Research & Data

Texas Manufacturing Outlook Survey

Special Questions

October 31, 2011
1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct '10
(percent)
Oct '11
(percent)
  Eased substantially 2.7 1.4
  Eased somewhat 13.5 11.0
  No change 43.2 39.7
  Tightened somewhat 5.4 13.7
  Tightened substantially 5.4 6.8
  Not applicable—haven’t sought credit 29.7 27.4

2. To what extent is your business having difficulty obtaining financing for desired long-term uses such as capital expenditures?
    Oct '10
(percent)
Oct '11
(percent)
  Eased substantially 2.7 1.4
  No difficulty 35.6 34.2
  Some difficulty 12.3 17.8
  Substantial difficulty 8.2 8.2
  Extreme difficulty 1.4 2.7
  Not applicable—haven’t sought credit 42.5 37.0

3. To what extent is your business having difficulty obtaining financing for desired short-term uses such as paying workers and acquiring inventories of material or supplies?
    Oct '10
(percent)
Oct '11
(percent)
  No difficulty 36.1 35.6
  Some difficulty 11.1 9.6
  Substantial difficulty 5.6 5.5
  Extreme difficulty 1.4 4.1
  Not applicable—haven’t sought credit 45.8 45.2

4. Has your firm's production and/or sales been adversely affected by difficulty obtaining credit?
    Oct '10
(percent)
Oct '11
(percent)
  Yes, significantly 2.7 5.5
  Yes, somewhat 9.5 13.7
  No 29.7 31.5
  Not applicable—haven’t had problems obtaining credit 18.9 15.1
  Not applicable—haven’t sought credit 39.2 34.2

5. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct '10
(percent)
Oct '11
(percent)
  Yes, significantly 1.4 2.7
  Yes, somewhat 5.4 13.7
  No 40.5 32.9
  Not applicable—haven’t had problems obtaining credit 14.9 16.4
  Not applicable—haven’t sought credit 37.8 34.2

Survey Collection period: 10/11/2011 to 10/14/2011

Special Questions Comments

These comments have been edited for publication.

Chemical Manufacturing
We are running counter to most and have increased employees.

Plastics and Rubber Products Manufacturing
Our bank attempted to tighten credit in 2009, but retreated in negotiations. We believe their attempt was prompted by their uncertainty at corporate headquarters regarding loan standards that might have been imposed at that time.

Nonmetallic Mineral Product Manufacturing
We feel that bankers are making only the loans they think the regulators will like.

Fabricated Metal Product Manufacturing
Our firm ($38 million sales) has been fortunate to enjoy excellent growth and profitability. This is primarily due to the rebound of the oil and gas exploration market and the mining market that together represent over half of our sales. We replaced our existing working capital credit facility with a new one earlier this year that has a subprime interest rate. Our observation is that it is a bifurcated market with the banks fighting over top tier performing firms and being cautious with others.

Nonresidential construction continues to be negatively impacted by the lack of financing from regional/community banks. The commercial and industrial loans have only modestly increased on a year-over-year basis from historically low 2010 levels.

Machinery Manufacturing
Our cash flow and balance sheet are in excellent condition. We renewed and extended our line of credit last spring for five years so we are not in the market for credit at this time. We have arranged and increased third party financing for our end users without rate participation from our company.

We renewed our multibank credit facility earlier this year without any difficulty. However, our debt leverage is fairly low, which may make it an easier credit decision for the banks. We have been with the same bank group for more than 10 years.

The lackluster economy continues to sap revenue, so financial results are weaker, and financing is more difficult to obtain. The weak economy and more government regulations make hiring employees less likely than using temps.

Transportation Equipment Manufacturing
We are recovering from a couple of very tough years; therefore, our financials are not good.

Paper Manufacturing
We have not had the need to seek credit or loans, but friends in the construction business are having a terrible time getting financing.

Wood Product Manufacturing
We are sitting on cash.

Food Manufacturing
We feel that small community banks are afraid to do business lending because of regulators. We have been in business since 1947, employ 55 employees and would probably have a hard time getting a loan to expand—so we will wait.

Credit is not the problem. High commodity prices are the problem for us.

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Laila Assanie at laila.assanie@dal.frb.org.

Sign up for our free e-mail alert to be automatically notified as soon as the latest Texas Manufacturing Outlook Survey is released on the web.

 

Federal Reserve Bank of Dallas Seal
Federal Reserve Bank of Dallas

2200 N. Pearl St., Dallas, Texas 75201 | 214.922.6000 or 800.333.4460
Disclaimer / Privacy Policy

Federal Reserve Centennial