Flexibility, Diverse Customer Targets Equally Important to U.S Manufacturers

During the last decade, a number of events have underscored the importance of not limited a targeted sales and credit base too much to one area. A notable example came during the U.S. recession, which forced many manufacturers that previously sold almost exclusively to domestic customers to either pursue international markets or close down amid a drastic demand downturn. Analysis from the Census Bureau this week again underscored the importance of this.

For manufacturers, Wednesday's Census statistics illustrate that those with a domestic market orientation are faring better than those more focused on overseas markets. Notably, U.S. growth expectations for economic growth for the near term are improving from earlier estimates with analytical firms like Goldman Sachs, which predicts 3% growth in the second quarter, while the so-called emerging economies lose ground from previous gains in importance (e.g., China continues to watch growth rates slow, Brazil finds itself in the throws of political and economic meltdowns). It’s the reverse of the situation during the height of the recession, says NACM Economist Chris Kuehl, Ph.D.

“This is why the diverse customer base is so vital to long-term success,” Kuehl notes. “Selling globally is not a casual undertaking and requires focused investment in the parts of the world that offer the best chances for success. The U.S. manufacturer has to be nimble enough to get engaged when this is a good idea and smart enough to bail out when the conditions inevitably change.”

Wednesday’s release of preliminary Census data on trade for April showed the U.S. deficit grew by 3.4% in April to $57.5 billion. Total exports grew to $32.4 billion from March’s $30.8 billion, led by companies shipping industrial supplies, but imports surged by more than twice that dollar amount, settling at $176.8 billion in April. Capital goods imports increased the most, to $49.2 billion, with the foods, feeds and beverages, industrial supplies, capital goods, automobiles and consumer goods also showing growth last month.

- Nicholas Stern, editorial associate, and Brian Shappell, CBA, CICP, managing editor

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