Many metals companies around the world are currently operating in survival mode, with conservation of cash the top priority in the challenging economic client, a survey by PricewaterhouseCoopers has found.

The 12th annual Global CEO Survey found that CEOs of metals companies are struggling with plummeting demand, lack of access to credit and other challenges. Only 44% of CEOs are confident about prospects for revenue growth in the coming year compared with 64% of CEOs across all industries.

“It is no surprise that metals CEOs are gloomier than their peers in other industries surveyed by PwC,” said Jim Forbes, global metals leader at PwC. “Even in areas where there is still demand for metals, many customers cannot access Letters of Credit to support their orders.”

Among some of the challenges facing the industry, the steel sector has given back all of the pricing gains that were achieved in 2008 and the aluminum sector has been experiencing considerable pricing pressures.

Still, 80% of the CEOs are optimistic about their long-term outlook and believe they can increase their revenues over the next three years. Joint ventures and strategic alliances are high on the agenda, with 76% of respondents expecting an increase in collaborative business arrangements in coming years. In the next 12 months, 24% of metals CEOs intend to complete a cross-border merger or acquisition.

More than a third of the respondents are looking to new geographic markets, compared to just 17% of the total survey population.

A quarter of metals industry CEOs see existing market penetration as key.

Increased pressures on natural resources is an issue that most concerns 80% of metals CEOs, yet only 36% think that scarcity of natural resources is a commercial threat. Roughly half of the CEOs are concerned that the world’s dependence on carbon-based energy sources could have a deleterious impact on their companies.

Managing supply chain risk is fundamental to remaining profitable in the metals industry, according to 88% of respondents. Another 80% regard information about sourcing and supply chain management as critical or important, and they are generally happier with the quality of the information they get than executives in other sectors. But 45% of respondents would like further details, and 15% say that the information they get is inadequate.

Talent and skills are not as high on the agenda as last year, with 28% planning to increase the number of employees and only 20% considering downsizing. About one-third of the metals CEOs are somewhat or extremely concerned that a lack of people with the skills they need will have a negative impact on growth, compared with 66% last year. However, 60% are worried about declining college and university enrolments in sciences and technologies.

In general, metals executives tend to focus less on ensuring the well being of future generations or satisfying society’s needs than their peers in other industries, the survey found.

IE