Consultant CliftonLarsonAllen’s third annual survey of U.S. manufacturers and distributors shows that many organizations are on the road to a positive future despite the slow economic recovery. Survey results point to healthy and sustainable organizations by using what the firm calls The Value Triangle, which focuses in on four dimensions: financial, growth, execution, and leadership.
“The attitude and mindset of the leaders we surveyed focuses on capturing opportunities instead of dwelling on things that cannot be controlled,” said Eric Skie, manufacturing and distribution managing principal with CliftonLarsonAllen. “The industry has moved beyond the Great Recession and is now shaping its own future.”
Of the more than 100 survey respondents, 75% were privately held and family ownership businesses, 54% had two to five owners, and 27% were one-owner organizations. The financial dimension yielded positive responses, with 70% of respondents saying they are at or above pre-recession profitability levels. Forty percent reported that the average age of accounts has increased, while about the same number said they have stayed the same. In addition, those surveyed say that working capital requirements (including inventory) and the availability of credit have not caused problems with growth in the past two years.
Sixty-three percent say they are exporting, while 27% are not and do not plan to do so in the next two years. The survey also asked about management of revenue concentrations, with the majority of respondents having an industry concentration that accounts for more than 50% of its revenue base.
In terms of execution, continuous improvement is alive and well in manufacturing; 60% of respondents said their improvements target pressures such as costs, quality, and on-time delivery; 19% said they are hoping to increase capacity; and7% are planning to reduce inventory. There also is a shortage of skilled workers, which is why most organizations are implementing workforce training, lean manufacturing, and automation to change this. Leadership is also important, with 35% of respondents expecting an ownership transition in the next five years.
Economic uncertainty remains a concern in 2013.
“The need for skilled workers coincides with an expansion in manufacturing, but the inability to fill skilled positions could ultimately hold manufacturers back from their full growth potential,” Skie said, adding that the resiliency and leadership that has brought manufacturers and distributors through the Great Recession shows they will move forward.