Next Generation Manufacturing                           What lies ahead for manufacturers and distributers                ...
About McGladrey•   80+ year history•   Fifth-largest provider of accounting, tax and    business consulting services in th...
A distinctive industry focusUnderstanding your    • Focused on the middle marketbusiness              • Industry associati...
U.S. still dominates manufacturingworldwide, with China close behind                                                      ...
Real GDP forecast           Source: Bureau of Economic Analysis, NAM calculations , Moody’s Analytics simulation model   4
ISM manufacturing indices          Source: Institute for Supply Management   5
Growth in output                                                        6                   Source: Bureau of Labor Statis...
U.S. is the global leader inlabor productivity             Source: United Nations, Bureau of Labor Statistics, Internation...
Employment situation                                                            8                       Source: Bureau of ...
Largest net employmentgains by sector                                                              9                      ...
Top 20 states formanufacturing job creation                                                                  10           ...
Building permits, starts andcompletions higher in June 2012 vs.June 2011                         Source: U.S. Census Burea...
Distribution of U.S. exports                                                                     12                       ...
Percent growth ofmanufactured goods exports           Source: U.S. Department of Commerce   13
A Manufacturing Renaissance:Four goals for economic growth1. The United States will be the best place in the world to   ma...
NAM: Critical issues affectingthe industry•Tax reform: The coming “taxmageddon”•Regulatory reform: Potential impact of the...
Minnesota profile•   State job growth rose 2.2% in July 2012 from a year ago; national job    growth rose 1.4%•   State un...
17
Demographics andkey findings• Report released September 12• 924 total participants     -   554 Manufacturers     -   370 D...
The number of thriving and growingcompanies remained steady                                                               ...
Thriving and growing:Manufacturing and distribution                                                   MN Respondents      ...
Industries leading growth                                  50%                              48%                           ...
Industrial and CommercialSector in biggest declineIndustry Sector                                                     Thri...
Business optimism and the outlook for growthU.S. Economydropped 15%World Economydropped 33%                               ...
Business optimism byMN respondents                       Source: McGladrey 2012 Distribution Monitor   24
Taxes pose a major concern                                                              25                             Sou...
U.S. and non-U.S. sales                                                           26                          Source: 2012...
Increase expectations in U.S.sales by industry sectorPercent increase expected over next 12 months                        ...
Importance of new products andservices to company growth                                                                  ...
Cost expectations over thenext 12 months                                                              29                  ...
Inventory level changes                                                           30                          Source: 2012...
Inventory level changes for MNrespondents in the next 12 months                                                           ...
Strategies to maintain margins                                                            32                              ...
Approximate percentage increase insales prices in next 12 months                                                          ...
Capital expenditures        Capital equipment spending compared to previous year (average)                                ...
Capital expenditure changes in the next 12 monthsInformationtechnology isthe biggesttarget for allcompanies               ...
Most midsize companieslikely to increase workforce •   Two thirds of companies (67%) are expected to increase employment l...
Percent planning workforceincrease in the next 12 months                                                          37      ...
Finding skilled talent                                                          38                         Source: 2012 Mc...
Companies are attempting toaddress the skills gap                                                               39        ...
Process improvements                                                        40                       Source: 2012 McGladre...
Social media                                                41               Source: 2012 McGladrey Monitor
Perception of information anddata risks                                                                 42                ...
Best practices of thriving andgrowing companies   •   Have increased and plan to increase U.S. and non-U.S. sales   •   Co...
Experience the power of being understood.SM    In addition to the key findings outlined in this   presentation, results fr...
Open Discussion- Q&A              Questions?                           45
Contact me             Karen L. Kurek             McGladrey LLP             National Manufacturing & Distribution Practice...
