McGladrey Manufacturing and Distribution Monitor Shows Cloudy Mood Some Rays of Sunshine
Enhanced productivity could mean more jobs, but economic uncertainty and cost increases create challenges
Chicago — (August 31, 2011) – Continuing a trend from the spring, more than half of respondents to the recent 2011 summer McGladrey® Manufacturing & Distribution Monitor expect to increase their workforces by an average of 7 percent, in spite of the fact that 60 percent are pessimistic about the U.S. economy, compared to 38 percent in the spring.
“The Monitor results are debunking the myth that manufacturers have achieved productivity gains by using more technology and equipment to hire fewer workers,” said Karen Kurek, national manufacturing leader for RSM McGladrey, one of the nation’s leading accounting, tax and business consulting firms. “We found that companies investing in technology and equipment are more likely to say they plan to hire more workers and invest in their training.
"The survey reveals the highest perceived risk factor among industry leaders who responded to the survey is commodity prices. Eighty-eight percent of respondents are expecting an increase in raw materials costs, and a surprisingly large 85 percent say they plan to pass those increased costs on to customers through blanket price increases, selective price increases or surcharges of some sort, so clearly, that impact will be felt well beyond the manufacturing and distribution industry.”
In addition to rising commodity prices and the state of the U.S. economy, the summer Monitor revealed a 64 percent increase of respondents perceiving high risk in federal government gridlock (23 percent in the summer versus 14 percent in the spring) and a 53 percent increase in those perceiving high risk related to the global economy (23 percent in the summer versus 15 percent in the spring).
Despite the rise in apprehension about economics, politics and general business conditions, manufacturing and distribution leaders see some rays of sunshine among the clouds:
- 76 percent of respondents report increased productivity over the past 12 months.
- Of those reporting an increase in productivity, over 60 percent of say they plan to growth their workforces in the coming 12 months. Sectors more likely to be hiring include chemicals, oil and plastic.
“What we’re seeing is that manufacturers and distributors have positive data in front of them, but they’re not sure whether to believe their figures or the dismal news they hear every day,” Kurek said. “We took things a step further this quarter and created a series of recommendations for companies, based on data and best practices from firms that report they are thriving and growing.”
The Manufacturing & Distribution Monitor (previously known as the annual McGladrey Manufacturing and Wholesale Distribution National Survey) began quarterly distribution this spring to provide timely and relevant information to industry leaders. Each quarter, survey participants are presented with a core group of benchmark questions and a select series of topical questions touching on key management issues. Questions in the summer Monitor focused on operational issues. Responses revealed that improvements in production and scheduling/planning, followed closely by inventory, are most likely to be among the top two management priorities (39 percent).
Respondents receive access to customized, interactive dashboards they can use in multiple ways to compare their responses against the national aggregate. Those who participate each quarter will be able to track changes to their company’s response from quarter to quarter and receive quarterly reports that delve into the results. Findings from the 2011 summer Monitor are online, as are the 2011 spring Monitor results. Participants are invited to share feedback on the survey and to provide insights into current industry issues through the McGladrey Manufacturing Blog.
The fall Monitor, which will focus on global expansion issues, including exporting will launch on September 19, 2011. Results will be available in the November/December timeframe.
The McGladrey Manufacturing & Distribution Monitor surveys industry leaders of manufacturing and distribution organizations to assess the current state of the industry and to determine what steps CEOs, CFOs and other executives are taking to grow their businesses and stay competitive. All data is collected online in response to invitations from McGladrey and from partnering associations and chambers of commerce across the United States.
McGladrey is the brand under which RSM McGladrey, Inc. and McGladrey & Pullen, LLP serve clients’ business needs. Together, they rank as the fifth-largest U.S. provider of assurance, tax and consulting services, with 7,000 professionals and associates in more than 80 offices. The two firms operate as separate legal entities in an alternative practice structure. McGladrey & Pullen is a licensed CPA firm that provides assurance services. RSM McGladrey is a leading professional services firm providing tax and consulting services. Both firms are members of RSM International, the sixth-largest global network of independent accounting, tax and consulting firms. For more information, visit the McGladrey website at www.mcgladrey.com, join our Facebook fan page at McGladrey News and/or follow us on Twitter @ McGladrey.