Wednesday, August 19, 2009

What will the next six months bring?

A recent survey of senior U.S. manufacturing executives examines their midyear outlook for the U.S. economy, attitudes toward the proposed cap and trade legislation, and current international presence and expansion plans. Baker Tilly commissioned the survey and KRC Research conducted it. Overall, the survey indicates a tale of two manufacturing sectors: the winners and the losers.

Three-hundred senior executives of small, medium and large U.S. manufacturing companies participated in the survey through telephone calls between June 2 and June 22, 2009. Here’s a snapshot of the survey’s key industrial economic outlook findings:

Cautiously optimistic – Nearly six in 10 senior manufacturing execs (57 percent) have a positive outlook for the U.S. economy over the next six months, but slightly (51 percent) more pessimistic about the outlook for the manufacturing sector.

Rightsizing – Over the next six months, 70 percent of manufacturers said they plan to keep staffing levels the same.

Brighter days ahead for some – About half of executives (49 percent) expect their firm’s performance to decline, with 12 percent (disproportionally small businesses) saying their firm is in danger of failing. Customer demand is cited as the top challenge to growth, followed by access to loans and credit, over the next 12 months.

Economic survival strategies – Over the next 12 months, the majority of manufacturing execs expect to reduce costs across the board, such as operational (80 percent), supplier (65 percent) and labor (51 percent).

Staying the course – Despite pressure to reduce costs, executives are continuing to invest in their companies. The most common investments are in quality improvement systems (51 percent).

Bargain hunting – Among executives with plans for M&A activity, 85 percent report no change in their plans, 12 percent plan to increase and 3 percent plan to decrease it. Among executives whose firms derive some revenue from outside the United States, 80 percent said most of their new customers over the next three years would come from domestic markets. However, more than one in four executives from large manufacturers cited most of their new customers will come from outside the U.S. during the next three years. For companies that conduct business overseas, China (44 percent) and Mexico (40 percent) were cited as countries that will play an increasing role in their global growth strategies during that same period.

The survey also showed that most manufacturing executives (59 percent) generally oppose legislation that includes a greenhouse gas emissions cap and trade system, but a sizable pocket of soft support exists among some executives (32 percent), especially those who are more optimistic about the U.S. economic recovery and the manufacturing sector.

See the executive summary of the report, and let me know your thoughts for the next six months. Are we done with the worst yet, or have we still not reached the bottom? Are we ready to take off and soar high? Will it be an easy or difficult takeoff?

—By Sahely Mukerji, news editor/managing editor, Glass Magazine


Anonymous said...

Look for it to tank once it rebounds. Urkel has the plan...cap and tax....Did I say That?

Anonymous said...

summer is over, its time for change