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National Trends in Manufacturing - Karen Kurek, national manufacturing & distribution practice leader, McGladrey

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Learn the outlook for manufacturing across the country Presented at the Minnesota Chamber Manufacturers Summit on October 23, 2012

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National Trends in Manufacturing - Karen Kurek, national manufacturing & distribution practice leader, McGladrey

  1. 1. Next Generation Manufacturing What lies ahead for manufacturers and distributers Karen L. KurekNational Manufacturing & Distribution Practice Leader at McGladrey October 23, 2012 St. Paul Hilton Mall of America, Minneapolis, MN
  2. 2. About McGladrey• 80+ year history• Fifth-largest provider of accounting, tax and business consulting services in the U.S.• We provide services to more than 8,000 midsize manufacturers and distributors across the nation• 75 U.S. offices; offices in 85 countries worldwide• 6,500 professionals nationally, 32,000 worldwide 1
  3. 3. A distinctive industry focusUnderstanding your • Focused on the middle marketbusiness • Industry association memberships and board appointmentsand industry • Advocate on both national and local levelsSharing global best • Manufacturing & Distribution Monitorpractices • CFO Clubs • Executive Summits • Webinars • Thought leadership articles and publicationsProviding resources • National resources and services • Subject matter experts • Local, national and international presence 2
  4. 4. U.S. still dominates manufacturingworldwide, with China close behind 3 Source: United Nations Statistics Division; the World Bank.
  5. 5. Real GDP forecast Source: Bureau of Economic Analysis, NAM calculations , Moody’s Analytics simulation model 4
  6. 6. ISM manufacturing indices Source: Institute for Supply Management 5
  7. 7. Growth in output 6 Source: Bureau of Labor Statistics
  8. 8. U.S. is the global leader inlabor productivity Source: United Nations, Bureau of Labor Statistics, International Labor Organization 7
  9. 9. Employment situation 8 Source: Bureau of Labor Statistics
  10. 10. Largest net employmentgains by sector 9 Source: Bureau of Labor Statistics
  11. 11. Top 20 states formanufacturing job creation 10 Source: Bureau of Labor Statistics
  12. 12. Building permits, starts andcompletions higher in June 2012 vs.June 2011 Source: U.S. Census Bureau, National Association of Home Builders 11
  13. 13. Distribution of U.S. exports 12 Source: U.S. Department of Commerce
  14. 14. Percent growth ofmanufactured goods exports Source: U.S. Department of Commerce 13
  15. 15. A Manufacturing Renaissance:Four goals for economic growth1. The United States will be the best place in the world to manufacture and to attract foreign direct investment.2. The United States will expand access to global markets to enable manufacturers to reach the 95 percent of consumers who live outside our borders.3. Manufacturers in the United States will have the workforce that the 21st-century economy requires.4. Manufacturers in the United States will be the world’s leading innovators. Source: National Association of Manufacturers 14
  16. 16. NAM: Critical issues affectingthe industry•Tax reform: The coming “taxmageddon”•Regulatory reform: Potential impact of the EPAs proposed regulations•Trade and exports: A national competitiveness strategy must prioritizeexports•Workforce investment: Education and training programs that result innationally portable, industry-recognized credentials•Health care reform: Addressing costs and increasing regulation•Innovation and efficiency: The impact of high energy prices 15
  17. 17. Minnesota profile• State job growth rose 2.2% in July 2012 from a year ago; national job growth rose 1.4%• State unemployment averaged 5.9% in July 2012; the national average was 8.3%• Personal income rose 2.6% to $243.0 billion in Q1 2012 from a year ago.• Tax revenue increased 3.2% in Q1 2012 from a year ago.• Exports fell 2.8% to $13.3 billion in the first four months of 2012 from a year ago.• Venture capital investment in MN rose 20.8% to $70.5 million in Q1 2012 from a year ago Source: First research – September 2012 16
  18. 18. 17
