From: CourierMail. October 17, 2011
LOCAL manufacturer Rory Murphy has never been so confident about the future. His family’s Darra-based civil engineering and building company, Canstruct, has seen turnover go to around $55 million this year, with contracts linked to mining, refugee accommodation and development in Papua New Guinea.
“Things are booming,” he said.
“It’s never looked so good. We’ve never been so confident about the future. We do expect cost rises to accommodate that growth but Queensland is so well placed on all levels.”
That optimistic view is not shared by Mr Murphy alone, with the inaugural Commonwealth Bank Future Business Index finding that Queensland businesses were among the best prepared in the country for future economic volatility.
It found that Queensland was home to the highest proportion of businesses (52 per cent) that were well prepared for future conditions.
The index, which analysed the views of 427 financial decision-makers in public and private companies with turnover of $10 million to $100 million – found that more than half of Australia’s mid-market companies were not ready for continuing fluctuations in business conditions over the next six months, having no risk, business continuity or succession plan in place.
“The outlook suggests that in general, mid-market companies are not confident about their position in which to weather uncertain business conditions in the near future,” said Symon Brewis-Weston, CBA’s executive general manager corporate financial services.
“The general lack of confidence we are seeing may result in a low appetite for risk and capital investment over the next six months. Despite this, activity among Australian businesses looks set to continue to grow, albeit at a slower pace and in certain pockets of the economy.
“For those companies which take a proactive approach to management and planning, opportunity is still very much alive.”
The key findings for Queensland were that mid-market organisations expected rising fuel costs to add to the impact from natural disasters, further weakening business conditions.
About 61 per cent of businesses in the state also expected operating costs to rise, though Queenslanders were less likely to expect an increase in salaries and wages than other states.
As a testament to the multi-speed nature of the economy, Queensland businesses were divided when it came to their appetite for risk, with 24 per cent expecting a rise and 28 per cent expecting a decrease.
The index found that many organisations were increasing their use of hedging and debt facilities to minimise exposure to economic fluctuations.
“Whilst businesses seem to have put some thought on how to manage future adverse conditions, it’s clear that more work needs to be done in order to effectively protect themselves,” Mr Brewis-Weston said.
For manufacturers such as Mr Murphy, though, there was no dent in confidence.
“This is a golden age,” he said. “The only thing we’ve got to fear is fear itself. We’re so well placed.”