The annual State of Manufacturing® survey reveals an optimistic perspective to the overall market as it pertains to growth and longevity. In stark contrast is the growing concern that worker availability will continue to encroach on future profitability through productivity.
From Enterprise Minnesota, the surveyor conducting this 11th edition, and in tandem with Rob Autry, the founder of Meeting Street Research, the survey aims to be neutral in its perspective and a real litmus test for how things exist for Minnesota Manufacturers.
In methodology, Autry’s firm interviewed 400 manufacturing executives in quarter 1 2019. An executive comprised of positions ranging from CEOs, CFOs, COOs, presidents, vice presidents and managing officers. The confidence is +/- 5% after taking into account outliers. Said succinctly, it’s good stuff and can be used to build a house.
In addition to these perspective EM also hooked into a group of 13 focus teams to gather additional context for how well manufacturing is doing and will continue to do in Minnesota.
A few key metrics were revealed in regard to optimism:
- Ninety-three percent of executives feel “confident” about the futures of their companies, exactly the same percentage as last year. Only five percent are “not confident,” the lowest number recorded in the history of the survey.
- Fifty-nine percent of executives expect increases in gross revenue, while 45 percent project increases in profitability, both close to record highs.
- Fifty-eight percent expect employee wages to increase in 2019, which is six percent higher than 2018. Only one percent expect wages to decrease. The greatest increases were projected by large companies (78 percent at companies with revenues greater than $5 million, and 74 percent at companies with more than 50 employees). Metro companies (62 percent) are more likely to expect wage increases than those in Greater Minnesota (53 percent).
Not all is rosy. A few concerns were found:
- The top concern for costs among manufacturers (58 percent shared) is the ability to provide for health care coverage at a competitive level. This has followed the trend from prior 10 years of the survey as the number one concern.
- The second highest concern is the apprehension about government policies and regulations (40 percent of manufacturers) which has fallen consistently from 61 percent in 2011.
- As tariffs and other limitations loom (and some active) the concern with foreign competition rounds out at number three with 21 percent.
In looking toward the future, Snap Agency seeks to help manufacturers combat pieces of the non-core work of a manufacturer, e.g. marketing, sales and automation to find faster ways to both go to market and increase competitive moat. One of the most profound metrics of the study regards the question of “how do you plan to grow”? The number of companies that deploy a “formal strategic plan for profitable growth” has declined. Today, 49 percent of companies statewide use a strategic plan, while 49 percent do not, a slight decline from 2018.
It’s hard to develop something strategic, not to mention encapsulate the complexity of a manufacturing company that makes both the product and has to find the customers to sell to; all done profitably.
If you’re a manufacturer seeking to develop the plan for either operational excellence or a sales and marketing strategy to leverage both automation and degrade competition, Snap’s deep experience in both B2B and B2C could be a path worth investigating. Please spend a few moments with us to gather if our approach to the problem will fit the desired outcome. Our Customer Experience, Data and Technology teams would all appreciate the opportunity to discern if we can make 2020’s report even more positive for our manufacturing clients.