Survey: Small, Midsize Manufacturers "Conservatively Optimistic"
March 5, 2014
With 2014 in full swing, many are looking to the manufacturing sector for an indication of how the economy will perform this year. Sage North America recently conducted a survey of small and midsize manufacturers to find out their business outlooks and trends they expect, as well as investment priorities.
According to the second annual Sage Manufacturing Survey, small and midsize businesses are conservatively optimistic about business growth. More than one-third of surveyed manufacturing firms in the small and midsize business (SMB) sector expect the economy to strengthen in the next six months, while half expect it to remain the same. The survey was conducted in December amongst 215 SMB respondents in the United States.
These numbers are up from Sage’s last manufacturing survey -- only 27 percent anticipated an improvement in the economy last year compared to 36 percent this year. Almost half (48 percent) of respondents expect the economy to remain relatively the same over the next six months.
During the same period, 49 percent of surveyed manufacturers expect orders to increase, 42 percent believe that production will rise, and 25 percent anticipate more exports.
The reasons for all the anticipated growth? There were three main areas that manufacturers believed would positively impact their business in the next six months:
- Stronger domestic demand (68 percent)
- The global economic recovery (36 percent)
- The reshoring of manufacturing (26 percent).
In this new climate, manufacturers are making plans to refocus their efforts on specific areas that will have the biggest impact on their bottom line.
Forty-six percent of respondents are looking to invest to support their top priorities in the next six months, including:
- 53 percent are looking to invest in increasing sales
- 36 percent are looking to invest in developing new markets
- 36 percent are looking to invest in increasing productivity.
The results from the Sage Manufacturing Survey were echoed in other industry reports, as well. Jobs reports from the Bureau of Labor Statistics continue to show that the manufacturing sector continues to add jobs, and, according to the White House, manufacturing has added 622,000 jobs since early 2010, including more than 80,000 over the past four months. The sector is expected to contribute to job growth in 2014.
The outlook was not entirely rose-colored, however. In the survey, manufacturers revealed some areas that still hold uncertainty for them.
When asked about influencers that could affect a downside for their businesses in 2014, respondents in the Sage Manufacturing Survey pointed out three areas that could have a negative impact on their businesses. They included:
- A domestic economic slowdown (53 percent)
- Additional environmental or financial regulations (35 percent)
- A global economic slowdown (29 percent).
If this year’s survey serves as indication of things to come, then the modest growth seen in the manufacturing sector in the past few years is likely to continue.
Joe Langner is executive vice president of Mid-Market Solutions for Sage North America. A seasoned executive with more than 25 years’ experience, he is responsible for driving the Sage Mid-Market business strategy. This encompasses the Sage 100, 300, and 500 ERP solutions, as well as Sage ERP X3 and Sage CRM. Prior to joining Sage, Mr. Langner was with Ellie Mae, a provider of enterprise solutions for the residential mortgage industry, and before that, Dun & Bradstreet.