Tom Murphy, RSM McGladrey’s Executive Vice President of Manufacturing and Wholesale Distribution, will be presenting “U.S. Manufacturing Still Strong,” at Techtextil North America Symposium 2009’s General Session on Tuesday, April 21. In this article, Murphy shares some of his views on the state of manufacturing.

With over 25 years of experience in manufacturing and distribution, including chief financial officer roles at three public and private companies, Murphy has seen his share of business cycles. This industry veteran joined RSM McGladrey, the nation’s fifth largest accounting, tax and business consulting firm, in 2001, where he spends 90 percent of his time in an external role interfacing with manufacturers. Murphy is also a Board Director of the National Association of Manufacturers and an advocate for manufacturers on Capitol Hill.

Each spring, RSM McGladrey conducts its national Manufacturing and Wholesale Distribution Survey. In 2008, approximately 1,000 C-level manufacturing executives responded to questions about business conditions and growth strategies. Key findings from last year’s survey included:

• Respondents describing their business as “declining” had tripled from 2006-2008
• Acquiring new customers was the highest rated growth strategy
• Merger and acquisition activity slowed and declined as a growth strategy
• Companies continued to work globally, although offshoring declined
• More than half of respondents reported new product innovations and product line extensions
• Green initiatives were introduced by nearly half of respondents
• Use of lean principles and supply chain process improvements increased
• Respondents anticipated cost increases across all operating categories, including double-digit increases in health care
• Information technology was considered critical; however, declines were expected in overall IT spending
• Demand for skilled workers increased
• Government programs and tax strategies were underutilized

This year’s survey is being fielded from March 10 to April 10. Murphy hopes to have some high-level, top-line information available to share with attendees during his Symposium presentation.

Although economic conditions have changed significantly since the 2008 study was issued, Murphy noted that two mini-surveys with two industry segments in the past month have shown that conditions are not as dire as they are portrayed by the media. “Although conditions have deteriorated since last year, over 50 percent of respondents indicate that they are holding their own. This data corresponds with what I hear when I am out and about with manufacturers. The news media would have us believe that manufacturing has shut down and disappeared, but that is not the case,” he said.

In early February, Murphy gave a presentation to over 100 members of the Association for Corporate Growth, during which he reported that manufacturing in the U.S. is surviving and, in some cases, doing well. “Actually, U.S. manufacturing, as measured by output, is producing more than ever before,” he said. “What we are seeing is a change in product strategy.”

In a textile-related analogy, Murphy noted that U.S. manufacturers are not making as many socks and underwear, but they are producing fire-retardant materials. “We’re shifting from commodity to value-added products. Reporting the demise of U.S. manufacturing is totally wrong,” Murphy said, citing the example of medical devices – and medical textiles – as other examples of areas where U.S. manufacturing is growing.

In fact, one of the biggest challenges Murphy sees is in the area of available workforce. “The people who possess the skills that are needed don’t always live in the right geographic areas,” he said. “There are still pockets where manufacturers can’t find workers with the skills they need. And demographics are also challenging, with so many people reaching retirement age and walking out the door.”

“At the Symposium, I will be reporting on current conditions and the forecast for manufacturing overall,” Murphy said. “At this point, my chart about what’s changed has to be updated almost every day to keep pace with economic developments, and it is likely to continue to be a tough situation come April. But it is important to remember that this is a business cycle. We can debate what caused it, but it is a cycle. Some of us have enough gray hair to remember other recessions in 1974-75 and 1981-82. Manufacturing needs to block and tackle – something it knows how to do and has done for years.”

So even though the current climate for manufacturing may appear stormy, Murphy’s message is that manufacturing is still strong and will be here when this downturn is over. He remains upbeat about long-term prospects. “We will come out of this and come out stronger than when we went in. I’m confident that’s what will happen.”