Despite vexing fears of a recession, manufacturing executives are optimistic about the future, with most planning to increase staffing and spending on technology.
THISIt’s been a tough year for manufacturers, with supply chain bottlenecks, inflation and recession fears. However, a shocking 95% of production managers said they were optimistic about the future, according to a recent poll by Forbes, Xometria and Zogby.
A national survey of 150 production executives in late December found three-fifths (60%) of executives said “the future looks bright” and another third (35%) said they “see the light in the tunnel.” “.
Which of the following statements is closer to your view of the overall current state of your business?
This optimism is surprising given the economic backdrop of persistent inflation that has strained American wallets and created political danger for the Biden administration, ongoing supply chain difficulties that are slowing production, nagging fears of a recession, and near-daily reminders that the Covid-19 pandemic is yet to come. it’s not over.
However, 71% of managers surveyed said sales and earnings were better in 2022 than in 2021, and only 10% said they were worse. While 87% of executives said they believed a recession was at least somewhat likely this year, those numbers were slightly lower than the last poll in August, when 92% said so. Larger companies recover faster than smaller ones, with 82% of companies with revenue over $100 million saying sales have increased, compared with 61% of companies under $100 million.
In terms of sales, was 2022 better, worse or about the same?
Despite the optimism, management was mixed in its hiring and capital spending plans, with some saying they were planning hikes on both and others preparing for cuts. This mixed outlook could be a sign that 2023 will be a year of diversification, with some firms showing significant improvement while others lagging behind.
To deal with continuing supply chain difficulties, the vast majority of managers surveyed (79%) said they had stockpiled goods. They are not alone. Retail inventories reached $765 billion in October, up 21% from the previous year, according to the Census Bureau. High-profile companies including Nike and Gap have reported stockpiling in the run-up to Christmas, with many retailers starting to cut prices early to get rid of goods before the end of the year. In our survey, 89% said they believe supply chain disruptions will continue into the year.
Have you stockpiled goods and materials in anticipation of the 2023 supply chain shock?
Still, with inflation still rising, 89% of companies said they were likely to raise prices this year, and 54% said they would “definitely or very likely” do so. This is in line with our previous poll where 87% said they would raise prices in 2023. Most planning price increases this year (78%) said it would be between 5% and 15%, though a small number (7%) said they expected price increases of more than 20%.
What is the probability of a price increase in 2023?
There were mixed news on the future on both hiring and spending plans. Despite near-daily reports of layoffs, especially among tech companies, more than half of the manufacturing executives surveyed (52%) said they plan to hire more people this year, and another third (36%) said hiring would stay the same. same level. Of those planning to increase staff numbers, 83% said they would hire between 5% and 15% more people. However, two-fifths of respondents (44%) said they were planning layoffs. Smaller companies (less than $100 million in sales) struggled more than larger ones. Among smaller companies, 56% planned to reduce employment, while only 33% of large companies did so.
The majority of respondents (61%) also said their company was raising wages in an effort to attract workers. More than three-quarters (77%) said they provide incentives such as cash, bonuses, profit sharing, gift cards and gym memberships to lure in new hires. These efforts come at a time when U.S. industry is facing a labor shortage that could result in 2.1 million unfilled jobs by 2030. “Higher salaries, profit sharing and a better benefits package,” said one surveyed executive in response to an open question about the incentives offered. “Great pay and growth opportunities within the company,” said another.
Is your company increasing or decreasing wages for employees?
Mixed messages persisted in spending patterns. More than half (51%) said they were making cuts to free up resources in difficult times. However, nearly three-quarters (71%) said they were increasing R&D spending, and another quarter (26%) said R&D would remain the same. Only 3% said they would cut back on such spending from last year.
Technology? While the majority of executives said they were investing in workforce automation (72%) and artificial intelligence (58%), less than half (47%) said they were investing in robotics to deal with future shocks in supply chain. Not surprisingly, larger companies were more likely to make such investments, with 67% of companies with revenues of $100M or more investing in AI and 52% in robotics, compared with 49% and 43% for companies with less than $100 million in sales.
Another way for production management to cope with supply chain difficulties is to move factories closer to home. More than half (55%) said they wanted to restore some of their operations, and nearly all (95%) plan to do so this year. Their moves come as factory closures and reopenings in China due to Covid-19 policy changes have been chaotic, forcing many companies to look for alternatives. Even Apple is reportedly considering moving part of its MacBook lineup from China to Vietnam.
Directors are talking about relocating factories as the vast majority (89%) expect further supply chain disruptions in 2023. Nearly half (47%) said they have difficulty sourcing semiconductors, while nearly two-thirds (64%) found that finding raw materials was hard. More than half (59%) said they had difficulty getting goods and parts from China.
As China backed away from its Zero-Covid policy that shut down factories and shut down supply chains, executives disagreed on how they perceived the impact. “I think it can improve product availability,” said one of them. “It will help us get a much-needed raw material,” said another. But others worried about the downsides. “This is not good. We could have another Covid-19 outbreak,” said one. “Counterfeiting will increase,” said another.
Survey, joint effort Forbes and manufacturing company Xometry, backed by veteran research firm John Zogby Strategies, which aimed to explore how manufacturers fared in an environment of rising costs, supply chain difficulties and a potential recession. This is our second survey; the first was held in August.
The poll’s margin of error was plus or minus 8 percentage points. Since executives make up a small proportion of the population, a sample greater than 100 is considered more than representative.