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Industrial and Manufacturing

The Industrial and Manufacturing sector is large and diverse. The sector provides much of the equipment found on factory floors around the world today and its products help manufacturers large and small do more with less. More power with less footprint. More control with less labor. More output with less cost.

In today’s global economy, similar challenges face all sector players; increased costs for oil, natural gas, steel and copper are squeezing margins - unless offset by pricing and surcharge increases - and customer reluctance to invest in new equipment has intensified the importance of aftermarket services.

Sectors include:

•    Aerospace and Defense
•    Transportation and Logistics
•    Diversified Industrials
•    Paper & Packaging
•    Industrial Services
•    Industrial Automation
•    Construction & Materials
•    Specialty Products
•    Industrial Manufacturing
•    Electronics & Electricals

To no surprise, China was once again ranked the most competitive nation in the area of manufacturing, and is expected to be in the same position through 2017. International growth through acquisitions, joint ventures and alliances are also reshaping the industry. Under these conditions, new corporate strategies and processes are unfolding.

To bolster core product offerings or expand geographical reach, some players are seeking acquisition candidates, while others are looking to divest underperforming units. Calls for corporate accountability have driven new regulations around internal controls and everywhere, industrial manufacturing companies are trying to figure out how to get the most out of their IT investments.

Looking forward, the outlook for the global economy remains uncertain. Copper prices are expected to remain high because of supply side difficulties and will remain high until the global inventory pipeline is replenished most likely after 2014-15.  All manufacturers and distributors are also keeping an eye on the price of oil - consequently, the cost of doing business.

Rising costs and the weakness of the dollar also continue to affect revenue growth, driving consolidation as companies attempt to mitigate market risk through economies of scale and scope, while concentrating their operations on more profitable sectors. Unnecessary complexity cripples companies.

Due to advancing globalization, declining trade barriers, and an increasingly mobile workforce, the transport and logistics industry continues to inch-upward in slight growth. By expanding their service offerings both upstream and downstream, transport companies and logistics service providers are becoming masters of their supply chain.

Local manufacturers, with contraction in the supplier base, are finding they must retool and restructure to gain market share and stay competitive as they compete with larger firms who continue to move towards global platforms. Suppliers, being asked to accept more risk, are taking on wider responsibility for managing the supply chain and are beginning to globalize their operations. Risk is being passed down the chain.

To stay competitive, companies must continually monitor a host of critical business issues including those involving information and technology, supply chain security, mergers and acquisitions and global competition. Across all sectors of industry, there is erosion of local domestic monopolies raising the importance of customer management and supply chain management.

At Lexington, we look to partner with domestic and international companies who favor sound risk management processes and state-of-the-art technologies, global alliances or contracted partnerships, effective security and risk management systems and solid growth and acquisition strategies.

We believe the overall level of M&A and leveraged buyout (LBO) activity in this sector is poised to remain solid as companies pursue strategic acquisitions to drive growth, expand product offerings or geographic reach, or to remove excess capacity in their industry.

Our professionals can assist companies in garnering the financing options they need whether it be packaging materials, plastics, aerospace equipment, demand-driven manufacturing, advanced machinery, specialty components or any number of the other various industrial products and services.