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Current Manufacturing Situation

Risk and Financial Management Panel FPPA 13 th Annual Convention Sanibel Harbour – Fort Meyers, Florida February 23, 2010. Current Manufacturing Situation. Growth in Real Output: U.S. Manufacturing vs. Overall GDP. 432%. 411%. Source: U.S. Department of Commerce.

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Current Manufacturing Situation

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  1. Risk and Financial Management PanelFPPA 13th Annual ConventionSanibel Harbour – Fort Meyers, FloridaFebruary 23, 2010

  2. Current Manufacturing Situation

  3. Growth in Real Output: U.S. Manufacturing vs. Overall GDP 432% 411% Source: U.S. Department of Commerce

  4. US Share of Global Manufacturing Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

  5. Manufacturing Dominates US Exports Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

  6. US is the #3 Manufacturing Exporter 2007, $Billions Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

  7. Trade Agreements Do Not Drive the US Trade Deficits Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing

  8. NAFTA Trade Deficit - US Source: U.S. Department of Commerce

  9. Source: Federal Reserve

  10. Source: Institute for Trend Research - EcoTrends

  11. Risk and Financial Management in the New Normal

  12. Risk Management Infrastructure • Key RM Components • Performed a risk assessment • Internal audit function • Independent audit committee Source: RSM McGladrey 2009 Manufacturing and Wholesale Distribution National Survey

  13. Risk Categories Source: RSM McGladrey 2009 Manufacturing and Wholesale Distribution National Survey

  14. Supply Chain Risks • Supply interruption or inadequacy • Internal or external quality issues • Transportation interruption or inadequacy • Export/import delays • Labor crises • Traditional disasters • Public relations crises • Business fluctuations

  15. Technical Risks • System downtime • Software glitches • Malicious attacks on systems • Viruses, worms and other “malware” • Industrial espionage • Your staff

  16. Severe Weather

  17. Flooding

  18. Transportation

  19. Fire

  20. Utilities

  21. Recovery Time Impact Escalation

  22. Business Continuity Plans - Needed More Than Ever • Escalating threat and impact of disasters • More aggressive business environment: • Increased market competition • Increased manufacturing complexity • Specialized equipment, lengthy replacement times • Just-in-time–supply chain risks • More with less–people risks • Increased reliance on technology • Increasing regulatory requirements

  23. Business Continuity Risk Assessment • Analyze the impact of each threat to your business • Considerations include: • Criticality to your operations • Impact on your staff • Ability to repair or replace damaged assets • Ability to access systems remotely • Business and economic risks • Reputation risks • Privacy and control issues

  24. Develop Your Business Continuity Plan • Document procedures to recover critical business processes following a disaster • People, communications, facilities, equipment, records and other resources needed to recover your operations • Temporary operating procedures to allow critical functions to continue despite the unavailability of resources • Reconstruction of work-in-process that was lost • Restoration procedures for returning to normal operations

  25. Key Legislative Issues/Risks • Health Care • Energy Policy • Taxes • EFCA [Employee Free (Forced) Choice Act] • Cap and Trade (Stealth Tax)

  26. Five Things to Focus on Now • Innovation • Supply Chain • People • Exporting • Information Technology

  27. 2010 National Manufacturing and Wholesale Distribution Survey • Demographics: • Survey in field March 2 – April 2 • Similar questions to drive trend reporting • Plan to release results by early June • Issue & Industry reports available by July 1st

  28. Contact Information: Tom Murphy RSM McGladrey, Inc. Executive Vice President Manufacturing & Wholesale Distribution 612.376.9226 tom.murphy@rsmi.com QUESTIONS

  29. Continue the Conversation on our Blog mfgblog.rsmmcgladrey.com

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