A new report from Wisconsin-based accounting firm Schenck shows manufacturers nationwide have high hopes for this year.
According to the 2018 Leading Edge Alliance National Manufacturing Outlook Survey — published in partnership with Schenck — manufacturers have a more positive outlook for 2018 than they did for 2017.
Over 450 manufacturing executives participated in the survey in October 2017, with backgrounds in machining, automotives, construction, food and beverage, and other manufacturing sectors. Over half of respondents came from the Midwest.
The top three priorities for these executives were growing sales, cutting costs and addressing the talent gap. Over half of respondents said the labor shortage is the greatest risk or barrier to growth, and over half plan to increase hiring in 2018.
Optimism is high for revenue, with 81 percent of manufacturers saying they expect revenue to rise in 2018. And 72 percent say organic growth within the United States is their best opportunity to boost sales, while 44 percent expect to grow sales by developing new products or services.
Compared to 2017, optimism for sector growth has more than doubled, reaching 62 percent. The percentage expecting sector contraction dropped from 10 percent in 2017 to 4 percent in 2018.
Food and beverage construction materials had the highest level of confidence in future growth at 71 percent. Construction was nearly as high with 69 percent, while machining/industrial was at 59 percent, and automotive/transportation was at 52 percent.
Karin Gale, a shareholder and team leader for manufacturing and distribution at Schenck, says manufacturers are “focusing significant resources around cutting-edge technology” to reduce risk and boost sustainability.
Seventy-five percent of respondents said they will investigate or prioritize cybersecurity in 2018. And 64 percent said they will spend between 1 percent and 10 percent of revenue on research and development, while 3 percent said they will spend over 10 percent of revenue. Another 33 percent say they will spend less than 1 percent on R&D.
“Manufacturers, long known for their ability to adapt in an evolving industry, continue to innovate effectively,” she said. “In today’s competitive global market, finding ways to reduce cost, improve productivity and drive revenue is critical.”
The biggest category for predicted spending increases was personnel expenses, including wages and training. The second biggest was advertising, marketing and sales promotion; and the third biggest was technology.
Across all levels — regional, national and global — manufacturers’ optimism increased over 2017. Regional confidence went up 11.1 percent; national confidence went up 18.1 percent; and global confidence went up 13.7 percent.
–By Alex Moe