ILMA Compoundings February 2017 - 8

INDUSTRY RUNDOWN

Perspective
Risky Business Abounds in 2017
By Rae Ann Johnson, Vice President, General Counsel and Secretary, Manufacturers Alliance for
Productivity and Innovation (MAPI)

ertainty is a market's best friend. Companies grow when
resources and constraints are identifiable, supply and
demand trends are predictable, laws and regulations are clear
and risks are mitigated. With certainty, planners can plan, resources
can be allocated and everyone can move along with the business of
growing a business.
Predictability and certainty, however, now seem quaint vestiges
of a long-ago past. Years of meticulous planning can be unraveled at
the speed of a single tweet. As the sun rises on 2017, it appears the
greatest certainty we have is uncertainty.
Even in the midst of swirling uncertainty, however, lie silvery glimmers of hope for manufacturing. In this article, we look at some of the
greatest short-term risks for manufacturers as well as opportunities.

RISKY BUSINESS
Shaky Global Economy
As the latest MAPI Foundation U.S. Industrial Outlook [www.
mapi.net/forecasts-data/us-industrial-outlook-december-2016] shows,
we are forecasting no more than 2 percent annual growth for U.S.
GDP, with U.S. manufacturing output growing at 1 percent or
less, through 2020. This sluggishness stems from manufacturing's
outsized connection to global economic weakness, including
extended slow growth in the Eurozone, China's protracted
slowdown and long-term uncertainty presented by Brexit. These
hindrances to growth are not expected to ease in 2017. Manufacturers will likely remain cautious, extending the drought in capital
investment and continuing to perpetuate the slow-growth cycle.

Murkiness in the U.S. Political Agenda
Changes in the U.S. administration always beget short-term
uncertainty. 2017 will be no different - other than perhaps
to be even more uncertain as to which policies may change, in
which direction and to what extent. In January, MAPI asked our
members about the risks they'll be monitoring in 2017. Legal, risk
and compliance issues are popular concerns; uncertainty abounds
from healthcare law, immigration policy, corporate tax rates and
international trade. U.S. voters ushered in an administration full
of emotion but short on details. Manufacturers face the short-term

FEBRUARY 2017

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risk of legal and regulatory uncertainty and will likely take a status
quo position until the direction of change becomes clearer.

Geopolitical Instability
Economies large and small are in a state of flux. A few years ago,
U.S. interests in BRIC countries focused on economic policy to
ensure steady growth. Now the biggest concerns in those countries
and throughout the Middle East are even more basic and profound
as political regimes pose serious threats to the world's safety and
security. Mounting uncertainty in the U.S. - arguably one of the
most predictable and stable countries - makes the geopolitical
landscape much more threatening.

Security and Safety
With escalating threats surrounding cybersecurity, corporate espionage, travel security and safety in emerging markets, companies
must secure their networks, facilities, personnel and trade secrets
with increasingly robust efforts. This requires extensive planning
and effort as well as huge investments of time and money. Even
those who are prepared can still fail or experience a breach. A

http://www.mapi.net/forecasts-data/us-industrial-outlook-december-2016 http://www.mapi.net/forecasts-data/us-industrial-outlook-december-2016 http://www.ILMA.ORG

ILMA Compoundings February 2017

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