IN MY OPINION: Institute of Management companion Mark Abrahams, CEO of Fenner, urges manufacturers to maintain their creativity in the face of recession

IN MY OPINION: Institute of Management companion Mark Abrahams, CEO of Fenner, urges manufacturers to maintain their creativity in the face of recession - Life is tough for manufacturers. Increasing energy costs and competition from countries with low lab

by MARK ABRAHAMS

Life is tough for manufacturers. Increasing energy costs and competition from countries with low labour costs help to erode profit margins. The continual developments in information technology may allow us greater control of business information, but such information is also more easily accessible to our customers and competitors, which merely increases pressures on margins. And, just when we thought we were getting to grips with these issues, along came recession. Most of the developed world is in recession - at least, from a manufacturing perspective.

The natural response is to seek to expand or to consolidate, and this has led numerous companies to embrace the process of globalisation. In many industries this has resulted in markets being dominated by a number of large multinationals. The competitive pressures and the limited scope for growth perceived by many will ensure that this process continues as companies merge, acquire rivals or become acquisition targets themselves.

It is not surprising, therefore, that most manufacturers feel unloved by the investment community. With limited growth prospects, increasing competition holding back margins and the new management challenges that are being brought about by rationalisation and change, business valuation can be very risky for a prospective purchaser or investor.

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