Results of the 4th annual Manufacturing and Wholesale Distribution National Survey have been released. The survey, sponsored by RSM McGladrey, found that business conditions have deteriorated, accelerating the downward trend noted in the 2007 and 2008 surveys. Only 9% of the surveyed companies reported their business as “thriving and growing" while 40% reported their business as “declining.” Respondents were upbeat, however, with 46% predicting a rebound in 2009 (but, then again, 44% thought they'd hit bottom last year and only 9% agreed a year later).
Respondents consistently reported they are relying on four growth strategies: acquiring new customers, increasing sales in domestic markets, increasing sales to current customers and increasing brand recognition. They are looking for faster growth abroad than in the US domestic market; and international companies are more optimistic about the future. New product development and product line extensions are key strategies used by companies to maintain global competitiveness and open new markets to drive topline revenue.
A quarter of US manufacturers plan to reduce operating capacity this year, up sharply from 2008. By a 3-2 margin, the companies feel margins are tightening. Companies are curtailing IT expenses (although 90% of the companies consider IT crucial to their productivity).
Other trends: Going green is a big one with 95% of reporting companies hopping on the environmental bandwagon. Another continuing trend is the difficulty, even in an era of increased unemployment, in finding skilled workers.
Major concerns include the cost of health care (62% are passing more costs on to their employees; 36% have wellness programs) and inflation with consequent cost increases in energy, benefits, labor, freight and materials.
A surprising non-concern was the low level of risk manufacturers reported for the potential for supply chain disruptions. None of seven identified supply chain risks were considered a high risk by a majority of companies.