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Independent, non-profit Foundation studying markets, trends and operations to illuminate the future of the equipment finance industry.

July 2009 MCI-EFI

July 2009 Survey Results:

The overall Monthly Confidence Index of the Equipment Finance Industry (MCI-EFI) is 49.2, down 2.6 points from June 2009. Respondents indicate:

  • For July 2009, there was virtually no change (68.9% for July vs. 68.4% for June) in response when asked to assess if their current business conditions would remain the same over the next four months; however, 11.10% expect their business conditions to worsen over the next four months, up 5.8% from June 2009. When asked why, executives cited lack of access to capital and lack of equipment acquisition activity.
  • The majority of survey respondents (77.8%) believe demand for leases and loans to fund Capital Expenditures (Cap Ex) will remain the same over the next four months. This response remained almost identical to the June response of 76.3%.
  • The industry expects less access to capital to fund equipment acquisitions over the next four months. In July 13.3% said they expected less access to capital compared to 7.9 % who expected less access to capital in June. 66.7 % expect access to remain the same vs. 73.7% from June.
  • When asked, two thirds (up 8.8% from 57.9% in June 2009) of executives reported they expect no change in their workforce headcount over the next few months, and 20% still expect to have employee layoffs over the same time period.
  • The leadership's view of the current economy remains poor. 75.6% of survey respondents assessed the current U.S. economy as "poor" compared to 60.5% from June's survey, a downgraded change of 15.7% month over month. Only 24.4% rated the current economy as "fair" and no respondents rated the current U.S. economy as good or excellent.
  • 53.3% believe economic conditions will "stay the same" over the next six months compared to June, when 39.5 % felt the conditions would stay the same. Only 37.8% of July survey respondents believe economic conditions will improve over the next six months compared to 50% who, in June, felt economic conditions would improve over the next six months.
  • The majority of executives (82.2%) believe they will have no change in their spending on business development activities over the next six months compared to 78.9% in June 2009, an increase of 3.3%.

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July 2009 Survey Comments from Industry Executive Leadership:

  • From the Small-ticket segment:

    "I am optimistic that our industry will return to prosperity and growth. I am not certain that things will be like they were before this recession but many companies that have withstood the challenges presented in this environment will be well positioned when recovery occurs. This environment is a catalyst to stronger business models and sharpened management skills. Innovative leadership has been a driving force for the development of our industry and that spirit still exists." Kenneth R. Collins, Jr., Chairman & CEO, Susquehanna Commercial Finance, Inc.

  • From the Middle Market segment:

    "[The economy is] improving each month. If there is no dramatic event, the fourth quarter should show a vast improvement in volume. The one worry is oil prices, which if they increase to very high levels will have an impact on the current business conditions." George Konopsky, Managing Director of Leasing, WAFRA Investment Advisory Group Inc

    "We remain well-positioned to fund the replacement/addition of new assets as customers gain confidence in the economic recovery and witness signs that the business climate is expanding," Russ Nelson, President, Farm Credit Leasing

  • From the Large-ticket segment:

    "Access to capital will continue to be a challenge for the industry." Roland Chalons-Browne, President, Siemens Financial Services

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Survey Respondent Demographics:

Market Segment:

  • Bank 37.8%
  • Captives 20.0%
  • Financial Services 13.3%
  • Independent 26.70%
  • Other 2%

Market Segments Based on Transaction Size of New Business Volume

  • Large-Ticket (New Business Volume Avg. Transaction Size Over $5 Million) 15.6%
  • Middle-Ticket (New Business Volume Avg. Transaction Size of $250,000 - $5 Million) 53.3%
  • Small-Ticket (New Business Volume Avg. Transaction Size of $25,000 - $249,999) 31.1%

Organization Size (Based on Annual New Business Volume for Fiscal Year 2008):

  • Under $50 Million 8.90%
  • $50 Million - $250 Million 17.80%
  • $250 Million - $1 Billion 35.60%
  • Over $1 Billion 37.80%

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