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Midsized Industrial Manufacturers See Solid Revenue for 2016

Oct. 3, 2016

Continued optimism about revenues and employment as well as increasing demand for flexibility and responsiveness in supply chains is the sentiment expressed by midsized manufacturers in a new study.

The 15th annual Purchasing and Manufacturing Survey, by Prime Advantage, surveyed  750 U.S. manufacturing companies show continued optimism about revenues and employment as well as increasing demand for flexibility and responsiveness in supply chains. Confidence in growing revenues extends into 2017 as well.  

“The results of this survey are incredibly exciting, with the overwhelming majority of our members declaring that revenue will increase or sustain in the coming year,” said Louise O’Sullivan CEO of Prime Advantage.

Here is a summary of the survey’s findings:

Revenues look to stay strong for the balance of 2016

Our survey shows that 2017 will start out strong for manufacturing, with 97% of Prime Advantage member companies expecting revenue to either increase or stay the same in the next 12 months. Overall revenue expectations for the remainder of 2016 find 84% expect to improve upon or match 2015.

Among the 16% expecting this year’s revenues to come in under the previous year, the overwhelming reason is decreased customer demand. Among the respondents predicting growth, 58% indicated that new products are driving the increase. Bringing on new customers is the second most significant reason for increasing revenues, at 23%.

Capital expenditures are sturdy

Investing in business operations has been a priority for 2016, as 86% of manufacturers are at or above plan for capital expenditures. Most respondents expect to continue spending; as 81% believe capital spending will increase or remain at current levels for the balance of the year.

In contrast, the NAM/IndustryWeek and Manufacturing Barometer surveys both see investment intentions in 2016 pulling back with future optimism tempering.

Possible growth barriers

For the third year in a row, respondents selected a lack of qualified workers as the biggest external barrier to business growth, listed by 48%. The NAM/IndustryWeek and Manufacturing Barometer surveys, on the other hand, both indicate some relief in this area over the last three quarters.

An unusual political environment is creating anxiety, as 42%  of manufacturers responded that uncertainty in the federal elections could stymie growth. Concern over legislative and regulatory pressures continues to crack the top three barriers at 35%, although it has become less acute each of the last three years.

Employment outlook is encouraging

Fifty-seven percent of companies embarked on 2016 with plans to hire. Almost all of these have already followed through on those intentions, as 51% have increased headcounts.

More good employment news is to come as 40% of participants said they plan to hire before year’s end. The Manufacturing Barometer survey mirrors these results, but 29% of those participating in the NAM/IndustryWeek survey were not as optimistic as they foresee some level of full-time staff reduction over the next year.

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