Risk and Financial Management Panel FPPA 13 th Annual Convention Sanibel Harbour – Fort Meyers, Florida February 23, 2010.

Risk and Financial Management PanelFPPA 13th Annual ConventionSanibel Harbour – Fort Meyers, FloridaFebruary 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 Reserve9

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

FireFire

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

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Business Continuity Risk Assessment

Analyze the impact of each threat to your businessConsiderations 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 CareEnergy PolicyTaxesEFCA [Employee Free (Forced) Choice Act]Cap and Trade (Stealth Tax)

Five Things to Focus on Now

Innovation Supply ChainPeopleExportingInformation Technology

2010 National Manufacturing and Wholesale Distribution Survey

Demographics:Survey in field March 2 – April 2Similar questions to drive trend reportingPlan to release results by early JuneIssue & Industry reports available by July 1st

Contact Information:

Tom MurphyRSM McGladrey, Inc.Executive Vice President Manufacturing & Wholesale [email protected]

QUESTIONS

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