Execs Optimistic About Growth, See Regulation as Impediment



Nine out of 10 executives at small and mid-size manufacturing and distribution companies expect solid growth over the next 12 months and two-thirds plan to add jobs during that period, according to the 2014 McGladrey Manufacturing and Distribution Monitor.

In 2014, industrial sector executives report that they are already coming off a strong year but expect even better results over the next 12 months. While an already-healthy majority of executives (69%) reported increases in domestic sales over the past year, 88% expect the next 12 months to bring further growth, with an average projected increase of eight%.

In addition, two-thirds (67%) reported that they expect their profits (before taxes and interest) to rise over the next year, with nearly a quarter (24%) expecting increases of more than 10%.

Despite this positive outlook, executives indicated that they continue to face headwinds that could be holding them back from even further growth. As was the case with last year’s survey findings, regulatory issues topped the list of concerns this year, with two-thirds (66%) of respondents expecting their growth to be limited by regulation over the next year – a concern that is more challenging, according to survey participants, than competition from other companies (63%).

“There is no question that the industrial sector is growing, but industry executives clearly believe it could be growing more quickly,” said Karen Kurek, national industrial products practice leader for McGladrey. “Manufacturing and distribution executives have made it clear that they are being held back by a regulatory and tax landscape that seems to grow both more complicated and less certain each year. With the recession now comfortably in our rear-view mirror, regulations and taxes have become the top challenges for manufacturers and distributors, and it will continue to influence the growth and competitiveness of the industry until it is addressed.”

McGladrey is a provider of assurance, tax and consulting services focused on the middle market. The survey includes responses from more than 900 executives at small- and mid-sized U.S. manufacturers and distributors, and provides an annual update on the state of middle-market companies in the industrial sector.

To view the full 2014 McGladrey Manufacturing and Distribution Monitor, click here.


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