economy

Manufacturers Optimistic About Economy But Worried About Cybersecurity

The top cybersecurity threats in 2017 for small and mid-sized industrial manufacturers were identified as phishing attacks, IP theft and third-party security breaches.

Revenue and employment growth are predicted for the next 12 months, but manufacturers are concerned about cybersecurity risks, according to a new study, the 16th annual Purchasing and Manufacturing (PM) Survey, from Primate Advantage.

Eighty-eight percent of companies expect revenue to either rise (20%) or remain consistent (68%) in the next year.Twelve percent predicted a decrease in revenue for the coming year. These numbers represent an overall uptick in confidence from 2016’s survey, when only 15% were expecting an increase in revenues for 2017 and 69% expected revenues to remain steady, with 16% predicting a revenue decline.

 These numbers are comparable to the business confidence viewpoint presented in the third quarter 2017 NAM Manufacturers’ Outlook Survey, where 85% of small manufacturers and nearly 90% of mid-sized manufacturers reported a positive outlook for their own companies.

The survey also shows that optimism in revenue growth has gradually declined since 2013, when 56% predicted an increase in revenues, while 41% were predicting a boost in sales, and just three percent were predicting a sales decline.

Cybersecurity a Critical Issue

Thirty-four percent of survey respondents said their companies had experienced a digital security breach in the past year, while 38% said they have increased their intellectual property (IP) protection efforts. Thirty-three percent reported that they perform regular security vulnerability tests, and 16% said they had improved their cyber-risk teams in 2017.

The top cybersecurity threats in 2017 for small and mid-sized industrial manufacturers were identified as phishing attacks, IP theft and third-party security breaches.

Capital Expenditures Remain Strong

In response to the question about projecting capital spend for the remainder of 2017, Prime Advantage members have shown this to be a priority, with 83% saying they would increase (27%) or stay the same (56%) from last year. This is a slight increase from 2016’s Prime Advantage PM Survey when 81% believed their capital spending would increase (28%) or remain steady (53%) for the year.

 Employment Outlook on the Rise

A survey record high of 65% of respondents predicted to add headcount in 2017, and 50% have already done so. This surpasses last year’s projections, where 57% predicted new hires for the year. It is even stronger than the PwC Manufacturing Barometer, which saw 35% of industrial manufacturers predict new hires for the year.

 Barriers to Growth: Most Sought-After Employees are Hardest to Find

For the fourth year in a row, a lack of qualified workers is the biggest potential external barrier to business growth, according to 40% of respondents to the latest Prime Advantage PM Survey. And 29% said a lack of demand was also hampering business prospects.

 While these were again the highest-rated potential business barriers, it is encouraging to note that all decreased from the 2016 PM Survey. And the top five potential business barriers have all dropped steadily since 2015.

 Cost Pressures: Procurement Insights

Procurement teams continue to identify raw materials as the top cost pressure at 94%, with logistics and transportation as the second biggest cost pressure at 62%, followed by component parts at 61%. Raw material costs have been identified as the top cost pressure in every survey since its inception.

 Outside of the three core supplier measures (price, quality and on-time delivery), which are metrics used by more than 90% of all survey respondents, small and mid-sized industrial manufacturing professionals are also searching for added value from their supplier partnerships. Among the value improvements sought from suppliers are responsiveness to change requests (87%), flexibility to respond to unexpected demand (84%), and communication (78%).

Related to this, time pressures remain the biggest challenges facing procurement operations in 2017, according to 40% of the survey respondents. This represents an 8%t increase from 2016.

 

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