  19. 19. Demographics andkey findings• Report released September 12• 924 total participants - 554 Manufacturers - 370 Distributors - 62 Respondents from MN• 77% private or closely held businesses - Mostly CEO’s and CFO’s• 12% private equity-owned businesses 18
  20. 20. The number of thriving and growingcompanies remained steady 56% Source: 2012 McGladrey Monitor 19
  21. 21. Thriving and growing:Manufacturing and distribution MN Respondents Source: 2012 McGladrey Monitor 20
  22. 22. Industries leading growth 50% 48% 47% 45% 45% 21 Source: 2012 McGladrey Monitor
  23. 23. Industrial and CommercialSector in biggest declineIndustry Sector Thriving in 2011 Thriving in 2012Aerospace - 34%Automotive (OEM and Aftermarket) 57% 45%Biotech, Life Sciences and Medical Equipment/Supplies 38% 45%Building Materials 24% 28%Chemicals, Petroleum and Plastics 48% 40%Computers, Electronics and Electrical Components/Appliances 52% 41%Energy and CleanTech 41% 48%Food and Beverage 44% 47%Furniture and Fixtures 17% 34%Industrial and Commercial Machinery 20% Decrease 63% 43%Metal Fabrication 47% 41%Textiles, Apparel and Accessories 29% 16%Transportation Equipment 52% 50% 22Wood/Paper Products and Printing 25% 29%
  24. 24. Business optimism and the outlook for growthU.S. Economydropped 15%World Economydropped 33% 23 Source: 2012 McGladrey Monitor
  25. 25. Business optimism byMN respondents Source: McGladrey 2012 Distribution Monitor 24
  26. 26. Taxes pose a major concern 25 Source: 2012 McGladrey Monitor
  27. 27. U.S. and non-U.S. sales 26 Source: 2012 McGladrey Monitor
  28. 28. Increase expectations in U.S.sales by industry sectorPercent increase expected over next 12 months 27 Source: 2012 McGladrey Monitor
  29. 29. Importance of new products andservices to company growth 28 Source: 2012 McGladrey Monitor
  30. 30. Cost expectations over thenext 12 months 29 Source: 2012 McGladrey Monitor
  31. 31. Inventory level changes 30 Source: 2012 McGladrey Monitor
  32. 32. Inventory level changes for MNrespondents in the next 12 months 31 Source: 2012 McGladrey Monitor
  33. 33. Strategies to maintain margins 32 Source: 2012 McGladrey Monitor
  34. 34. Approximate percentage increase insales prices in next 12 months 33 Source: 2012 McGladrey Monitor
  35. 35. Capital expenditures Capital equipment spending compared to previous year (average) 34 Source: 2012 McGladrey Monitor
  36. 36. Capital expenditure changes in the next 12 monthsInformationtechnology isthe biggesttarget for allcompanies 35 Source: 2012 McGladrey Monitor
  37. 37. Most midsize companieslikely to increase workforce • Two thirds of companies (67%) are expected to increase employment levels - 67% 2012 vs. 56% in 2011 - Private equity companies are most likely to increase hiring (76%) - 85% of T&G companies plan to increase workforce where 42% of declining companies plan to reduce workforce 36 Source: 2012 McGladrey Monitor
  38. 38. Percent planning workforceincrease in the next 12 months 37 Source: 2012 McGladrey Monitor
  39. 39. Finding skilled talent 38 Source: 2012 McGladrey Monitor
  40. 40. Companies are attempting toaddress the skills gap 39 Source: 2012 McGladrey Monitor
  41. 41. Process improvements 40 Source: 2012 McGladrey Monitor
  42. 42. Social media 41 Source: 2012 McGladrey Monitor
  43. 43. Perception of information anddata risks 42 Source: 2012 McGladrey Monitor
  44. 44. Best practices of thriving andgrowing companies • Have increased and plan to increase U.S. and non-U.S. sales • Corporate objectives are all about infrastructure • Plan to use the following sales strategies to drive growth: - Increased penetration in existing markets - New customer segments - New products and line extensions • Hiring talent by proactively addressing skills gap • Have a mature continuous improvement culture • Annual investment in R&D is higher compared to others 43 Source: 2012 McGladrey Monitor
  45. 45. Experience the power of being understood.SM In addition to the key findings outlined in this presentation, results from the 2012 McGladreyManufacturing and Distribution Monitor can be found at http://www.mcgladrey.com 44
  46. 46. Open Discussion- Q&A Questions? 45
  47. 47. Contact me Karen L. Kurek McGladrey LLP National Manufacturing & Distribution Practice Leader karen.kurek@mcgladrey.com 46

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