Small and Mid-Sized Manufacturers Less Optimistic
Jun 11, 2010
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Larger U.S. manufacturers and distributors are more optimistic than small and mid-sized manufacturers and distributors regarding business conditions according to survey results from RSM McGladrey, Inc.
Of the total 1061 respondents included in the survey analysis, 32% of companies with annual revenue above $500 million report their business is "thriving and growing." But among companies with less than $25 million in revenue only 19% say their business is “thriving and growing."
McGladrey said the results are due in part to larger companies' ability to strengthen their competitive advantage through global engagement and international trade.
Small and mid-sized manufacturers tempered optimism stems in part from concern over credit availability, potential raw material and energy cost increases, and cautious investments in inventory.
"The improvement in business conditions for larger companies is directly related to increased order activity spurred by growing optimism over the economy,” said Tom Murphy, executive vice president of manufacturing and wholesale distribution, RSM McGladrey. “But we’re still seeing lower levels of inventory and spot shortages in the supply chain given that small and midsized companies remain so risk-averse following the recession.”
47% of companies report increased export sales, up four percentage points from 2009. Among those companies that say international sales are key to business growth, 88% anticipate revenue increases in foreign markets. Companies are more likely to broaden their sights outside of traditional U.S. trading partners to other foreign markets, such as Brazil, India and China.
On the domestic front, 71% of business leaders project U.S. sales will rise in 2010, roughly three times the percentage forecast in 2009 (25%).
48% of companies say they will bolster their workforce in 2010—triple the percentage of businesses that hired in 2009.
Manufacturers continue to report difficulty finding qualified workers as they did during the recession.
"While the country is facing some of the highest unemployment rates in several years, there is a shortage in those who are qualified for skilled positions," said Murphy. “As businesses continue to modernize facilities, invest in new products and improve efficiencies, this need will only increase. And with high levels of unemployment, there’s a growing desire to train not only the next generation of skilled workers, but those who were displaced during the economic downturn."
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