More CFOs expect layoffs due to coronavirus
More than one-fourth of CFOs anticipate layoffs at their organizations, a significant increase from two weeks ago, according to a new survey.
The survey, from PricewaterhouseCoopers, found that 26 percent of the CFOs polled from 313 U.S. companies anticipate layoffs, compared to 16 percent two weeks ago during a similar survey by PwC of CFOs in the U.S. and Mexico. There is some variation by industry sector, however, with only 13 percent of financial services CFOs expecting layoffs, while more CFOs in the industrial products (36 percent) and consumer markets (30 percent) expect layoffs.
The third release of PwC’s "COVID-19 CFO Pulse Survey" found the financial impacts of COVID-19 now rank as the top concern of CFOs, with 75 percent of the CFOs polled citing the pandemic’s effects on operations and liquidity. In addition, 82 percent of CFOs indicated they are now focused on reining in costs. That’s up markedly from two weeks ago, as they continue to deal with the economic impact of the COVID-19 pandemic. Two thirds (67 percent) of the survey respondents are considering deferring or canceling planned investments. Most companies are looking to contain costs by halting investments in facilities and capital expenditures, IT, workforce and other areas. An overwhelming majority (81 percent) of the survey respondents expect the coronavirus to decrease their company’s revenue and/or profits this year. Fewer financial leaders (61 percent) believe they will be able to return to “business as usual” within three months if COVID-19 were to end immediately, a considerable drop from two weeks ago.
“We’re clearly in a recession at this point, and CFOs are trying to figure out how long the recession is,” said Tim Ryan, U.S. chair and senior partner at PwC, during a conference call with reporters Monday. “They’re struggling with how to provide guidance when you simply don’t know or have the answer. It’s hard to find a company that is not focused on managing costs, relooking at investments, focusing on liquidity, preserving capital, and accessing where appropriate the CARES Act. That’s what we’re seeing almost universally across the client base. We’re also seeing a lot of discussion around what and how to come back to work. Many companies are using their own operations in China and South Korea as a model, and they’re also looking into other data points to inform them as to how to come back to work. Safety and managing the anxiety of their suppliers and employers is on their minds very much."
Industries are likely to undergo profound shifts as a result of the pandemic.
"Another theme we’re seeing is that some industries will see permanent shifts as we come out of the COVID-19 crisis, whenever that is," said Ryan. "The reality is that many industries that were already under pressure could change their business models, and we’re seeing the COVID-19 crisis accelerate that. Industries such as retail, banking, insurance, manufacturing, education, and even our industry, professional services, were already seeing changes afoot, and the COVID-19 crisis is accelerating many of those changes. The concept of coming back to the way things were is something we’re seeing a growing realization that things will likely in certain industries, depending on where you sit, may or may not come back.”