wear on your body (watches, heart rate monitors) to the dashboard of your car.
His proof? The transition from cell phones to smart phones.
A decade ago, the value of a cell phone was entirely in the hardware, which was made mostly by companies from outside the U.S. (Qualcomm being the big exception).
Now, it's almost entirely in the software -- both platform software from Apple and Google (mostly), and application software from big companies like Facebook and Amazon and countless startups.
This is probably the same reasoning that Google is using as it makes its big hardware play. We've been skeptical about the company's chances for success -- and today's report from GigaOM that Google TV has less than 1 million active users after more than a year on the market increases our skepticism further. But at least Google isn't chasing after some random whim. Other smart people in Silicon Valley are on to the same idea.
It also explains why big old computer companies like HP aren't quite so eager to give up their consumer hardware lines. Even if the old "personal computer" is dying, the basics of personal computing are going to be everywhere.
At any rate, this investor controls more than $1 billion in funds, so expect an influx of money into this space in the coming year.
He's talking about devices with a complete operating system and an actual user interface -- fully interactive, and able to run applications from third parties.
It has already started with TV. Apple, Google, Microsoft, and a bunch of startups like Boxee are changing the way we interact with video on our television sets. Instead of a simple channel changer, we now have on-screen menus with video from all kinds of sources, voice and gesture controls from Microsoft (and soon from Apple), and -- yes -- apps.
He believes this kind of interactivity will soon be seen in many other kinds of devices, from things you wear on your body (watches, heart rate monitors) to the dashboard of your car.
His proof? The transition from cell phones to smart phones.
A decade ago, the value of a cell phone was entirely in the hardware, which was made mostly by companies from outside the U.S. (Qualcomm being the big exception).
Now, it's almost entirely in the software -- both platform software from Apple and Google (mostly), and application software from big companies like Facebook and Amazon and countless startups.
This is probably the same reasoning that Google is using as it makes its big hardware play. We've been skeptical about the company's chances for success -- and today's report from GigaOM that Google TV has less than 1 million active users after more than a year on the market increases our skepticism further. But at least Google isn't chasing after some random whim. Other smart people in Silicon Valley are on to the same idea.
It also explains why big old computer companies like HP aren't quite so eager to give up their consumer hardware lines. Even if the old "personal computer" is dying, the basics of personal computing are going to be everywhere.
At any rate, this investor controls more than $1 billion in funds, so expect an influx of money into this space in the coming year.
Author: Matt Rosoff
http://www.businessinsider.com/why-america-will-be-the-next-consumer-electronics-powerhouse-2012-2?utm_source=alerts&nr_email_referer=1
He's talking about devices with a complete operating system and an actual user interface -- fully interactive, and able to run applications from third parties.
It has already started with TV. Apple, Google, Microsoft, and a bunch of startups like Boxee are changing the way we interact with video on our television sets. Instead of a simple channel changer, we now have on-screen menus with video from all kinds of sources, voice and gesture controls from Microsoft (and soon from Apple), and -- yes -- apps.
He believes this kind of interactivity will soon be seen in many other kinds of devices, from things you wear on your body (watches, heart rate monitors) to the dashboard of your car.
His proof? The transition from cell phones to smart phones.
A decade ago, the value of a cell phone was entirely in the hardware, which was made mostly by companies from outside the U.S. (Qualcomm being the big exception).
Now, it's almost entirely in the software -- both platform software from Apple and Google (mostly), and application software from big companies like Facebook and Amazon and countless startups.
This is probably the same reasoning that Google is using as it makes its big hardware play. We've been skeptical about the company's chances for success -- and today's report from GigaOM that Google TV has less than 1 million active users after more than a year on the market increases our skepticism further. But at least Google isn't chasing after some random whim. Other smart people in Silicon Valley are on to the same idea.
It also explains why big old computer companies like HP aren't quite so eager to give up their consumer hardware lines. Even if the old "personal computer" is dying, the basics of personal computing are going to be everywhere.
At any rate, this investor controls more than $1 billion in funds, so expect an influx of money into this space in the coming year.
He's talking about devices with a complete operating system and an actual user interface -- fully interactive, and able to run applications from third parties.
It has already started with TV. Apple, Google, Microsoft, and a bunch of startups like Boxee are changing the way we interact with video on our television sets. Instead of a simple channel changer, we now have on-screen menus with video from all kinds of sources, voice and gesture controls from Microsoft (and soon from Apple), and -- yes -- apps.
He believes this kind of interactivity will soon be seen in many other kinds of devices, from things you wear on your body (watches, heart rate monitors) to the dashboard of your car.
His proof? The transition from cell phones to smart phones.
A decade ago, the value of a cell phone was entirely in the hardware, which was made mostly by companies from outside the U.S. (Qualcomm being the big exception).
Now, it's almost entirely in the software -- both platform software from Apple and Google (mostly), and application software from big companies like Facebook and Amazon and countless startups.
This is probably the same reasoning that Google is using as it makes its big hardware play. We've been skeptical about the company's chances for success -- and today's report from GigaOM that Google TV has less than 1 million active users after more than a year on the market increases our skepticism further. But at least Google isn't chasing after some random whim. Other smart people in Silicon Valley are on to the same idea.
It also explains why big old computer companies like HP aren't quite so eager to give up their consumer hardware lines. Even if the old "personal computer" is dying, the basics of personal computing are going to be everywhere.
At any rate, this investor controls more than $1 billion in funds, so expect an influx of money into this space in the coming year.
Author: Matt Rosoff
http://www.businessinsider.com/why-america-will-be-the-next-consumer-electronics-powerhouse-2012-2?utm_source=alerts&nr_email_referer=1
Tuesday, February 21, 2012
Make It In America: Manufacturing Matters
Make It In America: Manufacturing Matters
Officials Declare “This is the Moment” for Manufacturing. Manufacturing got some love on Capitol Hill on Valentine’s Day.
Representative John Garamendi (D-CA), Representative Paul Tonko (D-NY) and Representative Jason Altmire (D-PA) discussed the President’s 2013 budget proposal. And manufacturing is written all over it. It’s seen as one of the ways to bring America back to the leading edge of the world’s economies.
Here are some favorite excerpts from the discussion:
“We care about manufacturing, we care about small and medium-sized businesses, and that we are going to see that as the springboard to the economic recovery.”
“We have to keep our eye on this particular prize, and that's rebuilding the American manufacturing sector.”
“This is the moment for us to move forward by reigniting the American Dream, doing it through small and medium-sized business, the pulse of the American enterprise, investing in those dreamers, those movers, those builders, those entrepreneurs, and then resulting in a thriving middle class."
“We appreciate the Representatives for their thoughtful discussion of Manufacturing in America, including the contributions of the MEP program.”
“Over the last year, my colleagues and I have been talking about the key ladders to success, those things that create opportunity in America. And certainly, they're education, the research, the manufacturing, the infrastructure, and the opportunities that come with them.”
“Our colleagues understand the relationship that exists between manufacturing and R&D, research and development. And it's critical that we look at those together, because of the discussion that we're having in this country about why, over the past several decades, we've lost so much in manufacturing.”
“We have to continue to make that investment in R&D because, if we don't do it, other countries will--and they are.”
“And if we expect to compete in a global economy, if we expect to get back our lead in manufacturing, which we are starting to do, it has to begin at that first stage of innovation, of research and development, creating new products, leading to new ways of manufacturing.”
A full transcript of the discussion can be found on the attached link.
http://capitolwords.org/date/2012/02/14/H715_make-it-in-america-manufacturing-matters/
Officials Declare “This is the Moment” for Manufacturing. Manufacturing got some love on Capitol Hill on Valentine’s Day.
Representative John Garamendi (D-CA), Representative Paul Tonko (D-NY) and Representative Jason Altmire (D-PA) discussed the President’s 2013 budget proposal. And manufacturing is written all over it. It’s seen as one of the ways to bring America back to the leading edge of the world’s economies.
