The 2020 Mid-Year Economic Update_long

Survey Offers Mixed Reaction

About 96 percent of respondents to RSM McGladrey’s 2006 Manufacturing and Wholesale Distribution National Survey said their company was “thriving and growing” or “holding its own.”

The survey looked at what CEOs, CFOs and other senior executives are doing to grow their companies and compete in the global economy. Overall the survey reported business leaders are optimistic.

RSM McGladrey reports that while distributors and manufacturers are optimistic, many are missing opportunities to grow. Underused strategies include penetrating foreign markets and increasing exports, using more resources to find skilled workers, taking advantage of government funding assistance and optimizing tax planning.

Global Economy
The survey shows low scores for “moving production offshore” and “moving sales and service centers closer to international markets.” Half of survey participants expect no revenue growth in this area. About 25 percent of participants said globalization helped them lower costs while 50 percent said it forced them to lower selling prices.

Operational Effectiveness
In 72 percent of cases, respondents said redesigning business processes is what they are relying on to improve operational effectiveness. Few participants are reducing operational capacity as a means of improving operational effectiveness.

Most survey respondents are seeking to increase their operational capacity.

The survey found 43 percent of the respondents seek their main source of skilled labor in the general marketplace. Few are sourcing employees from community colleges and vocational schools.

In ranking workforce issues tied to company success, participants placed low importance on “removing barriers to immigration.” If unemployment rates remain low, labor shortages across all industries are expected.

Some survey participants are buying equipment to replace the skilled labor they can’t find.

Heath Care Costs
Rising health care costs continue to burden employers. About 65 percent of survey participants are dealing with the increases by passing on more costs to employees.

Energy Costs
About 35 percent of all natural gas is consumed by manufacturers. Food, chemical, metal fabrication and plastics industries all indicated energy cost as a significant component of their cost structure, with an average ranking of 3.6 or higher on a scale of 1 to 5, with 5 being highest importance.

Tax Planning
About 65 percent of manufacturers surveyed claim state and local tax credits, and 64 percent take advantage of the domestic manufacturers’ deduction. About 61 percent use R& D tax credits, and just 38 percent use international tax incentives. Few distributors in the survey take advantage of any tax programs.

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