Manufacturers and Wholesalers Predict Rebound in Late 2009

July 6, 2009
MINNEAPOLIS—Manufacturers and wholesalers are starting to see positive signs for economic recovery, according to the annual Manufacturing and Wholesale Distribution (MWD) national survey released by RSM McGladrey, an accounting, tax and business consulting firm.

Of the more than 920 manufacturing and wholesale distribution executives responding to the survey, 46% say they expect their companies to rebound from the current recession beginning in late 2009, and 44% expect the rebound to occur in early 2010. Fully 40% of companies reported their business as “declining” in 2009, compared to 12% in 2008. Only 9% reported their companies as "thriving and growing."

“Executives are reporting tough business conditions, and as a result, they have taken direct actions to reduce costs,” says Tom Murphy, RSM McGladrey’s executive vice president of manufacturing and wholesale distribution. The report also revealed a significant number of companies are planning capacity modifications this year: 26% plan to reduce capacity, 25% plan to consolidate operations and 15% plan to expand capacity.

The top four 2009 growth strategies cited in the survey were to acquire new customers, increase sales in domestic markets, increase sales to current customers and increase brand recognition. “Companies can’t cost cut their way to growth,” Murphy notes. “With the recession slowing demand for products, companies recognize the need for top-line revenue growth. This is reflected in their focus on revenue-generating growth strategies.”

Results also suggest executives feel they are at low risk of supply chain disruptions, even though many companies have implemented lean principles and streamlined operations. “This should make businesses stronger and more competitive as we climb out of the recession,” says Murphy.

Green initiatives are still a priority, as more than half of respondents say they have implemented or will implement green initiatives in 2009.

Despite workforce reductions, survey respondents continue to struggle to find workers with the skills required by today’s advanced manufacturing environment. Engineers, manufacturing technicians, supervisors and entry-level workers are needed by around 30% of companies.

“The demand for skilled workers in the face of current levels of unemployment underscores the lack of technological skills in the current workforce. Companies need to partner with the educational community, government, industry associations and organizations to identify the necessary skill requirements and develop training programs to fill this gap,” Murphy says.