Here are some favorite excerpts from the discussion:
“We care about manufacturing, we care about small and medium-sized businesses, and that we are going to see that as the springboard to the economic recovery.”
“We have to keep our eye on this particular prize, and that's rebuilding the American manufacturing sector.”
“This is the moment for us to move forward by reigniting the American Dream, doing it through small and medium-sized business, the pulse of the American enterprise, investing in those dreamers, those movers, those builders, those entrepreneurs, and then resulting in a thriving middle class."
“We appreciate the Representatives for their thoughtful discussion of Manufacturing in America, including the contributions of the MEP program.”
“Over the last year, my colleagues and I have been talking about the key ladders to success, those things that create opportunity in America. And certainly, they're education, the research, the manufacturing, the infrastructure, and the opportunities that come with them.”
“Our colleagues understand the relationship that exists between manufacturing and R&D, research and development. And it's critical that we look at those together, because of the discussion that we're having in this country about why, over the past several decades, we've lost so much in manufacturing.”
“We have to continue to make that investment in R&D because, if we don't do it, other countries will--and they are.”
“And if we expect to compete in a global economy, if we expect to get back our lead in manufacturing, which we are starting to do, it has to begin at that first stage of innovation, of research and development, creating new products, leading to new ways of manufacturing.”
A full transcript of the discussion can be found on the attached link.
http://capitolwords.org/date/2012/02/14/H715_make-it-in-america-manufacturing-matters/
Tuesday, February 14, 2012
Characteristics of The Right Funding Partner
Outside investors can propel your business and create a foundation for long-term success. The trick is finding the right ones.
Every CEO of a growth company is faced with a primary challenge: funding that growth. In some cases, growing businesses can partially rely on customers (in the form of working capital), bank loans and founders’ equity. You may be tempted to accept funding from any interested investor. But there is a huge benefit to finding the right funding partner —the ones that can propel your business and create an environment for long-term success.
We will only take on your funding project needs if our funding committee members have three key characteristics:
1.Deep knowledge and interest in your product or industry
2.Experience with the unique challenges and idiosyncrasies of your growing business
3.An interest and ability to actively help you to grow the company and to be vested in its success
Have you built a win-win partnership with your working capital provider? Are you currently looking for the ideal funding group? Share your thoughts with us at iam.aif@andicefunding.com
5 Bold Ideas for Businesses
February 14, 2012
5 Bold Ideas for Businesses
By David R. Butcher
In the aftermath of the recession, we have the opportunity to truly change the way business is done. While ideas like reversing offshoring and rethinking the 9-to-5 schedule aren't new, it's surprising that they haven't been widely embraced by industrial pros, considering their benefits. In fact, the following five ideas could set new standards.
Reshoring
An initiative was launched in 2010 to efficiently reduce United States imports, increase net exports and regain manufacturing jobs in a non-protectionist way. Today, insourcing — keeping factories and production jobs that would normally go overseas in America — is at the top of Alliance for American Manufacturing Executive Director Scott Paul's trending list for 2012. Last month, the White House hosted a forum with top business leaders on insourcing and even reshoring, with the aim to bring jobs back to the U.S. and stimulate local and regional economies.
There's an idea: Protect U.S. jobs in a non-protectionist, private sector-driven way.
Already, factors that drove companies overseas, such as cheap fuel and labor, no longer favor far-flung ventures, while economic conditions, natural resources and technological innovation are making it even harder for manufacturers to justify moving jobs offshore.
As such, some manufacturers, including Caterpillar, Ford Motor Co. and General Electric, are beginning to move some production back to the U.S., albeit slowly. As manufacturers have gotten better at reducing inventory and adopting just-in-time delivery, supply chains stretching around the world have begun to look like liabilities. The fragility of global supply chains became dramatically apparent when the tsunami in Japan last year caused major disruptions for companies.
In his State of the Union address last month, President Obama called for a wide-ranging package of policies to help create American manufacturing jobs — including trade enforcement measures, business tax breaks and worker training programs — arguing that rising wages in developing countries, falling wages in America and a weaker dollar have made moving work to or keeping work in the U.S. a much more viable option than offshoring, especially with a little help from Washington.
Crowdfunding
Banks are not the only source for financing a start-up. And while there are many start-up funding alternatives to consider when banks say no, crowdfunding can help entrepreneurs raise small stakes from a large group of investors to fund their business, without the risks of traditional financing.
Inspired by crowdsourcing, crowdfunding is an approach to raising capital for new projects and businesses by bypassing angel investors and venture capitalists to directly solicit contributions from a community of stakeholders, typically online, following three types of models: 1) donations, philanthropy and sponsorship where there is no expected financial return, 2) lending and 3) investment in exchange for equity, profit or revenue sharing.
There's an idea: Get a large group of "regular people" to invest small amounts simply because they're inspired by your idea and want to see it grow.
"Crowdfunding, an online method for acquiring small investments in a business from several investors, is ideal for limited financial goals on a niche project," the National Federation of Independent Business (NFIB) explains. "Investors get little more in return than the satisfaction of helping people achieve their dream. But you must first tap into their desire to support your idea."
Of the many crowdfunding websites out there, some focus on funding creative projects — such as Kickstarter for arts and nonprofits — while others focus on meeting specific needs in the marketplace or community.
For entrepreneurs and inventors: MicroVentures targets firms that are creating technologies, products and services in core areas, such as business products, consumer products, electronics and online tech; PeerBackers is for business owners to raise capital from their peers in small increments in exchange for tangible rewards; 40Billion appeals directly to the start-up entrepreneur who is seeking capital from friends and family; ProFounder is platform for entrepreneurs to raise investment capital from their communities; Quirky offers inventors and product designers the chance to bring their products to market; and at GrowVC, entrepreneurs can connect not only with funders, but also experts, team members, new customers and partners to realize their ideas.
Social Networking
The social networking phenomenon is not new, yet it is fundamentally changing the way people conduct business, as well as how businesses view customers' opinions and product ideas. Social media has amplified the power of word-of-mouth, with customers now able to broadcast their experience with a company's product to hundreds of their Facebook friends or Twitter followers, or to thousands of people reading their blog posts or online reviews.
"Using social media tools like Twitter, Facebook and LinkedIn, manufacturers can create an environment that fosters collaborative conversations among customers, suppliers and consumers that can forever change their relationships with their stakeholders," Cheryl Perkins, founder of innovation consultancy Innovationedge, told IMT in September.
There's an idea: Improve relationships and expand business opportunities using a relatively easy and mostly free medium. Businesses are also finding social networks useful for expanding their customer base, mining information that can help them improve their products and bottom line.
Kia Motors Corp. decided to modify the seat design for its' 2012 Optima "after noticing a groundswell of complaints from consumers and automotive writers percolating on the Internet," IndustryWeek recently reported. "Like Kia, Ford Motor Co. pays close attention to what people are saying about its brands on popular social media sites such as Facebook and Twitter, and elsewhere on the Web. But Ford has taken it a step further by inviting consumers to submit their ideas directly to the automaker, on a website called TheFordStory.com."
Nissan Motor Co. is also trying to grow its base on social media sites, not only to leverage the maximum impact when it launches new models, but also as a research tool. The automaker recently invited its 300,000 Facebook fans to suggest names for a new optional interior package for the Nissan Cube.
Cloud Computing
Cloud computing promises to make powerful applications and mass data storage available in a flexible, cost-effective manner to companies of all sizes, in all industries, representing a transfer of traditional IT services to an Internet-based model where users don't have to worry about the IT infrastructure. Instead of buying, installing and managing their own servers to run applications, a company can rent server time from Microsoft, Amazon or Google, among others, then manage the servers over the Internet while paying only for the processing and storage it actually uses.
There's an idea: Pay only for technology that your business uses.
Cloud computing also offers more flexibility than the traditional setup. When changes can be made on the fly, a company can deploy once and then adapt an application as business needs change or become clearer. A firm could, for instance, rent a dozen servers during its website's traffic peak and then scale back to just two when traffic wanes.
