“Manufacturers are more optimistic about the economy in 2018 than they were for 2017,” according to 2018 National Manufacturing Outlook and Insights from LEA Global.
In the survey of more than 450 manufacturers, executives rated their optimism about the U.S. economy at 69.3 out of 100. In addition, 81% of manufacturers expected their revenue to increase in 2018, while only 3% expected a revenue decrease.
Executives were also optimistic about their industries, with 63% expecting their sectors to grow in 2018, compared to 30% in 2017. Only 4% believed their sectors would shrink in 2018, compared to 10% in 2017. The most optimistic manufacturers are in the food and beverage or construction material industries.
Priority: Growing Sales
The top priority for 70% of manufacturers is growing sales. Other high priorities include cutting operational costs/improving profitability, addressing the workforce shortage, finding new markets for products/services, and developing new products/services.
Almost 75% of manufacturers see organic growth within the U.S. as their primary opportunity to grow sales. Also, 44% expect growth from new product or service development. About 23% see growth coming from joint ventures/strategic partnerships and 22% anticipate organic growth in markets outside the U.S.
Along with growing sales, cutting costs is an important priority, although balancing sales growth with cost cutting can be a challenge.
The only expense a large percent (25%) of manufacturers believe will decrease in 2018 is taxes. However, 56% expect tax costs to remain the same as 2017, with 19% expecting increased taxes. Most manufacturers anticipate labor, materials, and technology costs will increase, with 81% of manufacturers envisaging higher labor costs.
The top technology focus for manufacturers is cybersecurity. Also driving manufacturing technology investments in 2018 are productivity and improving customer service.
Barriers to Growth
When asked about barriers to growth, 55% of manufacturers said labor, while 42% indicated competition. Other barriers for some manufacturers were operations, materials costs, technology, and disruptions from online markets like Amazon and major distributors.
Although 50% of manufacturers plan to increase hiring, finding skilled labor is more difficult with the growing economy. Most manufacturers will try to attract talent by offering more money. Other strategies include internal training programs, reducing turnover, and more deliberate succession planning.
The report concludes, “Businesses must continue to identify opportunities and utilize employee intellect, creativity, and commitment to develop and implement strategic plans and processes that will lead to success in 2018 and beyond.”