Survey shows signs of optimism in manufacturing

Potential investments, acquisitions on tap in 2017

Manufacturing plant

Despite slight overall dips in sales and profitability last year, Midwest manufacturers are generally optimistic about making capital investments moving forward, according to the latest survey from Wauwatosa-based professional development organization The Paranet Group.

Manufacturing plant

The number of respondents experiencing sales increases was down slightly, from 60 percent in 2015 to 57 percent last year. Respondents also said their margins were tightening and 31 percent said their profitability decreased in 2016, up from 28 percent in 2015.

Roughly four in 10 respondents said they are planning facility changes this year, with 46 percent of that group saying they would remodel existing facilities, 31 percent planning additions and 23 percent planning a new building.

For the entire group, 88 percent said they are planning to make capital equipment investments in 2017, an almost 6 percentage point increase over last year.

The report accompanying the survey results noted companies were looking to remodel to make better use of their space, while others were looking toward new buildings because of leases ending or a desire to be closer to customers.

“Some companies just need an update after not investing in their buildings for some time,” the report said.

The survey found 35 percent of respondents are considering an acquisition, with many feeling it would give them the ability to grow without the trial and error of starting up a new business line.

The report also noted many companies are involved in innovation and new product development to help fuel growth.

“There was a time when it was easy to distinguish competitors from each other,” the report said. “But today so many companies are playing in each other’s backyards as they take on new products and value added services, that companies are now ‘solution’ companies willing to do more.”

Among the lessons learned in 2016, the report noted a need to be responsive, use downtime to improve efficiencies, and strategically plan and develop new business.

Other respondents noted the increasing pace of change would force companies to start thinking and acting differently and that firms should always be open to new opportunities, even if they are non-traditional ones.

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Arthur Thomas
Arthur covers manufacturing for BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.