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Are manufacturers missing the boat?

Despite the increasing importance of global markets and foreign competition, many midsized American manufacturers continue to focus primarily on domestic growth, according to a Grant Thornton study.

Among companies with annual sales between $10 million and $500 million, 48% of top executives surveyed said their main corprorate strategy was to grow domestically and not internationally. Another 42% intended to expand both here and abroad, while 7% planned to focus primarily on markets outside the United States.

"More midsized manufacturers should be giving serious thought to how they can compete in a worldwide economy," according to Michael N. Cantwell, chairman of Grant Thornton's national manufacturing industry committee and partner in charge of the study. "For companies that fail to recognize the opportunities, such a limited, insular focus will inhibit growth potential. And for many, selling abroad may be the most practical way to survive an increasingly competitive U.S. market."

Among the 250 manufacturers surveyed, 73% said their toughest rivals were in the United States, while only 24% reported their stiffest competition came from abroad. Cantwell says this finding could reflect manufacturers' recognition that many foreign competitors are already operating in the United States. On the other hand, he suggests, executives may believe "there really isn't anything they can do about foreign competition unless or until it presents a direct threat to their operations."

Japan was reported to be the chief source of foreign competition by 31% of those concerned with pressure from abroad, followed by Germany, which was cited by 16%. Other countries mentioned included the People's Republic of China, the United Kingdom, Mexico, Canada and Korea.
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Journal of Accountancy
Date:Dec 1, 1991
Words:267
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