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Forecasting US Manufacturing in 2017 Part 1: Outlook and Challenges

In this, the first blog of a two-part series, we want to take a look at the 2017 manufacturing forecast. As many of you know, manufacturing has been a hot-button political issue the last year, so taking a look at where the industry is headed over the next 12 months seems appropriate.

In order to best report on industry projections we will be referencing a recent survey conducted by Leading Edge Alliance Alliance. The survey is an accurate cross section of US manufacturers, focusing primarily on small and medium sized manufacturers, with a smattering of large manufacturers included. This cross section is based on the fact that 94% of US manufacturers have fewer than 100 employees.

Having explained the source of the information to be presented, let’s take a look at the data.

Manufacturers are Cautiously Optimistic

The National Association of Manufacturers (NAM) Business outlook was 61% in the third quarter of 2016, which was a slight drop from Q2, but still higher year over year when compared to 2015. This mirrored the Manufacturers Alliance for Productivity & Innovation (MAPI) who project growth of 1.7% in 2017, which is slightly down from the end of 2016.

The Leading Edge Alliance survey shows that manufacturers are slightly more optimistic, especially small to mid-sized manufacturers. The survey posed two key questions to respondents:

  1. On a scale of 0-100 how optimistic are you for your local, national and global economic outlook?
  2. What is your expected revenue growth for 2017?

On the first question, optimism tended to be stronger when talking about local economic growth at 58/100. National optimism dropped to 52/100, while global optimism lagged behind at 45/100. This data follows typical trends in these types of surveys.

Manufacturers were far more optimistic when it came to expected revenue growth. Small and mid-sized manufacturers were more bullish when asked out revenue growth, with 74% expecting growth compared to 69% of large manufacturers. What is even more telling is that small and mid-sized manufacturers are twice as likely to project growth of 10% or more compared to large manufacturers.

Growth comes with Challenges

Optimism surely seems to be the word of the day, but growth will come with challenges.  Internally, manufacturers will have to overcome things like the costs of keeping up with new technology and managing inventory to sales ratios. Externally, things like global competition and the strength of the dollar will have major impacts on a business’ ability to grow. In order to transcend these hurdles, manufacturers will need to become leaders in innovation, efficiency, strategy while remaining agile enough to adjust to industry trends.

As a whole, US manufacturing is expected to grow in 2017, especially for companies with fewer than 100 employees. In part two of this blog series we will discuss strategies that small to mid-sized manufacturers can use to become an industry leader this year and enjoy revenue growth throughout the year. In the meantime, if you have any questions on how to better prepare your business for the remainder of the year you can call The Attivo Group at 877-428-8486 or contact us here.