Manufacturing leaders still cautious

Manufacturing companies have a lot of cash on their balance sheets, but they will continue to spend it conservatively in 2013, according to Peter Gottsacker, president of St. Francis-based Wixon Inc.

Businesses are likely to underspend on capital as the global manufacturing sector weathers a period of uncertainty, particularly in BRIC countries, Gottsacker said.

“The leading economies that are growing have probably slowed down,” he said. “When they slow down, those are kind of the engines in the manufacturing industry, so that has slowed manufacturing down.”

Wixo, a seasonings manufacturer, projects revenue of more than $100 million in 2013. It has more than 230 employees, and plans to hire another 15 this year as it continues to create new products to meet the recent healthy food and specialty diet trends.

Many manufacturers will likely invest in innovation this year, since it is needed to gain a competitive advantage over Asian countries with lower costs of production, said Gottsacker, who was a featured panelist at the Northern Trust Economic Trends Breakfast presented by BizTimes on Jan. 18.

Whether it’s technology, packaging or finding a quicker, smarter way to deliver products to the market, supply chains, customers and suppliers will collaborate on innovation, Gottsacker said.

“I see that being much more prevalent now and probably more unique to the U.S. in terms of manufacturers in the U.S. maintaining their competitive advantage against the other countries’ resource advantages,” he said.

The weakness of the dollar, increased regulations, higher taxes and the onset of health care reform will all increase costs, Gottsacker predicts. At the same time, Asian demand is increasing commodity prices, so manufacturers will work to control input costs this year, he said.

Manufacturing Trends

  • Continued fiscal conservatism on corporate balance sheets.
  • Investments in innovation to gain competitive advantage.
  • Working to control rising input costs.

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