IBR Industry Focus -
Manufacturing: adapting in difficult times
IBR Industry Focus - Manufacturing: adapting in difficult times.
Having seen world trade in goods expand at over 8 per cent a year during the global economic boom of 2003-07, manufacturers are bracing themselves for difficult times. The industry's problems stem largely from rapidly waning demand but are being compounded by turmoil in the financial sector.
The Grant Thornton International Business Report (IBR) results highlight the onset of further difficult times for privately held manufacturers with the ending of the global boom.
The impact of the downturn is shown by the proportion of businesses exporting, with figures down in 2008 following five years of robust growth. Employment growth remained robust in the survey with a balance of +35 per cent reporting an increase. But investment intentions are already easing and look set to fall further as uncertainties intensify.
Global conditions for manufacturers have deteriorated significantly, as the impact of the cataclysmic events in the financial sector have hit the real economy. Prospects are for a very tough period for manufacturing businesses, especially those in the mature economies, as demand weakens and even good companies find difficulty in obtaining credit.
The challenge for manufacturers is to try to protect their customer base, while carefully managing costs and cash flows. Lack of credit, even for the best run businesses, will severely constrain growth prospects into 2009.
Alex MacBeath
Global leader – privately held business services
Grant Thornton International