Small Manufacturing Concerned About General Economy, Taxes, Cost Of Materials

July 20, 2007
Less than 30% will expand their businesses in next two years.

The three leading concerns of North American manufacturers are the general state of the economy, taxes and the cost of materials, according a study by Small Business Research Board (SBRB) based on a survey on the second quarter of 2007.

Health care costs which had been the top concern in the first quarter moved down the list to number six. Energy and fuel costs as well as finding quality employees ranked ahead of health care expenses this quarter.

The result of these concerns is that only 29% of the respondents said they would expand in the next two years. Of those that will expand, 28% said they are considering expanding at current locations, while 21% said they will add more products and 20% indicated they intend to increase customer service. Adding more services was cited by 16% of the respondents, while the addition of locations was cited by only 7%.

The small business owners said adding more automation or technology as well as improving existing automation would be their primary means for enhancing productivity during the coming 12 to 24 months. Improved staff training, hiring of additional employees and incentive programs also were cited as important methods for improving productivity.

"While there are several categories that manufacturers have either no influence or, at best, can exert a relatively modest amount of control such as on the effect of government regulation, it is imperative that a tight reign is sustained on every item in their purview if they intend to improve profitability," said Gregg M. Steinberg, president of IPA, the sponsor of the study.

Even though the SBRB recently reported that its Manufacturing Industry Small Business Confidence Index rose 3.3 points to 40.3 during second quarter, there is great concern about the state of the economy -- now and into the future. Only 36% believe the economy will improve during the coming 12 months versus 40% in the first quarter.

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