Even in these uncertain times, manufacturers continue to be optimistic about the future. This was confirmed in a recent study of American Manufacturers. McGladrey, LLP, a Tax and Consulting firm, recently released their 2012 Manufacturing & Distribution Monitor report. The results are based on a survey of over 900 businesses engaged in manufacturing and distribution. Here are some highlights from the study.
Optimistic About Growth
Most of these businesses are "generally optimistic" about the next year. Those businesses who are doing particularly well today see an even brighter future ahead. Not surprising, all companies anticipate most of their growth to continue to come from the U.S. market. Non-U.S. markets have proven to hold less potential in terms of growth. Only 56% anticipate growth from overseas while 82% expect to grow sales in the U.S.
Working through rising costs
All companies are keenly aware of the pricing pressures they face in the next year. Not only do they anticipate continued increases in fuel and transportation costs, but in raw materials and equipment.
In an attempt to hold pricing increases to a minimum, companies are working to become more efficient and are partnering with their suppliers to improve pricing and processes. More than 88% of companies are working to improve efficiencies.
Capitalizing on low cost of capital.
In 2012, two-thirds more businesses plan to increase investment in their businesses versus 2011. Most of this investment will occur in the areas of Information Technology and Equipment/Machinery. Less attention will be paid to physical facilities and transportation investments.
67% of businesses surveyed want to hire more people in the future.... but can they find them?
A recent interview in Industrial Distribution with Karen Kurek, National Manufacturing & Distribution Practice Leader at McGladrey, provides some insight into the employment picture.
According to Kurek, "One of the most important factors is that for the past several years we haven’t done an adequate job in counseling our children about the opportunities that exist in the skills/technical trades." "A larger proportion of our youth should be counseled into considering the technical trades (i.e. manufacturing, distribution, etc.). The types of skills that are needed now at manufacturing companies are much more complex than what they have been in the past. In the 1980s and 90s, high school graduates were able to walk into a factory and find some sort of entry-level position. In the past 20 years, however, U.S. manufacturers have become much more productive, efficient and automated, and they have implemented a lot of technology into their businesses, so even entry-level positions today require a certain skill set. Employees need to know how to run specialized equipment. They need to be able to work as a team, and understand lean manufacturing concepts. Often times, people entering the workforce out of high school don’t have the necessary skill set to enter into a manufacturing company. We don’t have as many vocational/technical career schools as we had in the past. Our children of the past generation have been discouraged from going into manufacturing or the technical trades. When you take a look at some of the large cuts over the past 10 years, people think that there are no jobs left in manufacturing. Actually, right now there are more than 350,000 positions open in the U.S. that manufacturers cannot fill."
Even with these difficulties, a majority of businesses say they plan to hire new people. Manufacturers seem to be the most proactive in grooming the talent they need through school collaboration and apprenticeship programs.
Summing it up.
All the major indicators in this survey are headed in the right direction. It may be slow progress, but it is progress. What lies ahead for 2013 will be largely impacted by fiscal challenges faced within this country and throughout the world. However, it is good be on the upside of a manufacturing sector that has seen it's share of downsides.
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