With the buzz the manufacturing sector has generated lately – and the star treatment that’s ensued – you’d think the Kardashians had taken control of the National Association of Manufacturers.
Suddenly, manufacturing is tres chic, as evidenced by the gleam seen lately in the president’s eye when he talks about the sector’s future.
During a visit to Milwaukee’s Master Lock last week, President Obama acknowledged the real and abiding problems American manufacturers have encountered in the face of foreign competition, but he was notably upbeat about their prospects.
“In a global economy, some companies will always find it more profitable to pick up and do business in other parts of the world,” said Obama, who was touting the fact that Master Lock had returned 100 jobs from China since 2010. “But that doesn’t mean we have to sit by and settle for a lesser future.”
In recent years, as the Rust Belt grew rustier and rustier, few presidents would have been eager to hitch their re-election prospects to the future of the manufacturing sector, but signs abound that manufacturers are beginning to feel their oats and are feeling renewed optimism.
But while some might remain skeptical that we’ll be able to remain competitive with economies like China’s over the long haul, regionally at least, manufacturers are joining in the party of positivity.
Manufacturers are more optimistic
A recent survey by MRA – The Management Association – found that manufacturing companies in Wisconsin, Illinois, and Iowa are much more optimistic than their non-manufacturing counterparts.
“Actually, manufacturing companies are expecting their sales and revenue to be even stronger in 2012 than 2011,” said Bonnie Yordi, director of surveys and business research for the Waukesha-based MRA. “They’re planning on giving pay increases to their employees pretty much across the board, they’re planning on hiring, and they’re planning on making new investments in people and facilities or equipment in 2012. And those are all signs of progress and optimism.
“Those are things we did not see in our previous surveys. Everyone was pretty much, ‘batten down the hatches and do your absolute best to, one, survive the recession and, two, to keep as many of your employees as possible.’”
While hopes for the economy as a whole are showing tentative signs of brightening, the MRA survey found that manufacturers showed more optimism than non-manufacturers in several areas:
- With regard to 2012 sales projections, 77% of manufacturers envision an increase in their own sales, while 61% of non-manufacturers expect an increase.
- Fewer manufacturers than in previous surveys expect flat sales (17%) and only 6% expect a decrease. That compares with 23% of non-manufacturers who expect flat sales and 21% who anticipate a decrease in sales.
- Just as striking as anticipated sales is the difference between manufacturers’ and non-manufacturers’ plans for new investment. According to the MRA survey, 66% of manufacturers say they will make investments in 2012, while only 45% of non-manufacturers plan to do so.
- Finally, manufacturers plan to ramp up hiring more than non-manufacturers (48% vs. 34%), and very few employers overall plan to actually reduce staff levels (5%).
“I was very surprised by these results, very positively surprised,” said Yordi. “The respondents were fairly evenly divided between non-manufacturing and manufacturing, and it showed that the manufacturing companies are considerably more optimistic than the non-manufacturing. And that was really good news, because up to now the story has been that manufacturing is declining.”
Actually, with respect to hiring, the worst-kept secret in the manufacturing sector is that employers need far more help than they can find. Manufacturers have been wringing their hands over a skills shortage that could eventually be seen as the fly in the ointment of the current manufacturing resurgence.
“It was much easier in 2008 and 2009 if you were looking for talent than today,” said Lisa Demartino, HR manager for Huf North America in Milwaukee. “Today, there’s sort of a pricing war going on between the companies that do have the talent now, because there just isn’t talent available.”
Will that skills shortage threaten to hobble a sector that’s largely been rebuffed by high school graduates looking toward the future and that’s often been portrayed through the jaundiced eye of a media that’s become accustomed to reporting bad news?
“I would hope not,” said Demartino. “I don’t have a crystal ball, but I think somehow you find a way. You maybe take lower-level talent and you spend more time trying to figure out a way to bring them up to speed.”
Keeping their attention
While it’s no surprise that a labor shortage will naturally force employers to bid up employee pay and benefits, the MRA survey also found that a strong majority of both manufacturers and non-manufacturers plan to give pay increases in 2012, and that significantly fewer employers (only 5% of manufacturers and 11% of non-manufacturers) plan on freezing wages.
That, says Yordi, reflects an overall trend of focusing on re-engaging employees.
“You see these Gallup surveys saying that disengagement costs the U.S. economy about $350 billion a year, which is money that we really can’t afford to leave on the table,” said Yordi. “But the good news is that companies don’t have to live with that disengagement. And what we’re seeing with our members is companies are taking steps to re-engage their employees and are measuring their employees’ level of engagement, and they’re actively working to re-engage and heighten their employees’ engagement and performance.
“And that’s really important, and we’ve seen a change with our members, now that they have some money that they can reinvest in their employees. They really are taking this very, very seriously.”
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