As concerns about a potential recession are subsiding in early 2024 and the economy continues to experience better-than-expected growth, manufacturers’ optimism of business prospects over the next six months has increased, according to a new industry report. The latest Sikich Industry Pulse found that manufacturing executives rated their optimism an average of 7.07 on a scale of one to 10 – the highest rating since June 2021, when manufacturers were coming out of the COVID-19 pandemic slump. In comparison, executives’ optimism averaged at 6.76 on a scale of one to 10 in August 2023.
Two factors in the increase in optimism across the industry are an increase in customer demand and a decrease in labor challenges. While four in 10 respondents noted increasing customer demand in August 2023, more than half (51%) of manufacturers attributed their positive outlook to increasing demand in 2024. At the same time, labor shortages and costs have less of an impact on manufacturers’ outlook, with only 18% and 15% of respondents noting these factors as a challenge, compared to 25% and 24% in August 2023.
“Ongoing concerns about the economy have plagued manufacturers for the past few years; it’s great to see those concerns begin to lessen,” says Jerry Murphy, partner-in-charge of manufacturing and distribution services at Sikich. “Now is an ideal time for executives to prioritize growth initiatives. Upgrading technology and facilities, upskilling workforces, and executing business transformation projects will set manufacturers up for long-term success.”
Key Takeaways:
- Seventy-six percent of manufacturers implemented one or more operational efficiency projects in the past three years, and three out of four respondents to Sikich’s Industry Pulse survey are planning an operational efficiency project in 2024. These projects help manufacturers reduce costs (as reported by 58% of respondents), better measure results, eliminate rework and more.
- Of the organizational efficiency projects planned for 2024:
- 33% are organizational redesigns
- 23% are Kaizen events
- 22% are implementations of robotic process automation
- Further, 9% of manufacturers are planning a reduction in force in 2024. This is up 3% from March 2023, when 6% of manufacturers were planning a reduction in headcount.
- Eighteen percent of manufacturers that moved locations in the past three years saw savings of $750,000+ and 27% of companies that moved saw savings ranging from $500,000 to $750,000.
