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A Non-Political Conversation about American Manufacturing

It certainly is not news that we are living through a Presidential Election. With the first Presidential debate looming tonight, we have begun the final countdown to one of the most contentious election cycles in recent memory. The problem with all of the political intrigue that has characterized this election is that very few of the real issues have gotten fair play. While political pundits talk about gaffes and the candidates’ histories, regular American citizens are becoming increasingly anxious about what 2013 may bring.

One of the most important economic indicators in the United States is the state of manufacturing. The most recent report from Industry Week indicates that manufacturers are feeling increasingly anxious as we head towards the end of the year. Industry Week, in collaboration with the National Association of Manufacturers, has been surveying manufacturers since 1997. In August, 514 manufacturers responded to the survey. The results offer significant insight into where the US economy may be heading. As an early warning sign, we thought we would share some of the key points the survey revealed.

A More Negative Outlook

In the first quarter of 2012, 88.7% of survey participants said they had a positive business outlook. In the last survey, only 69.2% of manufacturers said their outlook on business was positive. This is not altogether surprising. The European recession, among other factors, is creating a lot of instability in the world and the demand for manufactured goods, even in China, has been decreasing as a result.

Industrial Production

Industry Week and the National Association of Manufacturers use several factors to predict industrial production two quarters in advance. In this survey, Industry Week suggests that while industrial production in 2013 should be 4.1% higher year-over-year, manufacturers will actually be producing 1.2% less than what they are producing now.

Sales

The survey reported mixed results in terms of sales projections. For example, according to the survey sales are expected to grow 2.5% over the next 12 months, but that’s not as good as the previously reported 4.7% projection from the first quarter of 2012. In similarly mixed news, one third of companies reported that they expect their sales to grow by 5% over the next 12 months, but that’s not as good as the 50% who predicted growth in the previous surveys this year.

The impact of this uncertainty is already affecting how manufacturers are looking ahead to 2013. Most companies, according to the survey, said their investment levels would remain fairly consistent over the next 12 months, but 16.7% also said they expect their number of employees to decrease over the next year.

Business Challenges

Not surprisingly, 78.7% of manufacturers polled said that the political uncertainty reigning currently was their biggest challenge. Because the two Presidential candidates offer such disparate views on key issues like healthcare coverage and taxes, manufacturers cannot currently plan for expenses for the coming year.

Ramifications for marketing

Of course, marketing represents part of the investment for which manufacturers plan. With uncertainty looming, it is extremely important to develop a marketing plan that incorporates clear objectives, clear strategies, and clear metrics for monitoring the success of those marketing efforts. Negative forecasts and a hazy future do not mean that marketing has to stop. It simply means marketing must get smarter. If you are a manufacturer and would like to talk to us about how to deal with some of these issues, please feel free to contact us. We’d be happy to help.

For the complete Industry Week survey results, just click here.

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One comment on “A Non-Political Conversation about American Manufacturing

  1. […] is a concern for manufacturers (along with everyone else) as we discussed in this summary of the National Association of Manufacturers Survey. What are CEOs of manufacturing companies really contemplating as we end 2012? A new survey from […]

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