Supply Chain Trends
Mid-Sized Manufacturers Optimistic in 2016

Mid-Sized Manufacturers Optimistic in 2016

Many U.S.-based manufacturers are upbeat about 2016.

Financial executives at mid-sized manufacturing companies are confident in the industry outlook for this year despite ongoing concerns about the overall U.S. economy, according to a new report from buying group Prime Advantage.

The group’s 2016 CFO survey, released in February, revealed an increase in industry confidence compared to last year and a decrease in their confidence in the overall U.S. economy. The group surveyed more than 75 top financial executives at industrial manufacturing companies with an average revenue range of between $20 million and $500 million in sales. The growing industry confidence continues an upward trend.

“The results of our 2016 CFO Survey indicate a continuing state of manufacturing optimism, coupled with strong expectations for increased revenue for our members and endorsed suppliers," Louise O'Sullivan, founder, president and CEO of Prime Advantage said in announcing the findings. “This is quite encouraging, as it follows four previous years of growth and innovation for our manufacturing members.”

Among the findings, manufacturing executives said that falling oil prices are helping to improve margins due to lower component costs and savings on freight expenses. They also list health care expenses and attracting and retaining qualified employees as top concerns this year.

A closer look:

  • 68% of respondents listed medical insurance expenses as their top concern in 2016
  • 64% said attracting and retaining qualified employees is their top concern
  • 36% said that preserving morale and productivity is their top concern
  • Top priorities in 2016 include growing existing markets (68% of respondents), finding new revenue from products and services (63% of respondents), and cutting operational costs (54%)

The upbeat tone of the survey is in line with what Global Purchasing has heard from buyers at original equipment manufacturing, contract manufacturing, and electronics manufacturing services providers over the past two years. From January 2014 through February 2016, we asked a panel of buyers to indicate their economic optimism based on five criteria: new orders from customers, electronic components purchasing activity, inventory levels, component pricing, and lead times. In that time, buyers said they remained optimistic about the electronics supply channel in all but one month, December 2014.

Although concerns over the global economy are likely to continue, it’s encouraging to know that many supply chain business leaders are confident in their own segments—and looking for positive momentum heading into the second quarter.

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