Middle market poised for growth

Larry Thomas -- Furniture Today, January 7, 2013

NLinon Home Décor President Jim Ziozis, second from left, joins MIT professor emeritus Arnoldo Hax, center, CIT Group President Nelson Chai, right, and other guests to ring the New York Stock Exchange opening bell to mark the release of the new CIT Voice of the Middle Market survey.EW YORK - Despite their concerns about uncertainties in the national economy, the majority of executives of middle-market companies say they are poised for growth in the coming year, and believe their companies are stronger than they were before the recession, a new survey indicates.
     The survey, commissioned by CIT Group, also found that 42% of the executives expect to expand their workforce in the next 12 months, while only 17% believe their workforce will decrease.
     CIT, which provides factoring and other financial services for many furniture manufacturers and importers, said the survey findings reinforce the importance of middle-market companies in the U.S. economy.
     "Although they might often be overlooked for more blue chip companies, the middle market is a critical component of the U.S. economy today," said Arnoldo Hax, a professor of management emeritus at MIT who oversaw the research. "The factors that are explored in this research study are of great centrality for every company, but they are particularly critical for the middle market, given the imperative that relies upon them to achieve success."
     Survey respondents, who were in leadership roles at firms with annual revenues of $25 million to $1 billion, included Jim Ziozis, president of furniture and area rug importer Linon Home Décor.
     Ziozis also took part in a CIT-sponsored panel discussion at the New York Stock Exchange that coincided with the release of the survey results.
     Ziozis, whose company has been a CIT client for more than 20 years, was joined on the panel by two executives with private equity firms that invest in middle market companies, and the founder of a real state investment firm.
     The discussion was moderated by Hax,and CNBC anchor Maria Bartiromo.
     Ziozis said he was able to provide perspective from a middle-market company that isn't owned by a private equity firm.
     "The only thing that surprised me (about the survey findings) was how many middle- market executives stated that financing was easier to get than it was before the recession," he said. "I would agree that money is cheap and banks are flush with cash, but they're not lending much of it right now."
     The survey said that only 40% of the respondents described themselves as "concerned" or "very concerned" about access to capital in the next 12 months, while 81% said they are satisfied with their company's access to financing as well as the cost of that financing.
     By contrast, 83% are concerned or very concerned about the continued uncertainty with the national economy, 59% are concerned or very concerned about their ability to retain top talent, and 56% are concerned or very concerned about compliance with government regulations.
     Most of those concerned about government regulations listed health care reform as the item that would have the greatest effect on their company.
     When asked about the lessons they learned from the recession, executives most frequently (51%) mentioned the need to continue to change. Some 50% also said they learned that their companies can be leaner, and 43% said they learned to make strategic planning a higher priority.
     Less frequently mentioned were the need to outsource more of their operations (6%), the need to return more operations to the United States (7%), and finding ways to increase distribution channels (19%).
     "Middle market companies have long been the backbone of the U.S. economy," said John Thain, chairman and CEO of CIT. "We recognize the importance of these companies and have been dedicated to providing lending, leasing and advisory services to the middle market for more than 100 years. This research is another extension of our commitment to this critical group of companies."
     The online survey was conducted by KRC Research among 300 middle-market executives from a wide range of industries. Participants were from companies that have a majority of their employees based in the U.S.

Lessons learned from the great recession

Based on a survey of 300 executives at middle market companies, commissioned by CIT

Source: CIT Voice of the Middle Market: Perspectives from the Heart of America’s Economy