In a recent Grant Thornton survey of more than 100 manufacturing CFOs and finance VPs, 91% of respondents indicated that their company outlooks are positive.
The results closely aligned with the latest quarterly survey
from the National Association of Manufacturers (NAM), which showed that 87.6% of respondents had a positive outlook, compared to only 33.9% in the second quarter of 2020.
“Our industry is creating new jobs and investing in new projects, buoyed by signs that we may finally be getting COVID-19 under control,” said NAM CEO Jay Timmons.
Leaders have a positive outlook for the next several years, and there is more than one reason behind the optimism.
Reasons for optimism
Some of the optimism is driven by external factors, like anticipated improvements in the US and global economy. But the biggest factors were internal, starting with increased efficiencies in production processes and improvements in employee culture.
All of these growth drivers will likely lead to growth in sales and production over the coming year. However, most respondents also anticipate that they’ll see an increase in the costs of raw material and other input.
As manufacturers prepare for higher production costs, they should also prepare for some of the opportunities and challenges that positive growth will bring.
Reasons for concern
The increase in production costs, together with a weak economy and sales, are the top concerns for manufacturing right now. Among CFOs across industries
, 91% indicated that they expected inflation, interest rates or both to exceed Fed targets.
Beyond that, manufacturing CFOs said they are concerned about trade uncertainties and the war for talent.
“The struggle to recruit is not just in the shop floor skillsets. It goes all the way up to the C-suite,” said Grant Thornton National Managing Principal Robert Hersh as the firm outlined five recruiting and retention strategies for manufacturers
Across supply chain
, workforce, technology
and other fronts, manufacturers must now establish dynamic strategies that will help them adapt for the changes that are arriving at an accelerating pace. For more, listen to Grant Thornton Chief Economist Diane Swonk and National Association of Manufacturers Chief Economist Chad Moutray discuss how supply chains, costs and employment are complicating recovery for manufacturers
National Managing Principal, Manufacturing
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