Manufacturing Survey Shows Surging Optimism About U.S. Economy

Government gridlock and uncertainty about regulation cited as continuing risks.

Nearly 60% of middle-market manufacturing and distribution executives are optimistic about the U.S. economy, according to the latest quarterly survey from McGladrey & Pullen, a tax and consulting firm. That is a 146% increase from the fall 2011 survey.

Some 59% of the executives said they were optimistic about the U.S. economy, compared to 24% in the fall. Optimism about the world economy increased significantly, as well, with 27% indicating optimism this winter, compared to 17% in the fall," said Karen Kurek, national manufacturing leader for McGladrey & Pullen. "These increases in optimism are good signs for 2012.

The survey found automotive and transportation executives more likely than others to be optimistic about their companies, and automotive and industrial machinery executives more likely than others to be optimistic about their industries.

The number of participants who characterized their companies as "thriving and growing" averaged 45% throughout 2011 nearly twice the level of those who responded positively in 2010 (24%), and comparable to 2007 levels (48%),the survey found. Moreover, the number of companies in decline is much lower than in 2007(3% vs. 9%).

While the resurgence of U.S. manufacturing has "largely focused on large, household-name companies who have generally expressed optimism about the direction of the economy in recent weeks, said Kurek, she noted that her firm's survey focuses on the middle-market companies that account for the vast majority of the countrys manufacturing jobs. Approximately 87% of the survey participants represent privately owned or private equity-owned organizations, she explained.

The increased optimism among manufacturing executives was tempered by several factors, including federal government gridlock, access to free trade agreements, the lack of a meaningful energy policy in the U.S. and the uncertainty of regulations due to the impending election this fall.

Executives also expressed concern about the challenge of finding skilled workers. Kurek noted that 60% of survey participants expect to increase their workforce, compared to 50% in the fall. "The need for a skilled workforce could be one of the greatest impediments to growth for U.S. manufacturers and distributors, and makes it difficult to compete in the global market," Kurek commented.

The survey found that best practices identified by thriving and growing companies over the past year include: a focus on process improvement, investment in efficient equipment, evaluation of their risk management programs, identifying and managing their top talent, pricing their products based on value, understanding the impact of capital strategy issues, and establishing global compliance policies.

"Embracing these best practices will help position organizations to join the ranks of thriving and growing companies that are seeing increased productivity and profitability," said Kurek.

Responses to the survey, the winter 2012 McGladrey Manufacturing and Distribution Monitor, were collected between Jan. 11 and Jan. 25, 2012. Results showed some companies posted the best performance in their histories during 2011.

See also:

Survey: Healthy Manufacturers Tend to Export

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