Companies Resolve to Improve Performance

Leadership and manpower availability are key challenges.

While many parts of the U.S. economy are nowhere near pre-recession levels of performance, approximately 70 percent of respondents to CliftonLarsonAllen’s third annual survey of U.S. manufacturers and distributors indicated they are at or above pre-recession levels of profitability. Most respondents also indicated that working capital requirements (including inventory) and availability of credit have not been deterrents to growth over the past two years.

Exports account for half of overall U.S. economic growth since the end of the recession, yet most respondents do not see a meaningful difference between what it takes to compete domestically and abroad. High quality products, flexibility to meet customer needs, and customer service continue to be the attributes most mentioned by respondents as their keys to success.

Execution

The survey showed that continuous improvement is alive and well in manufacturing. For most companies, it has become a way of life.

Sixty percent of respondents indicated that their continuous improvement efforts target market pressures like costs, quality, and on-time delivery; 19 percent aim to increase capacity; and just 7 percent said they are targeting inventory reduction.

Roughly 70 percent said they are at or above pre-recession profit levels, but almost as many respondents (67 percent) feel they still have excess capacity.

A shortage of skilled workers is an issue for more than half of survey respondents. Most say they are implementing workforce training, lean manufacturing, and automation to counter this trend.

Leadership

Many in the Baby Boom generation are reaching an age where they are planning for the next phase of their lives. Since small to mid-sized manufacturing ownership is dominated by Baby Boomers, it would be safe to assume that many leadership changes are on the horizon.

Thirty-five percent said they are expecting an ownership transition in the next five years.

When asked about the importance of this transition, 70 percent said that it is “somewhat important” or “very important.”

There appears to be a correlation between the timing of future leadership transitions and the timing of expected ownership transitions.

At the same time, manpower availability continues to be a rising concern.

“The rising concern with finding and retaining skilled workers can be seen as both a positive and a negative,” says Erik Skie, manufacturing and distribution managing principal with CliftonLarsonAllen. “The need for skilled workers coincides with an expansion in manufacturing, but the inability to fill skilled positions could ultimately hold manufacturers back from their full growth potential.”

 

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