Survey Finds U.S. Manufacturers Optimistic Despite Challenges

The results of the third annual Leading Edge Alliance (LEA Global) National Manufacturing Outlook Survey have been released and manufacturers are optimistic.

Eight out of ten U.S. manufacturers expect to grow sales this year, buoyed by their optimism about the strength of regional, national and global economies, according to the 2019 National Manufacturing Survey Report prepared by the Leading Edge Alliance, a global association of 220 accounting and consulting firms.

“Across the board, manufacturers are optimistic about the regional economy, sector growth, and increasing revenue expectations in 2019,” the report states. “Looking ahead, manufacturers expect raw materials, labor costs, lack of available talent, and competition to be significant hurdles in 2019. The tariffs implemented by President Trump provide productivity issues; however, an increase in spending on Big Data and business intelligence are delivering innovative technology for minimizing productivity concerns.”

More than 350 manufacturing executives across the United States and Canada participated in the survey, which includes respondents who produce industrial/machining; transportation/automotive; construction; food and beverage; and other products.

2019 Survey Highlights

• Growth: 81% of manufacturers expect their revenue to increase in 2019, and 61% expect their overall sector to expand in 2019.
• Economy: Optimism for the regional, national and global economies has increased by more than 12 percentage points over the last two years.
• Priorities: Manufacturers’ top three priorities are growing sales, improving profitability and addressing the workforce shortage.
• Challenges: Most manufacturers (52%) cited labor/talent as their greatest barrier to growth, followed by competition (34%) and profitability (25%).

The survey identifies three key growth strategies manufacturers will use to keep their companies on a growth track: technology, mergers and acquisitions, and talent management. 

• Technology: Manufacturers plan to leverage technology as a key to solving productivity concerns; 76% said that they would investigate/prioritize cybersecurity in 2019, and 43% said they would prioritize Big Data/erp solution/IoT.
• M&A: More manufacturers are considering a merger/sale or acquisition in 2019; 21% expect to acquire another business in 2019, and 16% are in the pre-planning stage of a merger or acquisition.
• Talent: Faced with a growing labor shortage, manufacturers have turned to a range of tools to improve hiring and retention with 62% increasing compensation, 39% implementing retention strategies and 35% using internal training programs.

Manufacturing owners and managers should have ongoing conversations with all of their advisors, including their accounting and tax provider, about how to overcome these challenges and achieve their business goals.

“Despite the improved outlook, hurdles remain. Increasing material and labor costs, labor shortages, implementing new technologies, cybersecurity and tax reform are growing concerns of manufacturers going into 2019. Especially now – when manufacturers are considering mergers and acquisitions and developing strategies for growth – having a team of industry-experienced advisors providing manufacturers insight and answers is critically important,” says Yeo & Yeo Principal and Manufacturing Services Group leader Amy Buben.

Read the entire survey report, 2019 National Manufacturing Survey Report.

For more information, please email Amy Buben, CPA, CFE, at amybub@yeoandyeo.com or call her at 989.793.9830.