So Why Cant Businesses Get Loans When Interest Rates Are at Historic Lows?
11/23/2009 6:50:00 PM
"Is the Manufacturing Economy a Turkey without Stuffing?"
DEARBORN, Mich. --This is a statement by Mark Tomlinson, Executive Director And General Manager of the Society of Manufacturing Engineers.
It's been over a year since the banking meltdown and the severe decline of our manufacturing economy. We have seen massive job losses and complete restructuring of many of the icons of manufacturing. A stimulus package was approved by our national government. The restructuring of the banking industry and the GM and Chrysler automotive companies has been talked about in the press for months.
When we look at the key indicators of our economy, we're starting to see some improvements in GDP and the production of goods and services. One might think we are on our way to recovery!
The question we must ask ourselves is: Are we seeing a golden brown turkey as it comes out of the oven only to discover there is no stuffing to go with it?
When we investigate what the restructuring of the banking systemand the stimulus package has really done to support small- to medium-sized manufacturers and its workforce â the engine that drives the economy â we might find an empty plate. The outlook for the next six to nine months is slow to no growth. We'll continue to see companies forced into bankruptcy and shedding their valuable workforce.
Why? Because in all the hype around stimulus and banking restructure, we have made it more difficult for companies to survive the long term. Manufacturing companies used up their reserves when purchase orders were few and far between. Now that orders are beginning to trickle in, they find themselves in need of loans to ensure cash flow as they bring new and existing products to market â typically an 18-24 month span.
So Why Can't They Get Loans When Interest Rates Are at Historic Lows?
It's simple. In this post-boom financial era, banks are not allowing companies to use their existing equipment and machinery as collateral against the loan.
Manufacturers are also finding barriers when they attempt to train their workforce for the new economy. While many skills are transferable, there is still a need for training when transitioning from traditional manufacturing sectors such as automotive into growing sectors such as medical device, aerospace and energy.
Banks have made it virtually impossible to get these types of loans, and finding valuable, accessible training dollars is like finding the wishbone in a large turkey.
So the Question Is: Why Is This Not Being Talked About Inside the Beltway?
Does Manufacturing Czar Ron Bloom have these items on his agenda when he talks to thepresident? When will programs be introduced to support this critical sector of the economy?
If we don't eliminate the financial roadblocks to manufacturing soon, we may not be eating turkey at all next year, never mind thestuffing.
For a complete version of the BUSINESS WIRE press release: http://www.businesswire.com/news/home/20091123006137/en