Aside from economic conditions, health care costs, new taxes and flat or declining sales are also areas of concern for respondents.
About 63 percent of small and mid-size manufacturers are currently delaying major business initiatives and almost half of all respondents have delayed hiring new employees. A whopping 80 percent of survey-takers expect the Patient Protection and Affordable Care Act to have a negative effect on their business.
“Manufacturers and distributors have been facing these challenges for several years and have shown great resiliency,” said Erik Skie, managing partner for manufacturing and distribution at CliftonLarsonAllen. “The current uncertainty is creating risks but also opportunities for forward-thinking leaders. Even smaller manufacturers are seeing opportunities beyond the U.S. market and are targeting exports for growth in the coming years.”
Those surveyed plan to both export and increase domestic sales while controlling costs and finding operational efficiencies. They also plan to find mergers and acquisitions opportunities, get closer to customers and take advantage of energy tax credits.
Encouragingly, about 60 percent of respondents to the 25-state survey reported higher profits over the last year, while only 22 percent reported reduced profits. Approximately 46 percent of more than 300 survey-takers reported revenue of less than $15 million, 29 percent between $15 and $50 million and 26 percent with more than $50 million.
Some of the business approaches manufacturing leaders mentioned specifically were:
“Build a cash reserve and keep the hiring of new people at a minimum. Look for efficiencies internally with new technologies or outsourcing to free up staff.”
“Reduce costs through layoffs and attempting to restructure various lease and maintenance contracts.”
“Continual reinvestment and evaluation of flow in our plant.”