2010 Survey Shows Minnesota Manufacturers Are Cautiously Optimistic
Following one of the most economically challenging years ever for many companies, Minnesota manufacturers are hopeful the worst is behind them, according to the second annual
State of Manufacturing survey conducted by Enterprise Minnesota and sponsored by LarsonAllen and other partners.
Fewer than 20 percent of manufacturers polled anticipate a continued recession in 2010 compared to 56 percent who expected the economic downturn in 2009.
While there is confidence the hardest times are in the past, companies are cautious about the speed of recovery. Most manufacturers are predicting flat or modest revenue growth in the upcoming year.
“Challenging times highlight both weaknesses and strengths in any organization. Addressing vulnerabilities is important when it comes to staying competitive, but the key to accelerating recovery today and creating opportunities for tomorrow is to understand and invest in competitive strengths,” says Erik Skie, LarsonAllen's principal-in-charge of manufacturing and distribution.
Although manufacturers believe the economy is improving, they have some worries about the future:
Health care
As health care reform continues to be on the horizon, about 60 percent of those surveyed indicate the current efforts are going in the wrong direction, and 68 percent say they are concerned about the affect the cost of health care will have on their organization.
Government policies and regulations
Manufacturers are still feeling uneasy about taxes. In 2009, 55 percent of respondents indicated concern with federal, state, and local taxes. Today, 64 percent say taxes are a primary issue. In addition, most feel taxation is one of the highest factors limiting their ability to be competitive.
Credit crisis
Nearly 37 percent of companies state they are experiencing a constriction of credit; this is up from 13 percent a year ago.
Employee relations
Companies have experienced a shift in their ability to attract and retain qualified employees. In 2009, 55 percent responded that they had difficulty retaining employees. Today, 40 percent indicate this same challenge. Although there are more qualified individuals in the market, less than half say they will increase wages in the next two years.
Going green
While most people polled say their reason for “going green” is to do their part in protecting the environment, 70 percent say these practices are not a competitive advantage in the eyes of their customers.
Skie adds, “It’s clear that many manufacturers have concerns about the business environment, including government policies and the health of the economy, and we encourage them to actively exert influence on these matters where they can. However, the practical reality is that most of this is outside of their control. Manufacturers will be better served by focusing on flexibility and competitiveness so that they can adapt to whatever the future may bring.”
Survey background
This research project is in its second year and included phone interviews with 500 manufacturing executives across Minnesota. It was also supplemented by focus groups. The poll has an error rate of +/- 4 percent. Access the full results in Rob Autry’s analysis.
Driving value in your organization
For insights on improving long-term success, read “What Drives Value in Your Organization,” by Brent Terhaar, a manufacturing and distribution principal with LarsonAllen. His article was published in the book containing the complete 2010 survey results. For more information, contact a manufacturing and distribution principal in your area.