|GLOBAL MARKET KEY TO SURVIVAL FOR SMALL AND MEDIUM-SIZED MANUFACTURERS
ARTICLE BY ROSALIENE BACCHUS
The New Year began with news of more casualties of the US subprime mortgage crisis. By January 21, 151
mortgage companies had failed, as reported by Mortgage Daily – an online news resource for the mortgage
industry. Forty four of these companies are already under new ownership. Subprime loans used to acquire
over one million homes have already soured. The number is expected to double over the coming months.
Global financial markets have been hard hit. Working-class communities across the USA feel the crunch.
Consumers have tightened their belts. Unemployment and bankruptcy figures released the first week in
January shook the market. The Bureau of Labor Statistics reported that November’s unemployment rate of 4.7
percent had increased to 5 percent in December, bringing the total number of jobless workers to 7.7 million.
This represents a 4.4 percent increase over December 2006. The number of Americans who filed for
bankruptcy in 2007 – according to the American Bankruptcy Institute – rocketed almost 40 percent from
573,203 in 2006 to 801,840 in 2007. On January 22, the US Federal Reserve stunned the financial market
with a dramatic emergency three-quarter point cut in US interest rates. A record cut in over twenty years.
Following fast behind on January 24, Congress reached agreement for a fiscal “stimulus package” of $150
billion to reinvigorate the sagging US economy.
This hostile environment is detrimental for small and medium-sized manufacturers (SMMs), already battered
by competition from producers in low-cost developing countries. Large and multinational companies offset
falling domestic sales by increasing international sales, spurred by demand in growing emerging economies
and the weak US dollar. In 2007, the US dollar fell nearly 10 percent against the Euro, 6 percent against the
Japanese yen, and 14 percent against the Canadian dollar. This weakened dollar makes US goods cheaper
on the world market, a boon for American exporters. US Census Bureau trade statistics reveal that exports in
November 2007 rose to $1.4 trillion, a 13 percent increase over November 2006.
A new survey – co-sponsored by the National Association of Manufacturers (NAM) and RSM McGladrey –
found that about 30 percent of SMMs are not engaged in international trade. Over 60 percent reported less
than 10 percent export sales or imported components. On the release of the report, NAM President John
Engler expressed concern that these manufacturers “(will) find it increasingly difficult to survive” if they do not
enter the global marketplace. “Small and medium manufacturers account for 40 percent of US production
value,” he said, “and their successes and failures can have a substantial impact on America’s economy.”
(RSM McGladrey News Release, Washington DC, December 19, 2007.)
For small manufacturers, the day-to-day challenges of staying in business are overwhelming. Entering
unknown foreign markets will be a daunting task. Next month, we will consider the insights and strategies
presented in this new report, Forging New Partnerships: How to Thrive in Today’s Global Value Chain, to help
small and medium manufacturers to optimize opportunities and minimize risks.
Article published in the Guyana Journal, Guyana Journal Publication, Inc., New York, USA, February 2008, p. 12.
Reprinted with permission.
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