Tips for financing in tight times
Good news: While the U.S. economy is stuck in downshift, manufacturing hasn't universally lost traction, nor its ability to secure money from financial markets, says Tom Murphy, executive VP of the manufacturing and wholesale distribution practice for RSM McGladrey, the fifth-largest U.S. accounting, tax, and business consulting firm.
Good news: While the U.S. economy is stuck in downshift, manufacturing hasn't universally lost traction, nor its ability to secure money from financial markets, says Tom Murphy, executive VP of the manufacturing and wholesale distribution practice for RSM McGladrey , the fifth-largest U.S. accounting, tax, and business consulting firm. “We've seen some softening, but manufacturing in general is holding its own,” he asserts. “The automotive and housing verticals are having a tough time, but aerospace is doing very well. Anyone supplying the agricultural business is doing pretty well. Medical device manufacturing also is doing well, experiencing worldwide demand. And because of the dollar, those who are exporting are finding opportunity.”
Murphy says the Institute for Supply Management (ISM) index, which gauges purchasing manager sentiment on whether the economy is expanding (above 50) or contracting (below 50), has stayed close to the center point of 50 in the last several months.
“You can't rely exclusively on one indicator,” Murphy asserts, “but the ISM manufacturing index would indicate it's pretty much a mixed bag—trending at the same level.”
Availability of industrial financing varies according to performance of the sector. “Lending institutions have tightened credit standards, so we're looking at tighter credit qualifications—some of it due to the economy,” says Murphy. “But it always comes down to the basics: You've got to run your business smartly. You need a plan, and then execute against it.”
Murphy encourages manufacturers to put greater emphasis on exporting into their plans. “The biggest opportunity for U.S. manufacturers today is to get involved in exporting, either directly or working with overseas partners.”
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey