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Grant Thornton CEO Stephen Chipman on the economy and fiscal cliff concerns’ impact on how CFO’s planning.
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Well if you're tired of the uncertainty in the markets because of fiscal cliff imagine.
Being the CFO of a company not knowing how to plan at all for the company's finances for the coming year.
Well imagine no longer joining us now exclusively with a results.
Other new survey CFO this is Grant Thornton CEO.
Stephen shipments even wonderful to see you know I love this because CFOs.
They're sort of the staff sergeant some of the corporate culture they have to do that.
The work had just kind of figure out how companies gonna run no matter what is put in front of it and let's take the worst case scenario first of all.
Imagine we do go over the fiscal cliff and all tax rates go up the taxes of the consumers and the producers.
What happens how to they planned for that.
Well David -- -- our survey covered about 16100 CF those across the United States both in public and private companies.
And in the event that we do go off the cliff 47%.
-- -- said that they were prepared to take.
Defensive actions that the reduce hiring traps shed jobs.
Written reduce -- plans for investment so about a half of them are ready to take.
Action to pull black on their plans now there is a fatigue factor we talked about investors.
Being -- by analysts.
And we see that in the marketplace action over the past few days but there's -- fatigue factor among these CFOs as well correct.
Absolutely in fact I would say one of the things that we have seen and and when I spoke to.
CFOs.
-- around the country as I visit our clients is that they have.
Really achieved an ability to deal -- and managed with uncertainty now that that that has been a constant for the last 23 years so.
The fragile recovery the stalemate in Washington is almost become business as usual so.
Their ability to to handle that managed the businesses conservatively has become a way of life.
And that's positioned -- actually quite well to deal with the potential downside of the fiscal cliff issues.
But it doesn't help them address their key concern which is how to grow their businesses will really on their minds is growth.
What will talk about that a segment they have had this stability over ten years of having basically the same.
Tax agenda whether -- corporate taxes or individual taxes so for ten years we've had a tax structure that is about to undergo.
Radical change.
But we don't know how I argued there may even -- kicking the can down the -- where we have the same thing for another six months.
Are they are they've balancing two sets of books to plan for 2013.
CFOs want comprehensive.
Tax reform.
And they want frankly Washington to get on -- that because the uncertainty that's created.
When they they don't know -- rates to apply what they don't know what tax strategies to embrace.
To help them to decide on investment decisions are really quite crippling in their growth agenda.
And frankly -- our tax code in the United States is too complex it's not competitive on a worldwide basis CFOs -- comprehensive tax reform and they're ready for for Washington -- well unfortunate I guarantee it's gonna get more complex every time they talk about simplification you can you can pretty much -- it's gonna -- but do they literally have two books one for the old tax structure and one for what they assume the next one will be.
-- tokens in order to David I'm not gonna admit that anybody has two sets of books right that's true but it and in fact what they are due saying joking aside is.
They -- scenario planning.
And they are looking at different alternatives in the trying to keep all their options open because frankly they just don't know which direction this is -- -- go.
And as a result you do get a bit of gridlock in decision making one of the reasons that 60%.
We believe.
Said that it's the fiscal cliff issues not going to change that decision making over the next six months.
Is because they're already in a very conservative decision making mode.
Waiting to look at different scenarios and they have different sets of of actions that they will take depending on which way this goes all right let let's put -- best case scenario -- for second here they have been in this in this sort of safety mode for a couple of years now.
A lot of people are sitting on cash as we know apparently a couple of trillion dollars if he had all the businesses together in the United States.
It are there any plans to churn that money out there to invest in in growth to invest in hiring.
Under what circumstances would they be willing to do that.
You know David we've got low interest rates that housing situation seems to be getting -- We do have stronger balance sheets when I talk to CEOs and CFOs of the dynamic businesses we serve -- ready to invest they want and growth.
They want to embrace a growth agenda.
Give them more certainty.
How the president and congress act.
Arrive at a central successful compromise move towards comprehensive tax reform you're gonna see these businesses -- -- I believe that.
All right -- I remember the days when everybody is talking about the Rust Belt.
In America back in the eighties before the Reagan tax cuts really kicked in and we begin to grow again.
Or is it do we have the potential.
I'll be there you talked about all the deleveraging that's going on and and how everybody is tighten up the ship on fortune that's led to a lot of layoffs as well.
But we are so tight are we like a spring ready to pop.
I think there's an opportunity for that one of your previous guest talked about the growth opportunity on a global basis.
I'm not sure I completely agree with them that all our problems are behind this in Europe and that.
That China still doesn't have some problems ahead but nevertheless there is opportunity in the global economy.
And the US businesses.
We don't want to be pollyannish about their real serious problems out there and a lot of folks inside the beltway are not gonna make things easier however.
Businesses in America to an incredible job of shoring up their base -- shipment great report thank you very much we really appreciate it.
Thank you.