"By offering a more cost-effective, less risky and fundamentally faster alternative to on-site application developments, cloud computing is poised to transform the economics of information technology in the next few years," according to Global Industry Analysts (GIA). The market research firm projects the global cloud computing services market will reach $127 billion by 2017, driven primarily by factors such as growing prominence of enterprise mobility, need for business continuity and increasing adoption of cloud strategy among small and medium enterprises.
"Small and mid-sized businesses have long missed out because of their size: they don't have the budget to buy hardware and don't have the scale to show up on the radar of innovative software vendors," Inc.com says. "The cloud is leveling this playing field."
Workplace Flexibility
Even as technological advances make more flexible working options available, and research repeatedly shows that workplace flexibility programs can benefit businesses of all sizes and result in increased job satisfaction, lower turnover and lower insurance costs, many employees today are still held to a mandatory 9-to-5 workday.
There's an idea: Pay less attention to employee time-keeping and focus more on results of employees' work.
As employers and employees experience greater work and home-life demands, flexibility "becomes a strategic necessity to keep employees and employers working and living well," according to a recent report, published by the When Work Works initiative of the Families and Work Institute (FWI) and the Society for Human Resource Management. Another recent study, published in the Journal of Health and Social Behavior, redirected the focus of employees and managers towards measurable results and away from when and where work was completed. After employees were allowed to routinely change when and where they worked based on their individual needs and job responsibilities without seeking permission from a manager or even notifying one, researchers found that participants got more sleep, had higher energy levels, were less likely to come to work sick and generally boasted improved health and well-being.
A common misconception is that employees will take advantage of workplace flexibility. "The assumption is that if you give employees an inch, they take a mile," FWI President Ellen Galinsky said in a statement. "But that's not the case. Overall, 11 percent of employees with access to daily schedule flexibility use it several times a month or more, 70 percent use it once a month or less, and the remaining 19 percent never use it."
Of course, "flexible working" should not be confused with "anything goes," as it is a structured system with vital ground rules.
"Treating employees like grown-ups made it more likely that they would behave the same way," entrepreneur Margaret Heffernan, author of the book Willful Blindness, writes at Inc.com. "Of course, this also implies that no one person's schedule should mess up anyone else's: We all work collaboratively and to do that, it's helpful to be in the same place at the same time occasionally."
5 Bold Ideas for Businesses
By David R. Butcher
In the aftermath of the recession, we have the opportunity to truly change the way business is done. While ideas like reversing offshoring and rethinking the 9-to-5 schedule aren't new, it's surprising that they haven't been widely embraced by industrial pros, considering their benefits. In fact, the following five ideas could set new standards.
Reshoring
An initiative was launched in 2010 to efficiently reduce United States imports, increase net exports and regain manufacturing jobs in a non-protectionist way. Today, insourcing — keeping factories and production jobs that would normally go overseas in America — is at the top of Alliance for American Manufacturing Executive Director Scott Paul's trending list for 2012. Last month, the White House hosted a forum with top business leaders on insourcing and even reshoring, with the aim to bring jobs back to the U.S. and stimulate local and regional economies.
There's an idea: Protect U.S. jobs in a non-protectionist, private sector-driven way.
Already, factors that drove companies overseas, such as cheap fuel and labor, no longer favor far-flung ventures, while economic conditions, natural resources and technological innovation are making it even harder for manufacturers to justify moving jobs offshore.
As such, some manufacturers, including Caterpillar, Ford Motor Co. and General Electric, are beginning to move some production back to the U.S., albeit slowly. As manufacturers have gotten better at reducing inventory and adopting just-in-time delivery, supply chains stretching around the world have begun to look like liabilities. The fragility of global supply chains became dramatically apparent when the tsunami in Japan last year caused major disruptions for companies.
In his State of the Union address last month, President Obama called for a wide-ranging package of policies to help create American manufacturing jobs — including trade enforcement measures, business tax breaks and worker training programs — arguing that rising wages in developing countries, falling wages in America and a weaker dollar have made moving work to or keeping work in the U.S. a much more viable option than offshoring, especially with a little help from Washington.
Crowdfunding
Banks are not the only source for financing a start-up. And while there are many start-up funding alternatives to consider when banks say no, crowdfunding can help entrepreneurs raise small stakes from a large group of investors to fund their business, without the risks of traditional financing.
Inspired by crowdsourcing, crowdfunding is an approach to raising capital for new projects and businesses by bypassing angel investors and venture capitalists to directly solicit contributions from a community of stakeholders, typically online, following three types of models: 1) donations, philanthropy and sponsorship where there is no expected financial return, 2) lending and 3) investment in exchange for equity, profit or revenue sharing.
There's an idea: Get a large group of "regular people" to invest small amounts simply because they're inspired by your idea and want to see it grow.
"Crowdfunding, an online method for acquiring small investments in a business from several investors, is ideal for limited financial goals on a niche project," the National Federation of Independent Business (NFIB) explains. "Investors get little more in return than the satisfaction of helping people achieve their dream. But you must first tap into their desire to support your idea."
Of the many crowdfunding websites out there, some focus on funding creative projects — such as Kickstarter for arts and nonprofits — while others focus on meeting specific needs in the marketplace or community.
For entrepreneurs and inventors: MicroVentures targets firms that are creating technologies, products and services in core areas, such as business products, consumer products, electronics and online tech; PeerBackers is for business owners to raise capital from their peers in small increments in exchange for tangible rewards; 40Billion appeals directly to the start-up entrepreneur who is seeking capital from friends and family; ProFounder is platform for entrepreneurs to raise investment capital from their communities; Quirky offers inventors and product designers the chance to bring their products to market; and at GrowVC, entrepreneurs can connect not only with funders, but also experts, team members, new customers and partners to realize their ideas.
Social Networking
The social networking phenomenon is not new, yet it is fundamentally changing the way people conduct business, as well as how businesses view customers' opinions and product ideas. Social media has amplified the power of word-of-mouth, with customers now able to broadcast their experience with a company's product to hundreds of their Facebook friends or Twitter followers, or to thousands of people reading their blog posts or online reviews.
"Using social media tools like Twitter, Facebook and LinkedIn, manufacturers can create an environment that fosters collaborative conversations among customers, suppliers and consumers that can forever change their relationships with their stakeholders," Cheryl Perkins, founder of innovation consultancy Innovationedge, told IMT in September.
There's an idea: Improve relationships and expand business opportunities using a relatively easy and mostly free medium. Businesses are also finding social networks useful for expanding their customer base, mining information that can help them improve their products and bottom line.
Kia Motors Corp. decided to modify the seat design for its' 2012 Optima "after noticing a groundswell of complaints from consumers and automotive writers percolating on the Internet," IndustryWeek recently reported. "Like Kia, Ford Motor Co. pays close attention to what people are saying about its brands on popular social media sites such as Facebook and Twitter, and elsewhere on the Web. But Ford has taken it a step further by inviting consumers to submit their ideas directly to the automaker, on a website called TheFordStory.com."
Nissan Motor Co. is also trying to grow its base on social media sites, not only to leverage the maximum impact when it launches new models, but also as a research tool. The automaker recently invited its 300,000 Facebook fans to suggest names for a new optional interior package for the Nissan Cube.
Cloud Computing
Cloud computing promises to make powerful applications and mass data storage available in a flexible, cost-effective manner to companies of all sizes, in all industries, representing a transfer of traditional IT services to an Internet-based model where users don't have to worry about the IT infrastructure. Instead of buying, installing and managing their own servers to run applications, a company can rent server time from Microsoft, Amazon or Google, among others, then manage the servers over the Internet while paying only for the processing and storage it actually uses.
There's an idea: Pay only for technology that your business uses.
Cloud computing also offers more flexibility than the traditional setup. When changes can be made on the fly, a company can deploy once and then adapt an application as business needs change or become clearer. A firm could, for instance, rent a dozen servers during its website's traffic peak and then scale back to just two when traffic wanes.
