More than 60 percent of manufacturers reported that they are in growth mode, according to The Paranet Group's 2015 mid-year survey. That is down from 73 percent at the end of 2014.
The strong U.S. dollar, a decrease in mining and military contracts, and an increase in exports from Canada and Mexico were cited as reasons for slower growth. Other factors were weak oil pricing and seasonality.
The manufacturers who identified themselves as in growth mode attribute that to new products and diversification. “While some markets are weak, having the ability to flex to other markets and new products has helped overall profitability,” the report said.
The top challenges manufacturers have faced thus far in 2015 were listed as: staffing problems; sales pipeline problems; price increases from suppliers and the refusal of customers to pay more; budget constraints; overseas suppliers and foreign bureaucracy; and new product capabilities and budgeting.
Other challenges mentioned by numerous members were: culture clashes; the oil and mining sector collapse; the lack of time to plan ahead; and freight issues.
In other results, the survey found that sales growth and new business had the biggest positive impact on manufacturers so far this year.
The sales growth and new business were caused by: new hires setting the bar higher, thereby re-energizing the sales force; the retirement of older sales people; the addition of support staff to allow sales people to sell, rather than do paperwork and other “time-wasting” duties; the addition of new products either internally or by purchasing another company; new leadership that pushes sales more and allows the manufacturing employees “to do what it does best;” and competitors going out of business.
The second biggest positive impact on manufacturers in the first half of 2015 was a decrease in the cost of raw materials and energy costs.
Other items positively impacting business were: positive lead time changes; more communication between departments; lean gains; and new hires that added a fresh set of eyes.
In regards to health care changes, 57 percent of respondents said they made no changes this year to their health care plans. Of the 43 percent that did make changes, they were: an increase in deductibles and premiums; a change in providers to reduce costs; the addition of more wellness and vision benefits; and the encouragement of savings through wellness participation.
The biggest challenges going forward centered around three areas: employees; manufacturing-related issues; and management and operating considerations.
Some of the issues related to employees are finding the right people; hiring the right people based on culture and experience; and making certain existing employees also know the company’s culture.
Changing the safety culture; keeping metrics up; and sustaining progress to date were a few of the manufacturing-related struggles.
Lastly, the management and operating considerations included funding of capital needs during a downturn; utilizing current assets effectively; and dealing with currency fluctuations.
More than 100 local manufacturers responded to the survey, which was conducted by The Paranet Group, a Wauwatosa-based manufacturing trade organization that provides best practices for manufacturers in Wisconsin and Illinois.