Executive survey: Manufacturing likely to lag when economy improves

Nearly 60 percent of manufacturing executives believe the economy will improve over the next six months, though they are slightly less optimistic about the prospects for the manufacturing sector.
By Sidney Hill August 6, 2009

Nearly 60 percent of manufacturing executives believe the economy will improve over the next six months, though they are slightly less optimistic about the prospects for the manufacturing sector.

Crystal ball

Those were among the key findings of a recent survey conducted KRC Research on behalf of the Baker Tilly accounting firm.The survey consisted of telephone interviews of 300 senior executives at small, medium, and large manufacturing companies during the month of June.

Cautious optimism was the prevailing sentiment when executives were asked for their opinions on the global economy, with 57 percent saying they expected improving conditions over the next six months.

Ironically, however, only 51 percent said they expect the sector in which they work-manufacturing-to improve over that time frame.

Nearly half the executives surveyed (49 percent) said they expect their own companies to suffer declines in business over the next 6 months, with 12 percent saying they felt their companies were in danger of failing.

These sentiments were most pronounced among executives at small companies (fewer than 100 employees), with 12 percent of that group fearing their companies were in imminent danger of failure.

Only 2 percent of executives at medium size companies fear immediate business failure, while 3 percent of large company executives have that fear.

Considering their feelings on the state of manufacturing, it’s not surprising that 70 percent of executives said they plan to hold the line of staffing levels over the next year.

A majority of executives also plan to reduce costs of the next 12 months, with operational costs (80 percent), supplier costs (65 percent), and labor cost (51 percent) cited as the primary targets.

When it comes to making investments to boost business performance, 51 percent of executives said they are willing to spend on quality improvement systems.

In addition to their views on the economy and business in general, researcher asked for the executives’ view on federal government’s proposal to combat global warning through cap-and-trade legislation.

Sentiment was mixed, with 59 percent opposed to such legislation. That opposition was more strident among executives who said they were familiar with the legislation. Meanwhile, executives with a more positive outlook on the economy and the future of manufacturing were more likely to support a cap-and-trade program.