Few industrial companies were prepared for the swift economic decline in 2001. The losses led to industry wide cost control measures including off-shore sourcing. Wise companies also implemented greater risk management oversight. As the economic cycle rebounds and customers once again invest heavily in capital equipment, industrial companies should continue to be careful of risks as they pursue expansion opportunities.
In the current growth phase, industrial companies have been expanding into new regions, industries, product lines, and services. At the same time, they have been dealing with industrywide changes that pose additional risks to their business. The primary risks faced by industrial manufacturers and distributors are:
- Rapidly expanding into new areas to maximize growth opportunities while minimizing exposure to losses and write-offs
- Winning and maintaining business since the bar has been raised for product quality as well as delivery and service reliability
- Bidding profitability on complex product and service contracts that carry penalties for poor performance
- Ensuring full compliance to all environmental regulations around the globe