Research & Data

Texas Manufacturing Outlook Survey

Special Questions

October 29, 2012
1. How do borrowing conditions facing your firm compare to those six months ago?
    Oct '10
(percent)
Oct '11
(percent)
Oct '12
(percent)
  Eased substantially 2.7 1.4 0.0
  Eased somewhat 13.5 11.0 3.9
  No change 43.2 39.7 53.2
  Tightened somewhat 5.4 13.7 9.1
  Tightened substantially 5.4 6.8 2.6
  Not applicable–haven’t sought credit 29.7 27.4 31.2

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)
Oct '12
(percent)
  No difficulty 35.6 34.2 41.6
  Some difficulty 12.3 17.8 9.1
  Substantial difficulty 8.2 8.2 9.1
  Extreme difficulty 1.4 2.7 3.9
  Not applicable–haven’t sought credit 42.5 37.0 36.4

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)
Oct '12
(percent)
  No difficulty 36.1 35.6 42.7
  Some difficulty 11.1 9.6 8.0
  Substantial difficulty 5.6 5.5 5.3
  Extreme difficulty 1.4 4.1 2.7
  Not applicable–haven’t sought credit 45.8 45.2 41.3

4. Has your firm’s production and/or sales been adversely affected by difficulty obtaining credit?
    Oct '10
(percent)
Oct '11
(percent)
Oct '12
(percent)
  Yes–significantly 2.7 5.5 3.9
  Yes–somewhat 9.5 13.7 9.1
  No 29.7 31.5 27.3
  Not applicable–haven’t had problems obtaining credit 18.9 15.1 19.5
  Not applicable–haven’t sought credit 39.2 34.2 40.3

5. Has your firm reduced hiring and/or increased layoffs due to difficulty obtaining credit?
    Oct '10
(percent)
Oct '11
(percent)
Oct '12
(percent)
  Yes–significantly 1.4 2.7 3.9
  Yes–somewhat 5.4 13.7 6.5
  No 40.5 32.9 32.5
  Not applicable–haven’t had problems obtaining credit 14.9 16.4 20.8
  Not applicable–haven’t sought credit 37.8 34.2 36.4

Survey collection period: 10/9/2012 to 10/12/2012

Special Questions Comments

These comments have been edited for publication.

Food Manufacturing

  • Credit is not our problem. Our problem is big increases in commodity prices.

Wood Product Manufacturing

  • Having failed at the large lending institutions, we are pursuing a relationship with a community bank. Things look more optimistic.

Paper Manufacturing

  • We are very fortunate to be cash strong and have not needed to seek financing.

Chemical Manufacturing

  • While we have not sought credit, my expectations are that it would be somewhat easier to obtain now rather than six months ago. We are postponing capital expenditures until after the election and any fallout from that.
  • The company has a fairly good balance sheet and profit and loss statement, and as a result we receive very competitive quotes. We are in a very stable market and are not suffering like so many companies around the country. The best help would be to lower corporate tax rates. With lower corporate tax rates our group would probably invest more in plant and equipment in this country. The high tax rate keeps companies from investing and subsequently hiring.

Plastics and Rubber Products Manufacturing

  • We are blessed to be in a very capital intensive manufacturing business, but have been careful through the last 35 years to minimize our credit needs and have primarily been paying cash for new equipment.
  • Our business is driven by customer demand and the ability to acquire new customers. We have the cash and credit if needed to meet growth if and when it occurs.

Nonmetallic Mineral Product Manufacturing

  • The terms for bank credit have tightened; the banks are lending lower multiples of cash flow for term loans and requiring faster amortizations of the loans. They are still lending, but it makes it more difficult to commit to long-term capital investments. Working capital loans are less difficult because they only last one year typically.

Primary Metal Manufacturing

  • We are very strong financially speaking, with no long-term debt.
  • We have difficulty obtaining forward cover against the value of the U.S. dollar. This impairs our ability to purchase upgrades to some major pieces of our manufacturing equipment.

Fabricated Metal Product Manufacturing

  • Credit for capital expenditures of less than $250,000 with the same institutions we have a history with is easy and just requires signatures, but with personal guarantees. We have not heard of anyone having difficulty with finding financing on capital equipment. Lines of credit are difficult for us to acquire.
  • We think the missing issue is the cost. For non-investment-grade credit, the cost is Libor floor of 200 basis points plus 650. Additionally, our 4,000 distributors and general contractors are struggling to fund their businesses from a working capital perspective. This could further hamper the nonresidential construction recovery.

Machinery Manufacturing

  • Our long-term relationship with local bank credit availability improved dramatically approximately two-and-a-half years ago.

Computer and Electronic Product Manufacturing

  • We have an excellent relationship with a local bank. We feel that the big banks are not personal or small business friendly. We would never do business with a large bank again.
  • Lenders are admittedly waiting on the elections and hoping for Congressional actions to effectively deal with the 2013 fiscal cliff.

 

Questions regarding the Texas Manufacturing Outlook Survey can be addressed to Emily Kerr at emily.kerr@dal.frb.org.

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