CFO Survey Reveals Manufacturing Optimism

CFO Survey Reveals Manufacturing Optimism

Manufacturing leaders are confident about the economy, as companies remain focused on capital investments, new products, and research and development this year.

A survey released this spring showed continued economic optimism among manufacturing executives, as many companies remain focused on business investment in 2015.

Conducted yearly by manufacturing buying group Prime Advantage, the Group CFO Survey polls executives at small and mid-sized manufacturing companies representing more than 25 industries with annual revenues ranging from $20 million to $1 billion.

This year’s survey of more than 100 chief financial officers revealed a strong focus on large capital investments in particular, with 96% of respondents saying their companies plan to purchase new manufacturing equipment for their plants in 2015. The reinvestment trend is also related to new products, the researchers said, as 67% of respondents said their companies are planning new products and services in 2015, while 44% said they are boosting research and development efforts. Other key findings include:

  • Confidence in the economy is high, with 93% of manufacturing CFOs expecting their industries to either remain constant or grow over 2015;
  • Executives want to help their companies control rising health care costs, with 55% working to implement preventive healthcare programs in 2015 (up from 39% in 2014);
  • Concern about the U.S. budget deficit has declined, while confidence in government has gone up—a change of about 40% from the 2014 survey.

Overall, the survey shows that business leaders predict “another impressive year” for small and mid-sized industrial manufacturers, as 90% expect revenues to increase or match 2014, according to the survey. A healthy bank of orders is contributing to the positive outlook.

“Much of this optimism can be attributed to strong order pipelines, with 50% of member companies seeing new orders exceeding the levels they saw at this time last year,” the researchers said. “In another encouraging result, 100% of respondents anticipate revenue growth with their key customers over the next three years.”

The survey emphasized the greater focus on production this year. In addition to the 96% of firms saying they will purchase manufacturing equipment in 2015, 44% said their companies plan to purchase computer hardware and software in the coming year.

Employment and pricing pressure remain top concerns among small and mid-sized manufacturing executives. Seventy percent of respondents said they are experiencing difficulty finding capable employees in their markets, with most saying it is due to insufficient levels of skilled employees in their area.

Three-quarters of respondents listed price pressure from competition as the external factor causing them the most anxiety.

The report echoes similar optimism among purchasing executives at manufacturing companies worldwide. The Global Purchasing Index has remained above the 100-point mark indicating optimism this year after falling below 100 in December 2014. The GPI is a monthly survey of purchasing executives at manufacturing and contract manufacturing companies, gauging their business outlook in five areas: new orders from customers, inventory levels, purchasing activity, pricing, and lead times.

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