"By offering a more cost-effective, less risky and fundamentally faster alternative to on-site application developments, cloud computing is poised to transform the economics of information technology in the next few years," according to Global Industry Analysts (GIA). The market research firm projects the global cloud computing services market will reach $127 billion by 2017, driven primarily by factors such as growing prominence of enterprise mobility, need for business continuity and increasing adoption of cloud strategy among small and medium enterprises.
"Small and mid-sized businesses have long missed out because of their size: they don't have the budget to buy hardware and don't have the scale to show up on the radar of innovative software vendors," Inc.com says. "The cloud is leveling this playing field."
Workplace Flexibility
Even as technological advances make more flexible working options available, and research repeatedly shows that workplace flexibility programs can benefit businesses of all sizes and result in increased job satisfaction, lower turnover and lower insurance costs, many employees today are still held to a mandatory 9-to-5 workday.
There's an idea: Pay less attention to employee time-keeping and focus more on results of employees' work.
As employers and employees experience greater work and home-life demands, flexibility "becomes a strategic necessity to keep employees and employers working and living well," according to a recent report, published by the When Work Works initiative of the Families and Work Institute (FWI) and the Society for Human Resource Management. Another recent study, published in the Journal of Health and Social Behavior, redirected the focus of employees and managers towards measurable results and away from when and where work was completed. After employees were allowed to routinely change when and where they worked based on their individual needs and job responsibilities without seeking permission from a manager or even notifying one, researchers found that participants got more sleep, had higher energy levels, were less likely to come to work sick and generally boasted improved health and well-being.
A common misconception is that employees will take advantage of workplace flexibility. "The assumption is that if you give employees an inch, they take a mile," FWI President Ellen Galinsky said in a statement. "But that's not the case. Overall, 11 percent of employees with access to daily schedule flexibility use it several times a month or more, 70 percent use it once a month or less, and the remaining 19 percent never use it."
Of course, "flexible working" should not be confused with "anything goes," as it is a structured system with vital ground rules.
"Treating employees like grown-ups made it more likely that they would behave the same way," entrepreneur Margaret Heffernan, author of the book Willful Blindness, writes at Inc.com. "Of course, this also implies that no one person's schedule should mess up anyone else's: We all work collaboratively and to do that, it's helpful to be in the same place at the same time occasionally."
Friday, February 10, 2012
Best companies for leaders 2012: How top companies excel in leadership development - Features - IFO
By: Bob McDonald, P&G CEO
"I see my role as the chief talent officer of the company," says Procter & Gamble CEO Bob McDonald. "Leadership is the one factor that will ensure our success long after I am gone as CEO." The West Point graduate and former brand manager for such products as Tide, Cascade, and Dawn believes leadership development is central to the consumer product giant's ability to grow earnings and cash flow in low- to no-growth economic times. Since the ranking's inception in 2005, P&G has numbered among the top-tier firms ofChief Executive's Best Companies for Leaders. The ranking is based on a study of about 1,000 firms worldwide conducted in partnership with Chally Group Worldwide (www. chally.com), a Dayton, Ohio, sales and management productivity firm. Companies were scored on four key criteria, including: Having a formal leadership process in place.
The commitment level of the CEO, as measured by the time and quality of involvement with the leadership process and development program. The depth of the leadership funnel as measured by the percentage of senior management positions filled by internal candidates as well as the percentage of middle management positions filled by internal candidates.
The number of other companies that report recruiting from the company being evaluated.To this narrowed list, Chief Executive factors in a shareholder value performance metric, slightly modifying point totals where necessary based on 10-year growth or decline in market capitalization. This generally results in only slight ranking adjustments, as any company making the list is a champion apart from most others. In fact, aside from P&G, the remaining companies in the top 10 scored within several points of one another, with the second 10 on the ranking scoring no more than six to 10 points below the first 10.
The Best Companies for Leaders survey tracks changes and developments from year to year. For example, this year some differences in priorities and challenges facing CEOs in public versus private companies were observed. Because it would be inappropriate to compare private companies with larger public companies that enjoy greater resources, the most noteworthy private firms with in-depth leadership development programs are listed separately. Respondents this year also made it clear that when succession from outside the company becomes necessary at the highest levels of management, companies depend on external recruiters. They charge these agencies with pursuing candidates from either other companies with the greatest reputation for leadership development or admired competitors with market expertise in their industry.
Several key factors most affect company rankings, including a company's reputation among its peers as a source for well-rounded talent. Also considered is the CEO's personal involvement in a company's internal process. For example, this criterion is one reason American Express dropped from last year and PepsiCo rose 10 ranks on the ladder.
Here's a look at the top five companies on this year's list, highlighting some of the reasons they secured their top-tier positions. The full Best Companies for Leaders report will be available in early February at www.chally.com. Also, later in the year, an in-depth benchmark report, detailing the process and metrics of the best companies for leaders will be available at www.ChiefExecutive.net.
P&G
Rank: 1
Quite simply, P&G executives are considered the Navy SEALs of management. This results in no small measure from a razor-like focus on internal succession planning at all levels. From its inception 174 years ago, promotion from within has been a hallmark of the company. It places a rigorous process on managers to develop managers below them. In general, your boss can't be promoted until you are ready to be promoted. P&G scored very high in its internal development program, receiving the maximum points for the percentage of its leaders that are internally recruited as well as being referenced by others as the source of their external talent search.
Development encompasses both formal as well as informal training. In 2000, when A.G. Lafley became CEO, he asked then-COO Bob McDonald to start a general manager college where individuals were taught values-based leadership, a curriculum McDonald himself created. He trains many of these 250 leaders personally. Some outsiders think it crazy that the CEO devotes his own time to this process. "It's the most valuable resource this company has," he shoots back. "This is exactly the difference between our company and others."
McDonald also personally looks at the top 300 to 400 executives and reviews the progress of key candidates with the board of directors. The most important element is short feedback loops that include 360-degree reviews where the system tries to prevent derailment. Failure is an option at P&G provided it's caught early and analyzed for what went wrong. "We have assignments that test people, stretch them, but don't break them," offers McDonald. "We often put our best people in our toughest jobs and often they may not get great results because of the difficulty of the assignment." McDonald learned this firsthand when he worked for P&G in Canada. After attending a number of focus groups there, he championed the idea of putting the company's liquid products in film enviro-packs, which proved to be a non-starter in the marketplace and had to be discontinued.
"I learned that what people say in focus groups isn't what they will necessarily do at the point of purchase," he says. Like GE, IBM and 3M, P&G sees itself as a learning organization. "We live in a VUCA world (volatile, uncertain, complex and ambiguous), which makes it impossible to know the future," McDonald says. "So instead we create a learning system that prizes flexibility and adaptability. The only way to do that is to have an organization that is willing to admit when something goes wrong.
"Every year in July, I take 150 leaders from around the world for leadership training at a facility such as West Point or CCL. We have to sharpen our saw each year. We must invest in the leaders and spend $2 billion in R&D and probably half that in leadership, although the company doesn't parse LD from its other activities."
IBM
Rank: 2
IBM has a long history of innovative leadership development and cross-discipline mentoring. Its Basic Blue for IBM Leaders, Shades of Blue and Accelerate Executive Leaders program for new executives, and Executive Insights for newly hired or acquired executives are among the many examples that involve deeply integrated programs for identifying, assessing, and developing some 60,000 high-potential leaders at all levels.
The planning process first defines all roles across IBM and creates "success profiles" for all leadership roles. This system is used to define demand for leadership roles by business unit or market and to identify critical gap roles (requiring accelerated development and recruitment). The second process focuses on pipeline identification and development. Leadership competencies of those currently in leadership roles are regularly evaluated to assess the leadership potential and functional skills of IBMers globally. Guidance on potential career paths and personalized development plans are provided for each IBMer, tracking progress through the IBM management system, including providing experiences and developmental opportunities.
