Supply chains, costs, employment all complicate the recovery for manufacturers

 

Grant Thornton’s CFO survey for the second quarter of 2021, which was conducted in May, found respondents worried about inflation and interest rates—91% of respondents expected inflation, interest rates or both to exceed Fed targets. CFOs were also asked about expectations on expenses in 12 different categories ranging from human capital costs to cybersecurity to real estate and they expected costs to rise in every category. On June 16, the Fed adjusted its inflation expectations for 2021 upward from 2.4% to 3.4% and also projected two possible rate increases for 2023.

In this podcast, Grant Thornton chief economist Diane Swonk and Chad Moutray, chief economist for the National Association of Manufacturers, offer some perspective on what these trends and results mean for manufacturers navigating the post-pandemic recovery.

Moutray points out that the good news is that demand is “through the roof.” The bad news? So are costs as supply chain and transportation issues continue to impact production. On the employment side, manufacturers were already facing challenges attracting qualified employees before the pandemic. Now, in a hypercompetitive labor market, those challenges are magnified.

A key question? Are inflationary and employment challenges short-term issues due to pent-up demand and an accelerating recovery, or will they be longer term concerns for America’s manufacturers? Listen to our podcast to learn more.

 

 

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