Because so many of our clients are manufacturers, we like to remain abreast of how the manufacturing sector of the American economy is faring in general. At the end of 2012, reports were indicating that American manufacturers were not feeling confident at all. There was too much uncertainty because of the pending “fiscal cliff” and medical manufacturers were also preparing for increased tax rates tied to the Affordable Healthcare Act. Now that we are at the halfway point of 2013, are things looking any better?
To find out, we went to the quarterly report provided by the National Association of Manufacturers in conjunction with Industry Week Magazine. Here are some of the highlights of that report.
“A mixed bag”
NAM summarizes their findings by calling the current state of American manufacturing a mixed bag. On the plus side, reports indicate that consumer confidence is up, and of course the stock market has reached record highs. However, there are still a lot of reasons for concern. The leading worry for manufacturers is increased health premiums. Of the companies surveyed, 82% noted that health care premiums were their greatest cause of concern. The report notes that “As evidence of the increased worry about what lies ahead after implementation of the ACA, respondents had an average premium increase of 8.4% in 2012, 8.6% in 2013, and 13.9% in 2014.” Manufacturers also continue to worry about the political climate in the US (66.9% indicated this was a concern). Interestingly, filling open positions also continues to be a problem for manufacturers despite continuing high unemployment rates. Of the manufacturers surveyed, about 42% said one of their main concerns was “attracting and retaining a quality workforce.”
Some good news
The report does highlight some good news in spite of all of these expressed concerns. For example, “62.1% of manufacturers surveyed said they expect higher sales in the next 12 months, up from 45.3% in December and 55.3% in March.” Manufacturers also reported that their inventories are slowly decreasing, which means production could increase sometime in the next year.
In general, American manufacturing has not bounced back as much as economists and industry insiders had hoped, but the future is looking bright. If other world economies can pick up so that exports could increase, this would offer a big boost for domestic manufacturers. If the American economy and consumer confidence can continue to improve, manufacturers should be in a good position to be carried with the tide. Only time will tell, however.
Take a look at the full report if you have a chance – this is just a brief summary, but there is a lot of important information, along with perspectives, as provided by the NAM and Industry Week. Let us know what you find most interesting!
Image credit: http://www.flickr.com/photos/blackbeltjones/3550752215/ via Creative Commons