Growth Strategies

Small, Midsize Manufacturers Optimistic

One notable negative finding: Although about 25 percent of respondents said that globalization helped them lower costs, nearly 50 percent said it f...
Stephen TaubJune 26, 2006

Fully 96 percent of top executives describe the condition of their manufacturing or distribution business as “thriving and growing” or “holding its own,” according to a recent survey by professional-services firm RSM McGladrey.

A total of 1,031 executives — including 489 chief financial officers, vice presidents of finance, and controllers — responded to this spring’s survey.

New product development was the highest-rated growth strategy, relied on by 55 percent of respondents. “Since new products are quickly duplicated, innovation and enhancement are among the few strategies companies can use to stay ahead of foreign competition and grow their businesses,” RSM noted in its report.

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The survey revealed lesser interest in “moving production offshore” and “moving sales and services closer to international markets”; half of respondents expect no revenue growth from these strategies.

Other notable findings:

75 percent of respondents in the Southwest said they were “thriving and growing,” compared with just 47 percent in the Northeast, reflecting a generally perceived regional shift in manufacturing activity.

• About 25 percent of respondents said that globalization helped them lower costs, but nearly 50 percent said it forced them to lower selling prices.

• 72 percent are relying on redesigning their business processes to improve operational effectiveness.

• Despite the commonly held belief that U.S. companies have excess operating capacity, most respondents hope to increase their own.

• 65 percent are passing along increases in health-care premiums to employees.