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Posted by Manufacturing Innovation Blog | 03 / 26 / 15 0 Comments

This article written by Ken Voytek, the Chief Economist at NIST/MEP, originally appeared on the NIST/MEP blog on January 21, 2015

I often keep myself up at night by noodling over some obscure question or asking myself why I ate that spicy lunch item. This got me thinking. What keeps MEP clients up at night? It turns out there’s already data for that so I can rest easy and get some sleep.

As part of the NIST MEP client survey process, MEP center clients are asked to identify the top three challenges their companies face over the next three years.  We’ve been asking this question for six years now and more than 41,000 clients have responded. The challenges they identify provide an interesting portrait of what keeps manufacturers up at night. They identify a host of issues they are facing. Moreover, it is interesting to see how these issues have changed over time.

Continuous Improvement

Seven in ten clients cite continuous improvement most frequently as their top single challenge in FY 2014 although it has dropped bit since FY 2009. However, the FY 2014 data include important shifts in other key issues that are worth highlighting.

  • Taken separately the dual challenges of growth (53 percent) and product development (just under 48 percent) are ranked second and third respectively.  However, taken together over 75 percent of clients cited one or the other, which would make it the top challenge facing clients.
  • Over time, the share of clients citing workforce needs as a key issue has doubled. In FY 2014, over 40 percent of clients reported employee recruitment and retention as an important challenge compared to 19 percent in FY 2009.
  • In addition, technology needs, supply chain needs, and product innovation/development are more important than they were five years ago. Nearly 48 percent of clients cited product innovation and development as an important challenge facing their company, up from 45 percent five years ago. The share of clients citing technology needs as a challenge rose by 3 percentage points – rising from roughly 10 percent in 2009 to nearly 14 percent in 2014.
  • On the other hand, fewer clients are now reporting that sustainability and financing are important challenges.  For instance, the share of clients identifying financing as a challenge fell from 18 percent in 2009 to roughly 12 percent in 2014. This likely reflects changes in credit becoming more available and the fact that many firms have cleaned up their balance sheets. Sustainability as a challenge fell by about 4 percentage points but more than one in five clients still cite it as important challenge.

Challenges Facing MEP Clients

These shifting patterns reflect underlying economic conditions, industry trends, and company needs as they identify and respond to new market and growth opportunities. Ultimately, as we begin this New Year, having some information on the toughest tasks facing smaller manufacturers and how they are evolving is more than just a numbers game.  It adds up to a useful view on trends that can help guide MEP’s work and priorities for the future. In addition, we also note that the challenges differ in important and significant ways across industries, firm size, and other characteristics. We will focus on those in future posts.

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