As U.S. manufacturers struggle to climb out of one of the fastest and deepest order declines in history, credit continues to hinder a manufacturing expansion in 2010. In surveys conducted in June 2009 and January 2010, members of The Association For Manufacturing Technology (AMT) shared that working capital, credit lines and financing for their customers were the top three critical issues their businesses faced. In the January 2010 survey, a third of the members reported that their lines of credit were either canceled or hadn't yet been renewed.
It isn't just small companies that face this challenge. Overall, the banking industry appears to be deserting the manufacturing sector. In a recent leasing/financing workshop held at the American Machine Tool Distributors' Association's annual meeting, a bank executive revealed that many of his competitors would not lend to manufacturers because the risk had become too great, given the penalties for extending risky loans. The banker leading the workshop shared that one large Pennsylvania-based bank is forcing all the regional and local banks it plans to purchase to eliminate their relationships with machinery manufacturers immediately and extend no credit.
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