Risk and Financial Management Panel FPPA 13 th Annual Convention Sanibel Harbour – Fort Meyers, Florida February 23, 2010
Current Manufacturing Situation
Source: U.S. Department of Commerce Growth in Real Output: U.S. Manufacturing vs. Overall GDP 411% 432%
US Share of Global Manufacturing Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing
Manufacturing Dominates US Exports Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing
US is the #3 Manufacturing Exporter 2007, $Billions Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing
Trade Agreements Do Not Drive the US Trade Deficits Compiled by The Manufacturing Institute for the 8th Edition of Facts About Modern Manufacturing
Source: U.S. Department of Commerce NAFTA Trade Deficit - US
Source: Federal Reserve 9
Source: Institute for Trend Research - EcoTrends
Risk and Financial Management in the New Normal
Key RM Components Performed a risk assessment Internal audit function Independent audit committee Source: RSM McGladrey 2009 Manufacturing and Wholesale Distribution National Survey Risk Management Infrastructure
Source: RSM McGladrey 2009 Manufacturing and Wholesale Distribution National Survey Risk Categories
Supply Chain Risks Supply interruption or inadequacy Internal or external quality issues Transportation interruption or inadequacy Export/import delays Labor crises Traditional disasters Public relations crises Business fluctuations
Technical Risks System downtime Software glitches Malicious attacks on systems Viruses, worms and other “malware” Industrial espionage Your staff
17 Severe Weather
18 Flooding
19 Transportation
20 Fire
21 Utilities
Recovery Time Impact Escalation
Business Continuity Plans - Needed More Than Ever Escalating threat and impact of disasters More aggressive business environment: –Increased market competition Increased manufacturing complexity –Specialized equipment, lengthy replacement times Just-in-time–supply chain risks More with less–people risks Increased reliance on technology Increasing regulatory requirements
24 Business Continuity Risk Assessment Analyze the impact of each threat to your business Considerations include: –Criticality to your operations –Impact on your staff –Ability to repair or replace damaged assets –Ability to access systems remotely –Business and economic risks –Reputation risks –Privacy and control issues
Develop Your Business Continuity Plan Document procedures to recover critical business processes following a disaster –People, communications, facilities, equipment, records and other resources needed to recover your operations –Temporary operating procedures to allow critical functions to continue despite the unavailability of resources –Reconstruction of work-in-process that was lost –Restoration procedures for returning to normal operations
Key Legislative Issues/Risks Health Care Energy Policy Taxes EFCA [Employee Free (Forced) Choice Act] Cap and Trade (Stealth Tax)
Five Things to Focus on Now Innovation Supply Chain People Exporting Information Technology
2010 National Manufacturing and Wholesale Distribution Survey Demographics: Survey in field March 2 – April 2 Similar questions to drive trend reporting Plan to release results by early June Issue & Industry reports available by July 1 st
Contact Information: Tom Murphy RSM McGladrey, Inc. Executive Vice President Manufacturing & Wholesale Distribution QUESTIONS
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