Study: Manufacturer Optimism Has 'Plateaued'

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The study received responses from industry stakeholders representing sectors including automotive, aerospace, industrial equipment, high-tech and medical product manufacturing. The study received responses from industry stakeholders representing sectors including automotive, aerospace, industrial equipment, high-tech and medical product manufacturing.
INDIANAPOLIS -

Results of an annual statewide survey suggest "growing discontent" among Indiana employers in the $64 billion manufacturing industry. The report shows more respondents who felt optimistic during the economic recovery now feel the squeeze of regulatory, tax and work force pressures. The Indiana Manufacturing Survey is a collaboration among Indianapolis-based Katz, Sapper & Miller LLP, the Indiana University Kelley School of Business, the Indiana Manufacturers Association and Conexus Indiana.

KSM Manufacturing & Distribution Services Group Chair Jason Patch says one of the biggest hurdles manufacturing leaders express in the survey is the feeling they are being "blanketed" by federal regulations. The sour governmental sentiment doesn't necessarily extend to the state government, according to hundreds of respondents. Eight-one percent of those surveyed believe Indiana's policies are supportive toward the industry, while 88 percent say policy makers in Washington are not supporting manufacturing. More specifically, concerns center on health care costs and regulations, corporate tax structure and environmental mandates, such as energy efficiency standards, environmental regulation and carbon emissions-curbing efforts.

Study co-author and Kelley Evening MBA Program Chair Steve Jones says "the post-recession bounce is over for many manufacturers, and they feel suddenly besieged by burdens - government regulation, rising energy costs, skill shortages and global competition. Most of these aren’t new or short-term challenges,” Jones noted. “But they gain urgency when economic momentum slows. As margins shrink, pessimism grows - 63 percent of Indiana manufacturers don’t believe that U.S. manufacturing will ever again lead the world."

Though down nearly 10 percent, 38 percent of survey participants say they still consider their overall financial performance to be "healthy." Kelley Indianapolis Associate Professor of Operations Management and survey co-author Mark Frohlich says "manufacturers actually see better prospects for market growth than they did last year, but they're less confident in their ability to turn opportunities into sales, and tend to view government as an impediment rather than a partner."

The availability of skilled labor is an issue that continues to crop up each year of the survey and the concern appears to be growing. Overall, 70 percent surveyed characterize a "moderate or severe" shortage in skilled workers on the production side. The biggest needs appear to involve production workers, production support, scientists and design engineers.

Half the industry stakeholders in the study say "product quality" is "extremely important" to attracting new business, while "fast/reliable delivery" and "lower selling prices" were listed lower among manufacturers' priorities.

KSM Manufacturing & Distribution Services Group Chair Jason Patch says the overall outlook for manufacturers appears to have "plateaued."
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