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.

By Staff August 1, 2008

“The biggest opportunity for U.S. manufacturers today is to get involved in exporting, either directly or working with overseas partners.”

—Tom Murphy, executive VP, RSM McGladrey

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.”