Manufacturers, How Did You Fare in 2009?

Last year at this time we talked about making and keeping New Year’s Resolutions during challenging times. We suggested that uncertainty presented the perfect opportunity to review strategic options, processes and goals.

How did your company measure up?

To be sure, 2009 has been a difficult year for manufacturers. While the end of the year seems to indicate stabilization of sales levels, companies are still looking at lower backlogs and confirmed orders. Many companies are still unable to predict 2010 revenue levels. There is some positive news, though. The decline in the manufacturing sector has slowed, and a modest 3% growth is projected for 2010 (source: First Research), followed by continuing growth through 2014. Additionally, business activity in the Midwest expanded more than anticipated in November, according to regional reports from the Institute of Supply Management. Production costs have been trimmed, and coupled with continued high levels of worker productivity, a rebound in sales will relate to increased bottom line and profits. Although consumer demand and employment levels are not expected to increase significantly in the near term, it does appear that we are in the midst of a modest recovery.

Although most economists are predicting a mild recovery, there is still uncertainty ahead. Consumer demand has not yet rebounded. Supply chains are depleted. Vendors are being forced to start maintaining inventory to reduce lead time on customer orders. Unemployment continues to rise, even if the pace has decreased. In short, everyone is still walking on eggshells.

What should you do now? What is true of society in general also applies to companies. That is, sometimes simple is good. So keep it simple and straightforward. It may be a cliché, but “slow and steady” wins the race.

Related article: Taking Advantage of Opportunities in an Economic Downturn

Schneider Downs provides accounting, tax and business advisory services through innovative thought leaders who deliver the expertise to meet the individual needs of each client. Our offices are located in Pittsburgh, PA, and Columbus, OH.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.