Cash Flow Is King
HEADNOTE
TO committing money to plants and equipment and making other kinds of business investments in the U.S., what drives manufacturing executives' decisions? The answer, first and foremost, is cash flow, say senior financial executives among the 450 companies belonging to the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. Cash flow generally is a company's net income after taxes plus such charges against income as depreciation.IMAGE ILLUSTRATION 1
SPENDING
HEADNOTEManufacturers pay little attention to long-term interest rates when deciding to invest.
WHEN IT COMES
The 51 executives, whom the alliance surveyed in December 2005, also put expected profits and market growth projections high on their list of factors affecting the level of their U.S. investments. Just a bit farther down on the list are capacity utilization, current profits and laborcost trends. Least important for this group of executives are commodity price trends, investments by competitors and long-term interest rates.
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