Ranging responses of persistent optimism and economic realities make the future of manufacturing in 2023 hard to summarize.
Fueled by a combination of ongoing optimism, dedicated hiring efforts, divisive spending, and potential supply-chain shortages, mixed signals from manufacturing executives suggest the future of business growth or failure in 2023 is anyone’s game. The unknown surrounding rising inflation, an impending economic recession, and split trade perspectives continue to make the new year one filled with an endless stream of speculated outcomes. So, what does this mean for manufacturing?
With the worst of pre-pandemic anxiety confidently in the rearview mirror, increased challenges continue to grow involving rapid inflation, supply-chain barriers, and concerns about an inevitable economic recession. Yet, according to a recent Forbes article, recently surveyed manufacturing executives demonstrate a surprisingly optimistic outlook for the future in relationship to increased hiring and spending patterns.
What are Top Manufacturing Executives Saying?
Conducted across 150 manufacturing executives through a nationwide survey, over 95% of those surveyed stated they were optimistic for the future – with three-fifths (60%) citing that “the future looks bright,” and another one-third (35%) feeling confident they “see light at the end of the tunnel.”
This surprising outlook comes during a time filled with economic uncertainty, unceasing inflation, and post-pandemic fatigue. Rising costs in almost every industry, from orange juice to auto loans, are causing Americans to think twice about their expenses and ultimately budget more while spending less in comparison to previous years. Yet, a surprising 71% of surveyed manufacturing executives reported that internal sales increased over the past year compared to 2021, with only 10% indicating they’d declined. Although 87% indicated they believe a recession is moderately likely in the near future, data proves those numbers are down compared to the last poll conducted in August 2022, capping at 92%.
Although overall attitudes remain optimistic, individual industry protocols remain scattered, with some citing plans to increase hiring efforts while others opt out for major cuts. This blurred line between dedicated investment and mindful reduction sets the tone for mixed signals regarding which businesses will rise and who will fall in 2023. One common denominator across those who were surveyed include devoted efforts to raise prices, with the majority (89%) citing they were likely to increase cost. Previous data supports this narrative, with the bulk of participants (87%) stating they’d plan to raise pricing in 2023.
How Will Supply Chain Issues and Layoffs Affect Productivity?
Diverging opinions regarding increased hiring and invested spending support a divided mindset about industry growth as a whole. With tech companies taking the hardest hit with almost daily recorded layoffs, over half of those surveyed (52%) insisted they plan on hiring more people, and another third (32%) stating they would keep hiring the same. Trends indicate that smaller companies (56%) will take the biggest risk in relationship to workforce cuts in an effort to cut cost and curb inflation, while larger companies (33%) plan to dedicate less attention to layoffs. Split perspectives involving spending patterns are also contributing to the unpredictability of future action, with a little over half (51%) indicating cuts to minimize resources during difficult times, while three-quarters (71%) said they are planning to increase spending in relationship to research and development. Pronounced investments in tech include workforce automation (72%) and AI (58%), which suggests positive attitudes related to growth and overall productivity. Notably, larger companies (67%) with $100 million or more remain committed to increased investment costs, while smaller companies (49%) showed less dedication to added investment spending.
Supply-chain challenges also continue to offer new difficulties, causing manufacturing executives to reevaluate offshore involvement. Over half (55%) suggested they were exploring options to re-shore some aspect of operations, including almost all of those cited (95%) indicating they intend to do so this year specifically. Concerns for offshore manufacturing complications come as no surprise as supply-chain disruption continues across a wide variety of industries in the wake of the pandemic and China pulling back their Zero-Covid policy.
On a unified note, in response to inflation, the majority of participants (61%) said they plan to increase wages in an ongoing effort to entice new workers, with another three-quarters (77%) stating they are providing incentives, ranging from cash to gym memberships, to also attract new talent. This comes in wake of recent U.S. manufacturing shortages, costing the economy an estimated 2.1 million in jobs by 2023. Future supply and demand involving manufacturing capabilities and talent availability are forcing industries to think outside the box and begin offering comprehensive benefits in an effort to increase interest and fill the gap between sale requirements and dedicated employees.
Given the sporadic actions indicated during this survey, substantial predictions within the manufacturing world remain largely uncertain and inconstant.
It’s no secret that 2023 will be filled with a multitude of challenges for manufactures across the globe – but encouraging attitudes offer hope in the ongoing production of both domestic and offshore manufacturing. The real question remains whether overall optimism is enough to increase manufacturing efforts and advancement or if, ultimately, foreseen obstacles driven by a strained economy, public demand, and rising costs solidify delayed productivity decline.
Learn more about the original survey and featured article here.
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Heading #1: What Are Top Manufacturing Executives Saying?
Heading #2: How Will Supply Chain Issues and Layoffs Affect Productivity?
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Published February 15, 2023