One of the authors of an annual manufacturing study says this year's results show “the bad old days of cost-cutting are behind us.” Associate Professor at Indiana University's Kelley School of Business Mark Frohlich says companies are demonstrating a “strong emphasis” on investing for growth and are “betting” on their employees, processes and products. He says the seventh annual Indiana Manufacturing Survey also reveals continuing concerns about the skills gap and rising material costs. October 16, 2013

News Release

INDIANAPOLIS, Ind. – The certified public accounting firm of Katz, Sapper & Miller LLP today released the results of their seventh annual Indiana manufacturing survey. This statewide study of employers in Indiana's largest industry was commissioned by Katz, Sapper & Miller and developed in partnership with the IU Kelley School of Business – Indianapolis, Conexus Indiana and the Indiana Manufacturers Association.

The results from the 2013 Indiana Manufacturing Survey: Manufacturing's Renaissance, reveal an often unnoticed but growing renaissance is underway in Hoosier (and American) manufacturing. Nearly 80 percent of respondents over the last two annual surveys describe their businesses as 'healthy' or 'stable' – a strong rebound from the dismal days of 2009-2010, when nearly half used the term 'challenged' to characterize their operations.

“Indiana remains the nation's most manufacturing-intensive state by employment and share of economic output,” noted Scott Brown, partner-in-charge of Katz, Sapper & Miller's Manufacturing and Distribution Services Group. “The state's economic future is inseparable from its production industries – and we see a cautious return to investment and growth that bodes well for all Hoosiers.”

Other key findings reveal:

-More than 70 percent of Hoosier manufacturers are actively investing in capital and labor again, while less than 5 percent are continuing to cut costs across the board. These results suggest that even in today's still turbulent economic times, companies are stepping up investment in their own employees and facilities, along with products and services, out of a recognition that failure to do so will hinder their ability to compete in the future.

-The pro-investment attitude of Indiana manufacturers comes in the face of worries about the federal regulatory climate (notably the implementation of healthcare reform), concerns over global competition and a pragmatic outlook about the potential for market growth.

-Despite these headwinds, manufacturers realize that cost containment alone is not a sustainable business strategy, and are willing to spend on superior product design, logistics and customer service to compete even in an uncertain economy.

-Human capital continues to be a major obstacle confronting Indiana manufacturers. Survey respondents identified skilled production workers as the most significant labor shortage facing their companies. Fortunately, there is significant momentum among industry leaders, policymakers and academic institutions to focus on the middle-skill challenge, align curricula with employer needs and re-energize vocational and technical education.

“Our findings from this year's survey show cause for optimism, as Hoosier manufacturers continue to invest and grow,” said Mark Frohlich, associate professor of operations management at IU’s Kelley School of Business. “But economic and public policy hurdles, plus our ongoing human capital challenges mean that Indiana can't take its position as the nation’s most manufacturing-intensive state for granted,” added Steven Jones, associate professor of finance at IU’s Kelley School of Business.

Frohlich and Jones went on to emphasize the need for continued focus on human capital and business climate to support the continued forward momentum in the manufacturing sector.

“While this year's findings are a snapshot of attitudes and short-term reactions to the business cycle, it is the collective actions of employers, educators, economic developers and elected officials that will help determine the results of future surveys in years to come.”

About Katz, Sapper & Miller

As one of the top 100 CPA firms in the nation, Katz, Sapper & Miller has earned a reputation as a leader in the areas of accounting, tax and consulting services. Founded in 1942, the firm has more than 250 employees and is headquartered in Indianapolis, Ind. with offices in Fort Wayne, Ind. and New York. Katz, Sapper & Miller was named one of the “Best of the Best” accounting firms in the nation by INSIDE Public Accounting magazine and has been recognized by the Indiana Chamber of Commerce as one of the “Best Places to Work in Indiana” for eight consecutive years. The firm is an independent member of Nexia International, a leading global organization of independent accounting and consulting firms. Learn more at

About the Kelley School of Business – Indianapolis

The Indiana University Kelley School of Business has been a leader in American business education for more than 90 years. With nearly 100,000 living alumni and an enrollment of nearly 8,000 students across two campuses, the Kelley School is among the premier business schools in the country. Kelley’s Indianapolis campus, based at IUPUI, is home to a full-time undergraduate program and four graduate programs, including the Business of Medicine MBA for practicing physicians and the part-time Evening MBA, which is ranked ninth in the country by U.S. News and World Report. Learn more at

About Conexus Indiana

Launched by the Central Indiana Corporate Partnership, Conexus Indiana is the state's advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader. Conexus is focused on strategic priorities like workforce development, creating new industry partnerships and promoting Indiana's advantages in manufacturing and logistics. Learn more at

About the Indiana Manufacturers Association

Formed in 1901, the Indiana Manufacturers Association is the second oldest manufacturers association in the country and the only trade association in Indiana that exclusively focuses on manufacturing. The Indiana Manufacturers Association is dedicated to advocating for a business climate that creates, protects, and promotes quality manufacturing jobs in Indiana. Indiana is one of the top manufacturing states in America in the wealth and jobs created, sustained, and supported. More than 50 percent of all employment in Indiana has some connection to manufacturing.

The staff of the Indiana Manufacturers Association has more than 160 years of combined governmental affairs experience and is recognized as experts in many areas, including tax, environment, labor relations, human resources, and healthcare. Learn more at


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