VOL 1

INDUSTRY PULSEMANUFACTURING & DISTRIBUTION

SIKICH.COM

2021 Q1 MANUFACTURING & DISTRIBUTION SURVEY RESULTS

In 2020, manufacturers and distributors learned how to adapt to an unprecedented global pandemic. This year, they’re taking those lessons learned and positioning their companies for growth in a redefined marketplace (though, growing pains are inevitable).

In the Sikich Industry Pulse, our optimism index shows industry executives are hopeful about the coming six months. Their hope is coupled with the reality of continued hiring challenges and a heightened focus on validating and protecting their data. To overcome these challenges, I urge industry leaders to embrace automation, adopt innovation and challenge the status quo.

We’re challenging our own status quo by committing to survey the manufacturing and distribution industry multiple times throughout 2021, providing real-time data for our clients and colleagues.

Stay tuned!

JERRY MURPHY CPA, CMA, CGMA

PARTNER-IN-CHARGE, MANUFACTURING & DISTRIBUTION SERVICES

In March 2021, Sikich surveyed more than 120 manufacturing and distribution executives from across sectors and the nation.

2

INDUSTRY EXECUTIVES FAIRLY OPTIMISTIC ONE YEAR

AFTER PANDEMIC SHOCK.

Stay tuned for regular updates to our industry optimism index for trend data.

DESPITE NATIONAL UNEMPLOYMENT RATE, FILLING OPEN POSITIONS

STILL A CHALLENGE.According to the U.S. Bureau of Labor Statistics, “The [national]

unemployment rate edged down to 6.0 percent in March. The rate is down considerably from its recent high in April 2020 but is 2.5 percentage points

higher than its pre-pandemic level in February 2020.”

3%1% 2% 1%

8%

14%

31%

26%

10%

5%

1 2 3 4 5 6 7 8 9 10

OPTIMISM ABOUT BUSINESS PROSPECTS IN THE NEXT 6 MONTHS

56%OF RESPONDENTSPLAN TO INCREASE THEIR WORKFORCE IN THE NEXT SIX MONTHS

But only 5% are completely confident in their ability to obtain the talent required

Level of Optimism (1 = not optimistic at all, 10 = extremely optimistic)

3

UNCERTAINTY LOOMS OVER EMPLOYEE RETENTION CREDIT.

BACKGROUND: The Employee Retention Credit (ERC) was designed to provide an incentive for employers impacted by the pandemic to retain their workforces. Different than the Paycheck Protection Program Loans, the ERC aims to provide payroll tax credits that could be realized immediately by employers if they met various requirements.

BUSINESS SALES ALREADY ON THE HORIZON? SUCCESSIONS PLANS

LARGELY UNCHANGED BY PANDEMIC CONDITIONS.

70% of respondents said their business succession plans remain the same, and our experts want to know more.

“ We’ve seen plenty of manufacturing companies considering or actively selling part or all of their business in the near future and have to question if those sticking with pre-pandemic succession plans already had a sale or tuck-in in their sights because the M&A market is hot.” – SIKICH EXPERTS

4%

7%

6%

13%

70%

Moving up plans by 3-5 years

Moving up plans by 1-2 years

Delaying plans by 3-5 years

Unsure

Plans remain the same

0 10 20 30 40 50 60 70 80

SUCCESSION PLAN SHIFTS AS A RESULT OF PANDEMIC CONDITIONS

of manufacturers and distributors don’t plan to take advantage of or are unsure if they qualify for the credit

4

ROOM FOR IMPROVEMENT IN USING AND PROTECTING DATA.

Nearly ¾ of executives are fairly or completely confident in using their existing data to make business decisions

More than half of manufacturers and distributors experienced at least 2 information security events in the past 12 months.

TOP-REPORTED INCIDENTS:

“ We’re most alarmed at the amount of ransomware events the industry experienced. A ransomware event has a lot of lasting ramifications, from permanently losing critical data to exposed sensitive customer and employee data to paying a hefty ransom to recover the data – these attacks are no joke.” – SIKICH EXPERTS

81% 42% 9%EMAIL PHISHING

SCAMSRANSOMWAREUNEMPLOYMENT

FRAUD

DATA CONFIDENCE

32%

40%3%

11%

14%Somewhat confident

Slightly confident

Not confident at all

Completely confident

Fairly confident

5

ABOUT SIKICH LLPSikich LLP is a global company specializing in technology-enabled professional services. With more than 1,000 employees, Sikich draws on a diverse portfolio of technology solutions to deliver transformative digital strategies and ranks as one of the largest CPA firms in the United States. From corporations and not-for-profits to state and local governments, Sikich clients utilize a broad spectrum of services* and products to help them improve performance and achieve long-term, strategic goals.*Securities offered through Sikich Corporate Finance LLC, member FINRA/SIPC. Investment advisory services offered through Sikich Financial, an SEC Registered Investment Advisor.