US Manufacturers Optimistic Despite Challenges

U.S. manufacturers have a largely optimistic outlook for the coming year despite a series of ongoing challenges according to a national survey.

Marcum’s 2023 National Manufacturing Survey found that 71% of manufacturing leaders felt confident or cautiously optimistic about revenue growth in the next 12 months.

Thirteen percent had a neutral outlook, while 16% said they were concerned or “very worried” about revenue growth.

“Concerns about rising interest rates, inflation, labor shortages, and potential slowdowns highlight the challenges ahead,” the survey report noted.

Revenues

Seventy-two percent of surveyed manufacturers reported revenue growth of at least 5%, down 14% from the previous year, which the report said hinted “at an early slowdown.”

Sixteen percent saw flat growth (compared with 13% in 2022) while 12% posted losses, up from 3% the previous year.

When asked how they were planning for a potential recession, 74% were managing cash flow, followed by expanding planning (58%), managing capital (51%) and boosting sales and marketing (45%).

The report showed that just 38% plan to raise prices to offset rising interest rates, compared with 70% the previous year.

“The worries about interest rates and a potential recession have also made manufacturing companies much more careful with cashflow,” the report noted.

“Particularly as many respondents reported that it was much more difficult to pass through higher expenses for materials to customers.”

Workforce

Workforce planning is another area where manufacturers are adopting a cautious approach, based on the survey’s findings.

While last year’s survey showed 63% of manufacturers planned to boost hiring by 5% or more, only 36% have similar plans this year.

“Some of this could be driven by gains in operational efficiencies thanks to AI and technology, but we believe a good portion is based on the need to manage cash reserves and/or lower growth projections,” the report noted.

Seventy-five percent of manufacturers report difficulties filling open positions.

Seventy-five percent of surveyed manufacturers report difficulties filling open positions, “noting it as a critical issue.”

(CBIA’s 2023 Connecticut Manufacturing Report found that 86% of manufacturers report difficulty finding and/or retaining employees, with 48% calling the state’s labor shortage the greatest obstacle to growth.)

Two-thirds of U.S. manufacturers are increasing wages to fill open positions, followed by bonuses (41%), improved benefits (45%), onsite or paid training (28%), tuition reimbursement (17%), and a better work-life balance (49%).

Supply Chain, Technology

Supply chain issues remain a challenge, with 64% reporting delayed shipments and 42% saying disruptions led to missed sales.

Manufacturers are increasingly turning toward artificial intelligence and other emerging technologies such as enterprise resource planning systems to drive operational efficiency and mitigate challenges.

The survey found a marked rise in the number of companies planning to invest in technology in the coming year.

Manufacturers are increasingly turning toward artificial intelligence and other emerging technologies.

Over half (51%) plan a new automation or technology project and 24% will implement or upgrade an existing ERP system.

“In this year’s survey, we see challenges but also significant opportunities,” said Jonathan Shoop, who leads Marcum’s midwest consumer and industrial products practice.

“Many are gearing up to manage cash flow better, invest in technology, and re-strategize workforce planning, and it’s clear that a mix of rapid tech advancements and economic uncertainty is the motivating factor.”