Optimism for economic growth in the near future
91% of manufacturing executives are optimistic about the growth of their company in coming months
Senior management at U.S. manufacturing companies are significantly more optimistic about their own companies’ growth than they were just three months ago in November, according to a Grant Thornton LLP February survey. Nine in 10 (91%) report that they are optimistic about their companies’ growth in the next six months, up from 81% in November.
As for the economy, 60% believe that the U.S. economy will improve in the next six months, up from 49% in November. However, those planning to increase hiring in the next six months saw a drop to 44% in February from 49% in November.
“We believe that the decrease in expected hiring despite an overall high level of optimism is because manufacturing executives feel some uncertainty about the future of manufacturing in the U.S.,” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products and a member of the Board of Directors of the National Association of Manufacturers (NAM). “These executives believe that the United States government has no battle plan to make American manufacturing more competitive in order to create more good-paying jobs. In fact, to the contrary, they believe Washington has created a climate that has made American manufacturers less competitive over the years.
“Rather than spending scarce resources on employees, manufacturing executives are spending on capital equipment purchases and technology to improve productivity and lower costs in an effort to be more competitive globally,” continued Gruenes.
With regard to reducing the U.S. government budget deficit, manufacturing execs favor cutting spending 4 to 1 over raising taxes.
In order to reduce U.S. government budget deficits…
NAM has put forth to the current administration a “Manufacturing Strategy for Jobs and a Competitive America” that includes the following key tenants:
- Create a tax climate that is competitive — The United States has the second highest statutory tax rate among the major industrial countries (Japan has the highest rate but has proposed a reduction, leaving the U.S. with the highest statutory rate).
- Stop the continual expansion of federal mandates and labor regulations that increases costs to the employer and discourages the hiring of new employees.
- Implement a fair approach to legal reform. Direct tort costs account for almost 2% of GDP in the United States — the highest in the world.
- Create a regulatory environment that promotes economic growth. Current laws impose substantial compliance costs never anticipated by the lawmakers.
- Enact tax provisions that will stimulate investment. For example, make the R&D tax credit permanent and increase the rate.
- Enact pending trade agreements quickly to reduce barriers to U.S. exports.
- Support health care reform that drives down costs.
“Based on my discussions with manufacturing executives, they support NAM’s strategy, but are skeptical that the current administration will act on their recommendations,” concluded Gruenes.
Grant Thorton LLP
- Edited by Amanda McLeman, Plant Engineering, www.plantengineering.com
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Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey