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In April 2011, CMF anticipated that when our country’s then-major economic headwind finally broke, niche manufacturing in the Rust Belt region would be the source of an economic tailwind that could help lead us out of the recession – with notable implications for investors and executives.

Recent statistics from the region formerly known as the “Rust Belt” demonstrate a steady decrease in unemployment month-over-month, as well as a steady increase in GDP on par with the overall U.S. GDP. Fact is, manufacturing is making a comeback nationally, with niche, highly-skilled, advanced technology manufacturing paving the way.

The National Center for the Middle Market does not see these trends slowing down anytime soon, and, here at CMF, we are noticing consistency in these trends with high relevance for private equity and finance executives:

  • Private equity clients are adjusting their investment theses to target these growing niche manufacturers in the Midwest, particularly in the auto and metal working sectors. Funds should be aware of this trend, whether they are buying or selling a Company, as demand and prices in this sector are on the rise.
  • Many of our CFO candidates with manufacturing backgrounds are receiving multiple job offers, while other CFO candidates without such skills are looking for ways to add manufacturing to their repertoire. CFO candidates still looking for work or looking to advance or change their career might want to consider looking for new opportunities in the Rust Belt region and brush up on their cost accounting.
  • Finally, we hear from our middle-market business clients that there is a shortage of blue-collar skilled workers, particularly in the Rust Belt region. At the same time, we see local training programs popping up, co-sponsored by local niche manufacturers and college/tech schools. It’s clear that the most competitive businesses will need to more proactively integrate employee training and apprenticeship programs in order to have confidence in their ability to scale the workforce with the growing demand for product.

As we continue to monitor these positive economic developments in the Rust Belt, investors and finance executives country-wide could cull strategies and learnings from the Midwest that might enhance performance outcomes in their own geographic regions.

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