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

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

  • 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
  • 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
  • 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
  • U.S. still dominates manufacturingworldwide, with China close behind 3 Source: United Nations Statistics Division; the World Bank.
  • 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 Statistics
  • U.S. is the global leader inlabor productivity Source: United Nations, Bureau of Labor Statistics, International Labor Organization 7
  • Employment situation 8 Source: Bureau of Labor Statistics
  • Largest net employmentgains by sector 9 Source: Bureau of Labor Statistics
  • Top 20 states formanufacturing job creation 10 Source: Bureau of Labor Statistics
  • Building permits, starts andcompletions higher in June 2012 vs.June 2011 Source: U.S. Census Bureau, National Association of Home Builders 11
  • Distribution of U.S. exports 12 Source: U.S. Department of Commerce
  • 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 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
  • 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
  • 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
  • 17
  • 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
  • The number of thriving and growingcompanies remained steady 56% Source: 2012 McGladrey Monitor 19
  • Thriving and growing:Manufacturing and distribution MN Respondents Source: 2012 McGladrey Monitor 20
  • Industries leading growth 50% 48% 47% 45% 45% 21 Source: 2012 McGladrey Monitor
  • 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%
  • Business optimism and the outlook for growthU.S. Economydropped 15%World Economydropped 33% 23 Source: 2012 McGladrey Monitor
  • Business optimism byMN respondents Source: McGladrey 2012 Distribution Monitor 24
  • Taxes pose a major concern 25 Source: 2012 McGladrey Monitor
  • U.S. and non-U.S. sales 26 Source: 2012 McGladrey Monitor
  • Increase expectations in U.S.sales by industry sectorPercent increase expected over next 12 months 27 Source: 2012 McGladrey Monitor
  • Importance of new products andservices to company growth 28 Source: 2012 McGladrey Monitor
  • Cost expectations over thenext 12 months 29 Source: 2012 McGladrey Monitor
  • Inventory level changes 30 Source: 2012 McGladrey Monitor
  • Inventory level changes for MNrespondents in the next 12 months 31 Source: 2012 McGladrey Monitor
  • Strategies to maintain margins 32 Source: 2012 McGladrey Monitor
  • Approximate percentage increase insales prices in next 12 months 33 Source: 2012 McGladrey Monitor
  • Capital expenditures Capital equipment spending compared to previous year (average) 34 Source: 2012 McGladrey Monitor
  • Capital expenditure changes in the next 12 monthsInformationtechnology isthe biggesttarget for allcompanies 35 Source: 2012 McGladrey Monitor
  • 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
  • Percent planning workforceincrease in the next 12 months 37 Source: 2012 McGladrey Monitor
  • Finding skilled talent 38 Source: 2012 McGladrey Monitor
  • Companies are attempting toaddress the skills gap 39 Source: 2012 McGladrey Monitor
  • Process improvements 40 Source: 2012 McGladrey Monitor
  • Social media 41 Source: 2012 McGladrey Monitor
  • Perception of information anddata risks 42 Source: 2012 McGladrey Monitor
  • 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
  • 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
  • Open Discussion- Q&A Questions? 45
  • Contact me Karen L. Kurek McGladrey LLP National Manufacturing & Distribution Practice Leader karen.kurek@mcgladrey.com 46