Global concerns: Privately held manufacturers fret over rising energy, materials costs
Rising raw materials and energy prices have become major concerns for privately held manufacturing companies, according to a recent survey from Grant Thornton International .
Globally, 61 percent of surveyed businesses reported being most concerned about raw materials costs, while 45 percent listed energy costs as their greatest concern.
These numbers emerged from the 2007 Grant Thornton International Business Report , which canvassed more than 7,200 privately held businesses in 32 countries. Grant Thornton, a U.K.-based umbrella organization for a global set of independent consulting firms, began surveying European small and medium-size businesses in 1992. The survey became a global effort in 2003, and companies surveyed are now primarily medium-size and large privately held manufacturers.
In this year’s survey, Turkish manufacturing businesses expressed the greatest concern about the direction of energy costs over the next 12 months, with 82 percent of respondents expecting them to have a major impact on production costs. Even in Mexico, an oil-producing country, 61 percent of manufacturers cited energy costs as a concern. Australia and Brazil, also energy-producing countries, are least concerned about energy costs. Just 20 percent of Australian manufacturers expect energy costs to have a major impact on costs, while 23 percent of Brazilian companies expressed such concern.
Says Alex MacBeath, Grant Thornton’s global head of privately held business services, “The management of energy consumption is critical to tackling global warming. When we asked manufacturers what they were doing, almost two-thirds reported taking measures to reduce
In addition to their concerns about rising energy and materials costs, survey respondents had strong—and sometimes surprising—opinions about globalization.
Manufacturers in Thailand, Australia, and New Zealand see globalization as a threat rather than an opportunity. This indicates increasing concerns about greater competition from Asian manufacturers, according to Robert Quant, partner at Grant Thornton Australia.
Unsurprisingly, Asian manufacturers are among the most positive in regard to globalization.Chinese manufacturers regard globalization as more of a threat, he says.
“Rapid growth in China is proving both a blessing and curse for business in Australia and New Zealand,” Quant adds. “Increased demand has led to higher production in the Australian resources sector, fuelling the mining boom and strong economic growth. However, Australian manufacturers are having difficulties competing with China’s ability to produce low-cost goods and are being constrained by shortages in skilled labor and the lowest unemployment levels in decades.”