Placement for each leadership role focuses on defining potential candidates, considering diversity for each opening. Placement decisions are accomplished through "five-minute drills" conducted at annual leadership reviews at all levels of the business. This companywide process moves upward to high visibility "chairman's reviews" with action follow-ups.
According to Stanley Litow, IBM's vice president of corporate citizenship and corporate affairs and president of the IBM International Foundation, IBM's "success has its roots in an adherence to core values while embracing fast-paced global change."
IBM's succession process has been a major reason it is one of the few firms that has lasted a century. It has one of the most closely watched institutionalized succession plans of any company in the world. This was evidenced by the smooth transition of CEO responsibility to Virginia "Ginny" Rometty from Sam Palmisano. She will become the ninth CEO since the company's founding and its first woman CEO. This was no exception, as Lou Gerstner's handoff to Palmisano was another good case study on leadership transition.
GE
Rank: 3
GE established the quintessential executive training ground at its world-famous Crotonville, N.Y., facility — on which GE reportedly spends about $1 billion a year. General Electric's John F. Welch Leadership Center marks its 55th anniversary this year. According to chief learning officer Susan Peters: "We have 13 offerings involving leadership skills that everybody should have, such as presentation skills, project management skills and understanding finance in a generic way."
These courses are managed through the Crotonville staff but are delivered at GE businesses around the world, including Shanghai, Munich, and Bangalore, among other places. This is done through a train the trainer (TTT) concept. "The integrity of the course is maintained because the Crotonville staff ensures that the person teaching it has been trained and certified," Peters explains. GE trains 50,000-60,000 people a year digitally, and an additional 9,000 attend courses at Crotonville. It's little wonder why so many other organizations covet the company's graduates.
3M
Rank: 4
3M practices leadership development through assignment rotation, but, consistent with the study's findings of other top-rated companies, it takes the approach that executives stay in a job for about four years in order to experience failure (the best teacher) and sustained success. Other companies often move people around every year or so, which yields a limited return on the development investment. 3M also focuses on leaders two to four levels below the CEO to develop and transition them into new roles.
The company projects its commitment to leadership development on its website: "The premise is simple: If your people grow, your company will grow. The key: linking growth in individuals to those things that unlock energy and activities that our customers value. Leadership development remains at the top of the company's agenda." 3M CEO George Buckley spends more than a fifth of his time on talent issues and teaches strategy and leadership to executives who meet twice a year.
He also reviews what personal experiences executives need to improve their learning and advance their career. He says he prefers surrounding himself and the organization with people more capable than himself. Courage and a strong sense of ethics will take a manager far, he believes, along with the ability to focus and separate opportunity from peril. The board has been working on a succession plan with Buckley for well over a year in anticipation of his retirement in February 2012.
Southwest Airlines
Rank: 5
An airline known for its low costs and high spirits, Southwest manages largely through its culture. It hires on attitude and enthusiasm and attempts to burnish this in a variety of ways, including The University for People (U4P), its corporate training facility dedicated to developing and delivering personal, professional and leadership curriculum. The manager-in-training (MIT) Program is a development experience for high-potential leaders who have long-term interest and future prospects within the company. There are two program levels: MIT I and MIT II. MIT I offers learning experiences and department visits that emphasize all aspects of Southwest Airlines and its culture. Participants experience 20-plus training sessions, including interactive exercises, assignments and visits by different departments within the company.
Participants learn about various aspects of Southwest Airlines to give its workforce a better understanding of the "big picture" and what Southwest Airlines, as a company, is all about. MIT II focuses on leaders at the manager level to strengthen management expectations and build key leadership skills, such as strategic thinking and coaching. Building relationships with other managers, directors and senior leaders across the company is another invaluable experience of both levels of the MIT program.
Sources: http://www.financialops.org/web/news/features/-/asset_publisher/X0Wf/content/best-companies-for-leaders-2012:-how-top-companies-excel-in-leadership-development
"I see my role as the chief talent officer of the company," says Procter & Gamble CEO Bob McDonald. "Leadership is the one factor that will ensure our success long after I am gone as CEO." The West Point graduate and former brand manager for such products as Tide, Cascade, and Dawn believes leadership development is central to the consumer product giant's ability to grow earnings and cash flow in low- to no-growth economic times. Since the ranking's inception in 2005, P&G has numbered among the top-tier firms ofChief Executive's Best Companies for Leaders. The ranking is based on a study of about 1,000 firms worldwide conducted in partnership with Chally Group Worldwide (www. chally.com), a Dayton, Ohio, sales and management productivity firm. Companies were scored on four key criteria, including: Having a formal leadership process in place.
The commitment level of the CEO, as measured by the time and quality of involvement with the leadership process and development program. The depth of the leadership funnel as measured by the percentage of senior management positions filled by internal candidates as well as the percentage of middle management positions filled by internal candidates.
The number of other companies that report recruiting from the company being evaluated.To this narrowed list, Chief Executive factors in a shareholder value performance metric, slightly modifying point totals where necessary based on 10-year growth or decline in market capitalization. This generally results in only slight ranking adjustments, as any company making the list is a champion apart from most others. In fact, aside from P&G, the remaining companies in the top 10 scored within several points of one another, with the second 10 on the ranking scoring no more than six to 10 points below the first 10.
The Best Companies for Leaders survey tracks changes and developments from year to year. For example, this year some differences in priorities and challenges facing CEOs in public versus private companies were observed. Because it would be inappropriate to compare private companies with larger public companies that enjoy greater resources, the most noteworthy private firms with in-depth leadership development programs are listed separately. Respondents this year also made it clear that when succession from outside the company becomes necessary at the highest levels of management, companies depend on external recruiters. They charge these agencies with pursuing candidates from either other companies with the greatest reputation for leadership development or admired competitors with market expertise in their industry.
Several key factors most affect company rankings, including a company's reputation among its peers as a source for well-rounded talent. Also considered is the CEO's personal involvement in a company's internal process. For example, this criterion is one reason American Express dropped from last year and PepsiCo rose 10 ranks on the ladder.
Here's a look at the top five companies on this year's list, highlighting some of the reasons they secured their top-tier positions. The full Best Companies for Leaders report will be available in early February at www.chally.com. Also, later in the year, an in-depth benchmark report, detailing the process and metrics of the best companies for leaders will be available at www.ChiefExecutive.net.
P&G
Rank: 1
Quite simply, P&G executives are considered the Navy SEALs of management. This results in no small measure from a razor-like focus on internal succession planning at all levels. From its inception 174 years ago, promotion from within has been a hallmark of the company. It places a rigorous process on managers to develop managers below them. In general, your boss can't be promoted until you are ready to be promoted. P&G scored very high in its internal development program, receiving the maximum points for the percentage of its leaders that are internally recruited as well as being referenced by others as the source of their external talent search.
Development encompasses both formal as well as informal training. In 2000, when A.G. Lafley became CEO, he asked then-COO Bob McDonald to start a general manager college where individuals were taught values-based leadership, a curriculum McDonald himself created. He trains many of these 250 leaders personally. Some outsiders think it crazy that the CEO devotes his own time to this process. "It's the most valuable resource this company has," he shoots back. "This is exactly the difference between our company and others."
McDonald also personally looks at the top 300 to 400 executives and reviews the progress of key candidates with the board of directors. The most important element is short feedback loops that include 360-degree reviews where the system tries to prevent derailment. Failure is an option at P&G provided it's caught early and analyzed for what went wrong. "We have assignments that test people, stretch them, but don't break them," offers McDonald. "We often put our best people in our toughest jobs and often they may not get great results because of the difficulty of the assignment." McDonald learned this firsthand when he worked for P&G in Canada. After attending a number of focus groups there, he championed the idea of putting the company's liquid products in film enviro-packs, which proved to be a non-starter in the marketplace and had to be discontinued.
"I learned that what people say in focus groups isn't what they will necessarily do at the point of purchase," he says. Like GE, IBM and 3M, P&G sees itself as a learning organization. "We live in a VUCA world (volatile, uncertain, complex and ambiguous), which makes it impossible to know the future," McDonald says. "So instead we create a learning system that prizes flexibility and adaptability. The only way to do that is to have an organization that is willing to admit when something goes wrong.
"Every year in July, I take 150 leaders from around the world for leadership training at a facility such as West Point or CCL. We have to sharpen our saw each year. We must invest in the leaders and spend $2 billion in R&D and probably half that in leadership, although the company doesn't parse LD from its other activities."
IBM
Rank: 2
IBM has a long history of innovative leadership development and cross-discipline mentoring. Its Basic Blue for IBM Leaders, Shades of Blue and Accelerate Executive Leaders program for new executives, and Executive Insights for newly hired or acquired executives are among the many examples that involve deeply integrated programs for identifying, assessing, and developing some 60,000 high-potential leaders at all levels.
The planning process first defines all roles across IBM and creates "success profiles" for all leadership roles. This system is used to define demand for leadership roles by business unit or market and to identify critical gap roles (requiring accelerated development and recruitment). The second process focuses on pipeline identification and development. Leadership competencies of those currently in leadership roles are regularly evaluated to assess the leadership potential and functional skills of IBMers globally. Guidance on potential career paths and personalized development plans are provided for each IBMer, tracking progress through the IBM management system, including providing experiences and developmental opportunities.
Placement for each leadership role focuses on defining potential candidates, considering diversity for each opening. Placement decisions are accomplished through "five-minute drills" conducted at annual leadership reviews at all levels of the business. This companywide process moves upward to high visibility "chairman's reviews" with action follow-ups.
According to Stanley Litow, IBM's vice president of corporate citizenship and corporate affairs and president of the IBM International Foundation, IBM's "success has its roots in an adherence to core values while embracing fast-paced global change."
IBM's succession process has been a major reason it is one of the few firms that has lasted a century. It has one of the most closely watched institutionalized succession plans of any company in the world. This was evidenced by the smooth transition of CEO responsibility to Virginia "Ginny" Rometty from Sam Palmisano. She will become the ninth CEO since the company's founding and its first woman CEO. This was no exception, as Lou Gerstner's handoff to Palmisano was another good case study on leadership transition.
GE
Rank: 3
GE established the quintessential executive training ground at its world-famous Crotonville, N.Y., facility — on which GE reportedly spends about $1 billion a year. General Electric's John F. Welch Leadership Center marks its 55th anniversary this year. According to chief learning officer Susan Peters: "We have 13 offerings involving leadership skills that everybody should have, such as presentation skills, project management skills and understanding finance in a generic way."
These courses are managed through the Crotonville staff but are delivered at GE businesses around the world, including Shanghai, Munich, and Bangalore, among other places. This is done through a train the trainer (TTT) concept. "The integrity of the course is maintained because the Crotonville staff ensures that the person teaching it has been trained and certified," Peters explains. GE trains 50,000-60,000 people a year digitally, and an additional 9,000 attend courses at Crotonville. It's little wonder why so many other organizations covet the company's graduates.
3M
Rank: 4
3M practices leadership development through assignment rotation, but, consistent with the study's findings of other top-rated companies, it takes the approach that executives stay in a job for about four years in order to experience failure (the best teacher) and sustained success. Other companies often move people around every year or so, which yields a limited return on the development investment. 3M also focuses on leaders two to four levels below the CEO to develop and transition them into new roles.
The company projects its commitment to leadership development on its website: "The premise is simple: If your people grow, your company will grow. The key: linking growth in individuals to those things that unlock energy and activities that our customers value. Leadership development remains at the top of the company's agenda." 3M CEO George Buckley spends more than a fifth of his time on talent issues and teaches strategy and leadership to executives who meet twice a year.
He also reviews what personal experiences executives need to improve their learning and advance their career. He says he prefers surrounding himself and the organization with people more capable than himself. Courage and a strong sense of ethics will take a manager far, he believes, along with the ability to focus and separate opportunity from peril. The board has been working on a succession plan with Buckley for well over a year in anticipation of his retirement in February 2012.
Southwest Airlines
Rank: 5
An airline known for its low costs and high spirits, Southwest manages largely through its culture. It hires on attitude and enthusiasm and attempts to burnish this in a variety of ways, including The University for People (U4P), its corporate training facility dedicated to developing and delivering personal, professional and leadership curriculum. The manager-in-training (MIT) Program is a development experience for high-potential leaders who have long-term interest and future prospects within the company. There are two program levels: MIT I and MIT II. MIT I offers learning experiences and department visits that emphasize all aspects of Southwest Airlines and its culture. Participants experience 20-plus training sessions, including interactive exercises, assignments and visits by different departments within the company.
Participants learn about various aspects of Southwest Airlines to give its workforce a better understanding of the "big picture" and what Southwest Airlines, as a company, is all about. MIT II focuses on leaders at the manager level to strengthen management expectations and build key leadership skills, such as strategic thinking and coaching. Building relationships with other managers, directors and senior leaders across the company is another invaluable experience of both levels of the MIT program.
Sources: http://www.financialops.org/web/news/features/-/asset_publisher/X0Wf/content/best-companies-for-leaders-2012:-how-top-companies-excel-in-leadership-development
Thursday, February 2, 2012
Manufacturing Growth Picks up Pace in January
February 2, 2012
Manufacturing Growth Picks up Pace in January
By Ilya Leybovich
The U.S. manufacturing industry continued to expand through January, as an increase in new orders accelerated the growth rate to its highest level in seven months.
Business activity in the United States manufacturing sector posted strong growth in January, and the rate of expansion increased, continuing a series of monthly increases in the pace of growth through the fall and winter. However, concerns remain about employment conditions in the sector, as well as rising costs for raw materials.
According to the Institute for Supply Management's (ISM) latest manufacturing Report on Business, U.S. manufacturing expanded for the 30th consecutive month in January, reflecting overall growth in the U.S. economy, which grew for the 32nd consecutive month.
The ISM purchasing managers' index (PMI), a key monthly gauge for the manufacturing sector, climbed to 54.1 last month, up from 53.1 in December and marking the highest index reading since June 2011. Readings above 50 indicate overall growth for the industry. Despite the gain, January's PMI was still slightly below the 12-month average of 54.7. The index has been on a general trend of accelerating growth since October 2011.
"Stocks rose on optimism the factory reports show the world economy is withstanding fallout from Europe's debt crisis," Bloomberg News notes. "Production, led by inventory rebuilding at the end of 2011, is poised to keep expanding in the U.S. as the need to update equipment drives orders at companies like Caterpillar Inc. and demand for cars rises."
The ISM new orders index rose to 57.6 in January, up from 54.8 in December, marking the 33rd consecutive month of growth in demand and indicating that the pace of expansion is accelerating. New orders reached their highest level in nine months in January. Exports also rose, climbing to 55 from 53 in December, indicating that U.S. manufacturers haven't yet been significantly affected by a slowdown in European economic growth.
Nine of the 18 industries tracked by the ISM reported growth last month: apparel, leather and allied products; petroleum and coal products; machinery; computer and electronic products; transportation equipment; miscellaneous manufacturing; fabricated metal products; paper products; and primary metals.
Meanwhile, seven industries reported contraction: plastics and rubber products; furniture and related products; wood products; chemical products; food, beverage and tobacco products; electrical equipment, appliances and components; and textile mills.
Despite the overall growth, the latest monthly findings fell slightly short of expectations, as economists polled by MarketWatch had forecast the PMI to rise to 54.5 in January.
There were also some signs of sluggishness amid the gains last month. The ISM's production index fell from 58.9 in December to 55.7 in January, signaling a slowdown in the growth rate. Meanwhile, the prices index surged upward, climbing from 47.5 in December to 55.5 in January, raising concerns over the cost of raw materials.
