Manufacturers Optimistic About Business Prospects

Aug. 1, 2006
Small- and medium-size manufacturers are more optimistic than other industry segments with many owners and managers projecting revenue growth and continued

Small- and medium-size manufacturers are more optimistic than other industry segments with many owners and managers projecting revenue growth and continued hiring over the next 12 months, according to the results of an International Profit Associates Small Business Research Board (IPA SBRB, Buffalo Grove, Ill.) survey just released.

The IPA SBRB Manufacturing Confidence Index was established at 45 for the first IPA SBRB manufacturing industry poll completed earlier this month. By contrast, the aggregated IPA SBRB Small Business Confidence Index (SBCI) for all small- and medium-size businesses participating in the survey was 39.3, which represented a drop from 47.3 for the previous poll concluded in May 2006. Similarly, the confidence of construction and contracting firms dropped to 30.7 from the 49.3 that was registered three months ago.

Nearly half of the manufacturers that responded to the poll indicated that they are forecasting improvement in the economy over the next 12 months and that a full 50% of them expect revenues to increase during this period. Nearly 40% said they expect revenues to remain about the same. This compares to the universe of all small businesses of which only 42 % believe the economy will improve during the next year and 46% of whom are expecting revenue growth. Among construction and contracting companies, 26% said they had confidence that the economy will improve. Of the construction and contracting firms responding to the survey, 40% are estimating that revenues will exceed current levels over the next 12 months.

Hiring among manufacturers is projected to remain healthy. During the next 12 months only 5% said they intend to decrease the workforce, 45% said it will remain the same and 38% believe they will add employees.

“There is a significant variance in the confidence levels,” says Gregg Steinberg, president of International Profit Associates, “of manufacturers versus those of the general small business community and those of construction companies and contractors. By the end of the year, we will be able to determine whether the perceived strength in the manufacturing is based upon existing orders or new contracts,”

Finding quality employees was listed by 17% of the manufacturing respondents as their most significant issue. Other major issues were cost of materials (16%), taxes, (13%) and economic conditions (12%).

Source: International Profit Associates Small Business Research Board