Raw material and energy costs are biggest threats to manufacturing businesses

Research from Grant Thornton International shows that the increasing costs of raw materials and energy are having major impacts on cost pressures for manufacturers. Globally, 61% of surveyed businesses reported being most concerned about raw materials costs and 45 % reported energy costs.

Turkish manufacturing businesses are the most concerned about energy costs in the next 12 months with 82% of respondents expecting these to have a major impact on cost pressures. Despite being a major oil producing country, 61% of manufacturers in Mexico cite energy costs as a concern. Australia and Brazil, also energy producing countries, are least concerned about energy costs, with 20% and 23% expecting them to have a major impact.

Alex MacBeath, global head of Privately Held Business services says: "The management of energy consumption is key to tackling global warming - reduction in costs is the result. When we asked manufacturers what they were doing, almost two thirds reported taking measures to reduce their energy consumption. They reported installing energy saving lighting, motion detectors, insulation and measures to ensure that IT equipment is turned off while not in use to cut down on usage and costs. Over half of responding manufacturing businesses are investing in energy saving plant and machinery."

Globalisation is being perceived as a threat to some manufacturing businesses. According to the report, manufacturers in Thailand, Australia and New Zealand see globalisation as a threat rather than an opportunity. This indicates increasing concerns about greater competition from Asian manufacturers.

Unsurprisingly, Asian manufacturers are among the most positive in regards to globalisation. Malaysia and India head the list having responded forcefully to the need to compete in the international manufacturing market. It is interesting to note that while mainland China has established itself as a highly competitive manufacturing base, a significant proportion of mainland Chinese manufacturers regard globalisation as more of a threat.

Robert Quant, partner at Grant Thornton Australia says "Rapid growth in China is proving both a blessing and curse for business in Australian and New Zealand.

Increased demand has lead to higher production in the Australian resources sector, fuelling the mining boom and strong economic growth. However, Australian manufacturers are having difficulties competing with China's ability to produce low-cost goods and are being constrained by shortages in skilled labour and the lowest unemployment levels for decades."

Grant Thornton International started a major annual survey of the attitudes and expectations of small and medium-sized businesses in 1992 called the European Business Survey (EBS). In 2003 the research project was widened to an international perspective covering medium-sized businesses and renamed the International Business Owners Survey (IBOS).

In 2007, the survey s name was changed from IBOS to the International Business Report (IBR). The IBR survey draws upon 15 years of trend data for original EBS participants and 5 years for original IBOS countries. The 15 year trend data is available for: France, Germany, Greece, Ireland, Italy, Netherlands, Poland, Spain, Sweden, Turkey and the UK, while the 5 year trend data is available for Australia, Canada, Hong Kong, India, Japan, Mexico, Singapore, South Africa and the US.

Grant Thornton International will donate US$5 to UNICEF for every completed IBR questionnaire. In 2007, this resulted in a donation of US$36,465.

The research was conducted by Experian Business Strategies Limited. To find out more about IBR and to obtain details of IBR reports and results please visit www.internationalbusinessreport.com.

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