The employment index posted a slight decline, dropping from 54.8 to 54.3 in January. While manufacturing businesses continue to hire, the pace has slackened a bit. However, the backlog of orders increased from 48 to 52.5, suggesting manufacturers may lack the resources to meet rising demand and that a new round of hiring could result.
The manufacturing sector is poised to continue expanding over the next quarter as long as demand for equipment and supplies remains elevated, but much of that demand depends on consumer spending rates.
"[E]conomists are concerned that a key source of factory growth could wither in the coming months. They note that a key reason the economy grew at an annual rate of 2.8 percent in the final three months of last year was that was companies restocked their supplies at a robust pace. That restocking is likely to slow in the first three months of this year," the Associated Press explains. "Unless consumer spending picks up, businesses won't be able to sell off that extra inventory, and may have to cut back on future orders."
Manufacturing Growth Picks up Pace in January
By Ilya Leybovich
The U.S. manufacturing industry continued to expand through January, as an increase in new orders accelerated the growth rate to its highest level in seven months.
Business activity in the United States manufacturing sector posted strong growth in January, and the rate of expansion increased, continuing a series of monthly increases in the pace of growth through the fall and winter. However, concerns remain about employment conditions in the sector, as well as rising costs for raw materials.
According to the Institute for Supply Management's (ISM) latest manufacturing Report on Business, U.S. manufacturing expanded for the 30th consecutive month in January, reflecting overall growth in the U.S. economy, which grew for the 32nd consecutive month.
The ISM purchasing managers' index (PMI), a key monthly gauge for the manufacturing sector, climbed to 54.1 last month, up from 53.1 in December and marking the highest index reading since June 2011. Readings above 50 indicate overall growth for the industry. Despite the gain, January's PMI was still slightly below the 12-month average of 54.7. The index has been on a general trend of accelerating growth since October 2011.
"Stocks rose on optimism the factory reports show the world economy is withstanding fallout from Europe's debt crisis," Bloomberg News notes. "Production, led by inventory rebuilding at the end of 2011, is poised to keep expanding in the U.S. as the need to update equipment drives orders at companies like Caterpillar Inc. and demand for cars rises."
The ISM new orders index rose to 57.6 in January, up from 54.8 in December, marking the 33rd consecutive month of growth in demand and indicating that the pace of expansion is accelerating. New orders reached their highest level in nine months in January. Exports also rose, climbing to 55 from 53 in December, indicating that U.S. manufacturers haven't yet been significantly affected by a slowdown in European economic growth.
Nine of the 18 industries tracked by the ISM reported growth last month: apparel, leather and allied products; petroleum and coal products; machinery; computer and electronic products; transportation equipment; miscellaneous manufacturing; fabricated metal products; paper products; and primary metals.
Meanwhile, seven industries reported contraction: plastics and rubber products; furniture and related products; wood products; chemical products; food, beverage and tobacco products; electrical equipment, appliances and components; and textile mills.
Despite the overall growth, the latest monthly findings fell slightly short of expectations, as economists polled by MarketWatch had forecast the PMI to rise to 54.5 in January.
There were also some signs of sluggishness amid the gains last month. The ISM's production index fell from 58.9 in December to 55.7 in January, signaling a slowdown in the growth rate. Meanwhile, the prices index surged upward, climbing from 47.5 in December to 55.5 in January, raising concerns over the cost of raw materials.
The employment index posted a slight decline, dropping from 54.8 to 54.3 in January. While manufacturing businesses continue to hire, the pace has slackened a bit. However, the backlog of orders increased from 48 to 52.5, suggesting manufacturers may lack the resources to meet rising demand and that a new round of hiring could result.
The manufacturing sector is poised to continue expanding over the next quarter as long as demand for equipment and supplies remains elevated, but much of that demand depends on consumer spending rates.
"[E]conomists are concerned that a key source of factory growth could wither in the coming months. They note that a key reason the economy grew at an annual rate of 2.8 percent in the final three months of last year was that was companies restocked their supplies at a robust pace. That restocking is likely to slow in the first three months of this year," the Associated Press explains. "Unless consumer spending picks up, businesses won't be able to sell off that extra inventory, and may have to cut back on future orders."
Wednesday, February 1, 2012
Small biz loan demand up, Federal Reserve says - Jan. 31, 2012
NEW YORK (CNNMoney)
NEW YORK (CNNMoney) -- A growing portion of the nation's banks saw a spike in demand for loans to smaller firms late last year, according to the latest Federal Reserve figures.
Despite the uptick, nearly all banks surveyed kept their credit standards or loan terms the same. The survey, which used responses from senior loan officers at 56 U.S. banks, contained information about firms with annual revenues of $50 million or less. Although that range covers many mid-sized businesses, it also included small businesses.
The survey showed that 26% of banks experienced "moderately stronger" demand for commercial and industrial loans from small firms during the fourth quarter. That percentage was the highest all year, rising from 8% the previous quarter. But the updated data does not reveal a total rise in demand, as 62% of banks reported no change.
Small Business Lending Fund: a dud:
The "data are consistent with a modest recovery and an uptick in business confidence," said Robert Litan, vice president of research and policy at the Kauffman Foundation.
Whether that can be sustained is open to debate, he added. The survey also showed the vast majority of banks kept credit tight, as 94% reported that credit standards for small firms "remained basically unchanged." A similar proportion of banks said the maximum size of credit lines and requirements on collateral also stayed the same.
The majority of banks did not see an increase in demand, because the uncertainty in the economy has made small businesses reluctant to take out loans, explained Raymond J. Keating, chief economist at the Small Business & Entrepreneurship Council. "Many small businesses are either struggling to get by or simply keeping their powder dry when it comes to capital investments, hiring and borrowing," he said. Ami Kassar, CEO of Multifunding, said the Federal Reserve figures are meaningless when it comes to gauging small-business lending, because most of the firms that the loan officers are talking about are not small.
Most small businesses earn a yearly revenue of $1 million or less, explained Kassar, whose company helps small firms acquire loans. "It's an insult to the vast majority of business owners and entrepreneurs who are sweating it out there and trying to get loans to keep their businesses going."
http://money.cnn.com/2012/01/31/smallbusiness/loans/index.htm
First Published: January 31, 2012: 6:04 PM ET
NEW YORK (CNNMoney) -- A growing portion of the nation's banks saw a spike in demand for loans to smaller firms late last year, according to the latest Federal Reserve figures.
Despite the uptick, nearly all banks surveyed kept their credit standards or loan terms the same. The survey, which used responses from senior loan officers at 56 U.S. banks, contained information about firms with annual revenues of $50 million or less. Although that range covers many mid-sized businesses, it also included small businesses.
The survey showed that 26% of banks experienced "moderately stronger" demand for commercial and industrial loans from small firms during the fourth quarter. That percentage was the highest all year, rising from 8% the previous quarter. But the updated data does not reveal a total rise in demand, as 62% of banks reported no change.
Small Business Lending Fund: a dud:
The "data are consistent with a modest recovery and an uptick in business confidence," said Robert Litan, vice president of research and policy at the Kauffman Foundation.
Whether that can be sustained is open to debate, he added. The survey also showed the vast majority of banks kept credit tight, as 94% reported that credit standards for small firms "remained basically unchanged." A similar proportion of banks said the maximum size of credit lines and requirements on collateral also stayed the same.
The majority of banks did not see an increase in demand, because the uncertainty in the economy has made small businesses reluctant to take out loans, explained Raymond J. Keating, chief economist at the Small Business & Entrepreneurship Council. "Many small businesses are either struggling to get by or simply keeping their powder dry when it comes to capital investments, hiring and borrowing," he said. Ami Kassar, CEO of Multifunding, said the Federal Reserve figures are meaningless when it comes to gauging small-business lending, because most of the firms that the loan officers are talking about are not small.
