2013 Manufacturing and Distribution Monitor

INSIGHT ARTICLE  | 

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US Manufacturers Are 'Optimistic': Pro

Karen Kurek, McGladrey industrial products practice leader, says U.S. manufacturers are optimistic about their businesses but concerned over federal policy and government regulations. Watch CNBC.com video.

Manufacturers and distributors are optimistic about their growth prospects for the coming year, but they remain concerned about economic conditions, regulatory hurdles and other potential threats to prosperity.

The 2013 McGladrey Manufacturing & Distribution Monitor report examines an industrial base struggling to move forward in a recovering business environment. On one hand, growing demand spurs executives to invest capital in new equipment and information technologies. On the other hand, political indecision and uncertainty over new regulations undermine executive confidence, and limit hiring, investment and expansion.

Based on a survey of more than 1,000 industry executives across the United States, this report offer insights into how businesses are balancing courage and caution in this challenging economy, including:

An optimistic middle market — Most business are still thriving or holding steady, but the percentages are down slightly from 2012. At the same time business executives remain optimistic about their companies, their industry, and the U.S. economy and are more optimistic this year regarding the world economy. Having weathered the recession, executives seem impatient with results that have improved but are not yet where they need to be to warrant investing for the future.

Strategies for growth — Industry executives are primarily focused on growth tactics as their top corporate objectives: introducing new products/product lines, investing in process-improvement initiatives, and investing in new or upgraded information technologies. Businesses appear to be finding increased opportunities within their established markets, making them less inclined to pursue new ones.

Managing operating costs and margins — Although rising operating costs—particularly for fuel and transportation—and a continuing skills gap are significant challenges to the industry, manufacturers and distributors view government regulations, the implementation of the Aff ordable Care Act, the increases in payroll taxes and the federal deficit as the biggest threats to growth.

Business proximity — Over half of the Monitor participants believe it is important to locate their businesses in close proximity to their customers. One approach being taken by an increasing number of companies is to ‘onshore’ or ‘nearshore’ operations, that is, bring work back to operations in or near the United States. Many of the cost savings gained by offshoring production no longer apply, and bringing work back to the U.S. means lower costs, shorter cycle times and improved quality.

Information technology — Executives are more aware of the risks associated with business information and data, particularly as social media strategies become more widespread and corporate cyberattacks make headlines. A majority of businesses reporting having an IT risk-management process, and 74 percent of businesses regularly monitor systems to find threats and attacks that may have occurred.

Intelligence tool

This is the eighth consecutive year McGladrey has polled manufacturing and distribution industry executives. The unique aspect of this data lies in the fact that most of the survey participants are privately owned or are private equity-owned organizations. Because most of the data referred to in the media is based solely on publicly available documents, this makes the Monitor results rather exceptional for the industry.

The 2013 McGladrey Manufacturing & Distribution Monitor was conducted using an online questionnaire promoted by McGladrey and various industrial associations and organizations to principally U.S.-based manufacturing and distribution organizations. There were 1,067 total valid respondents to the 2013 Monitor survey (categorized as 688 manufacturers and 379 distributors), with completed questionnaires received in March 2013. Responses were received by The MPI Group, an independent research firm, and then entered into a database, edited, and cleansed where necessary to ensure answers were plausible.

Along with this report, Monitor participants receive a customized benchmark report that provides views of their responses to the questions posed, along with comparisons to the aggregate responses for their industry category and geographic location. The analysis in the Monitor report – along with the customized benchmark report – provides a comprehensive view of the business environment.


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