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  January 23rd, 2017 | Written by

U.S. Manufacturers Optimistic

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  • Manufacturing faces headwinds, , LEA Global Survey finds.
  • 44 percent of small manufacturers expect revenue growth of 10 percent or more in 2017.
  • 19 percent of large manufacturers expect revenue growth of 10 percent or more in 2017.

While manufacturers across the U.S. are generally optimistic about revenues for 2017, small manufacturers are far more optimistic than larger manufacturers by more than a 2:1 margin.

That is just one of the findings from the 2017 National Manufacturing Outlook Survey, conducted by the Leading Edge Alliance (LEA Global).

“We found that 44 percent of small manufacturers expect revenue growth of 10 percent or more in 2017, while only 19 percent of large manufacturers do,” explained LEA Global President Karen Kehl-Rose.

With more than 250 participants, LEA Global’s survey report contains the expectations and opinions of manufacturing executives in more than 20 states across the U.S., producing a wide variety of products including industrial/machining, transportation/automotive, construction, food and beverage, and other products.

“Half of the large manufacturers we surveyed expect three to nine percent revenue growth this year, while a still strong 30 percent of small manufacturers have that same optimism,” Kehl-Rose added.

Manufacturers are more optimistic about their local and regional economies than the national or global economies.

The top priority for manufacturers in 2017 is cutting operations costs. But high-growth manufacturing respondents are more focused on research and development, with 12 percent of high-growth respondents reinvesting more than 10 percent of annual revenue.

Labor continues to be a challenge for manufacturers, with 67 percent of respondents expect labor costs to increase and an additional seven percent expect labor costs to increase significantly in 2017.

Appropriate cost allocation and accurate and timely data will become required capabilities for successful businesses in the industry, the report found.

More manufacturers will be considering both sales and mergers in 2017 as well as strategic acquisitions.

Kehl-Rose said U.S. manufacturing industry “headwinds” are significant and include both internal issues, such as high inventory-to-sales ratios, the cost of technology, and labor shortages, as well as external issues like the price of raw materials and strength of the dollar.

“To stiffen up and fight through these headwinds,” Kehl-Rose said, “strategic manufacturers should have ongoing conversations with all their advisors, including their accounting and tax provider, as to how to overcome these challenges and achieve their business goals. What manufacturers cannot afford to do, is take a wait-and-see approach.”