Most small businesses earn a yearly revenue of $1 million or less, explained Kassar, whose company helps small firms acquire loans. "It's an insult to the vast majority of business owners and entrepreneurs who are sweating it out there and trying to get loans to keep their businesses going."
http://money.cnn.com/2012/01/31/smallbusiness/loans/index.htm
First Published: January 31, 2012: 6:04 PM ET
Why Your Business Should Be Exporting
Why Your Business Should Be Exporting
By Brian Lane
A significant proportion of thriving firms today are exporting their goods and services. Here's why (and how) your business should follow suit.
Accounting firm McGladrey's Manufacturing Distribution Monitor Fall 2011 Edition reveals that 43 percent of manufacturers and distributors are thriving and growing, and a large proportion of those are exporting. What does the correlation mean for companies looking to expand into the export market?
According to McGladrey's latest survey of 511 manufacturing and distribution leaders, 71 percent of respondents are exporting to foreign countries, with most exporting to Canada (82 percent) and Mexico (54 percent), and Western Europe (excluding Germany, the Netherlands or the United Kingdom at 38 percent), the U.K. (38 percent) and China (38 percent) rounding out the top five destinations.
Notable growth markets include Brazil, Central America and South America. Meanwhile, exports to China have slowed, which McGladrey ascribes to the market becoming "ever-more sophisticated and thus harder to penetrate." The accounting firm also notes that free trade agreements (FTAs) with Colombia, Panama and South Korea were signed after the period of the survey. How these FTAs will affect exports to countries remains to be seen.
Today, the companies most likely to export are in the biotech (88 percent), industrial machinery (84 percent), textiles and apparel (83 percent) and automotive (82 percent) industries, while companies dealing with building materials (59 percent), food and beverage (57 percent) and wood, paper and printing (41 percent) are in the bottom tier of exporting companies.
According to McGladrey's findings:
•Customer and/or key client demand is the most common reason for exporting;
•Interest in exporting to Central America and South America is rising, and Brazil seems to be where mid-market manufacturers see the greatest growth potential; and
•Initial forays into offshore markets tend to focus on transactional issues, while firms' subsequent moves into additional foreign markets focus more on strategic issues.
While the majority (52 percent) of respondents reported increases in exporting activities over the past year, a striking finding is the correlation between growth in exports and organizations' health: Approximately 60 percent of the companies that are thriving have increased their exports, a sign that exporting sales is recognized as a key driver for growth.
"The takeaway is if you're not exporting, you need to think about exporting," Karen Kurek, national manufacturing leader for McGladrey, recently told IndustryWeek. "And if you are exporting, you need to think about ways you can enhance that activity."
Companies looking to expand their export sales may be intimidated by such a large undertaking, but resources for research and partnership are readily available. In a separate report, IndustryWeek asked several industry leaders who focus on exports for their advice:
1.Actively select the markets you pursue. Do research and take advantage of free trade agreements the government has with nearby countries. "The decision to go into new markets should be thought of not as one big, irreversible commitment but as a series of smaller experiments from which you can learn," according to Frank Lavin and Peter Cohan, authors of Export Now: Five Keys to Entering New Markets.
2.Recognize that different markets require different approaches. SASCO Chemical Group President Marc Skalla says that people should "learn the culture of the market [they] want to enter," as foreign markets aren't always receptive to American products.
3.Establish and nurture international relationships. Kathe Falls of the Georgia Department of Economic Development noticed a trend: American companies would enter foreign markets, develop relationships with local customers, then abandon them when the U.S. economy improved. Consistent and considerate relationship maintenance is key to avoiding this misstep.
4.Develop partnerships. Developing relationships with in-country partners can help exporters avoid a multitude of worries. "Whether it's a selling agent, distributor or wholesaler, it's always a good idea to have local expertise involved when trying to penetrate new overseas markets," Daniel L. Gardner, CEO of Ocean World Lines, says.
5.Don't overlook government resources. Because government agencies already have a foot in the door in foreign countries, they can assist companies with a wide range of services, including finding booth space at foreign conventions or providing free market research.
More information on federal support can be found through the International Trade Administration. Additionally, the White House's National Export Initiative is designed to ease restrictions and provide resources to companies looking to export.
Resources
Manufacturing & Distribution Monitor: Fall 2011 Report
McGladrey, November 2011
Business Accelerating Despite Concerns about Government Gridlock
By Brian Lane
A significant proportion of thriving firms today are exporting their goods and services. Here's why (and how) your business should follow suit.
Accounting firm McGladrey's Manufacturing Distribution Monitor Fall 2011 Edition reveals that 43 percent of manufacturers and distributors are thriving and growing, and a large proportion of those are exporting. What does the correlation mean for companies looking to expand into the export market?
According to McGladrey's latest survey of 511 manufacturing and distribution leaders, 71 percent of respondents are exporting to foreign countries, with most exporting to Canada (82 percent) and Mexico (54 percent), and Western Europe (excluding Germany, the Netherlands or the United Kingdom at 38 percent), the U.K. (38 percent) and China (38 percent) rounding out the top five destinations.
Notable growth markets include Brazil, Central America and South America. Meanwhile, exports to China have slowed, which McGladrey ascribes to the market becoming "ever-more sophisticated and thus harder to penetrate." The accounting firm also notes that free trade agreements (FTAs) with Colombia, Panama and South Korea were signed after the period of the survey. How these FTAs will affect exports to countries remains to be seen.
Today, the companies most likely to export are in the biotech (88 percent), industrial machinery (84 percent), textiles and apparel (83 percent) and automotive (82 percent) industries, while companies dealing with building materials (59 percent), food and beverage (57 percent) and wood, paper and printing (41 percent) are in the bottom tier of exporting companies.
According to McGladrey's findings:
•Customer and/or key client demand is the most common reason for exporting;
•Interest in exporting to Central America and South America is rising, and Brazil seems to be where mid-market manufacturers see the greatest growth potential; and
•Initial forays into offshore markets tend to focus on transactional issues, while firms' subsequent moves into additional foreign markets focus more on strategic issues.
While the majority (52 percent) of respondents reported increases in exporting activities over the past year, a striking finding is the correlation between growth in exports and organizations' health: Approximately 60 percent of the companies that are thriving have increased their exports, a sign that exporting sales is recognized as a key driver for growth.
"The takeaway is if you're not exporting, you need to think about exporting," Karen Kurek, national manufacturing leader for McGladrey, recently told IndustryWeek. "And if you are exporting, you need to think about ways you can enhance that activity."
Companies looking to expand their export sales may be intimidated by such a large undertaking, but resources for research and partnership are readily available. In a separate report, IndustryWeek asked several industry leaders who focus on exports for their advice:
1.Actively select the markets you pursue. Do research and take advantage of free trade agreements the government has with nearby countries. "The decision to go into new markets should be thought of not as one big, irreversible commitment but as a series of smaller experiments from which you can learn," according to Frank Lavin and Peter Cohan, authors of Export Now: Five Keys to Entering New Markets.
2.Recognize that different markets require different approaches. SASCO Chemical Group President Marc Skalla says that people should "learn the culture of the market [they] want to enter," as foreign markets aren't always receptive to American products.
3.Establish and nurture international relationships. Kathe Falls of the Georgia Department of Economic Development noticed a trend: American companies would enter foreign markets, develop relationships with local customers, then abandon them when the U.S. economy improved. Consistent and considerate relationship maintenance is key to avoiding this misstep.
4.Develop partnerships. Developing relationships with in-country partners can help exporters avoid a multitude of worries. "Whether it's a selling agent, distributor or wholesaler, it's always a good idea to have local expertise involved when trying to penetrate new overseas markets," Daniel L. Gardner, CEO of Ocean World Lines, says.
5.Don't overlook government resources. Because government agencies already have a foot in the door in foreign countries, they can assist companies with a wide range of services, including finding booth space at foreign conventions or providing free market research.
More information on federal support can be found through the International Trade Administration. Additionally, the White House's National Export Initiative is designed to ease restrictions and provide resources to companies looking to export.
Resources
Manufacturing & Distribution Monitor: Fall 2011 Report
McGladrey, November 2011
Business Accelerating Despite Concerns about Government Gridlock
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