manufacturing + distribution
2022 VOL 3
In October 2022, Sikich surveyed more than 120 manufacturing and distribution executives on optimism, automation, plans for a possible recession, and more.
TAB THROUGH THE RESULTS BELOW.
Optimism is continuing to trend downward. Only 49% of industry executives rated their optimism a seven or higher, on a scale of one to 10, with an economic recession serving as the top contributing factor, similar to sentiments in June of 2022. And Sikich is not the only one seeing this trend. The National Association of Manufacturer’s quarterly outlook survey found only 75.6% of their respondents were positive about their company’s outlook; the association’s lowest outlook since Q4 of 2020.
“The manufacturing and distribution sector is one of resilience. I don’t anticipate the looming recession would have great effects on their trajectory of growth. Though, the 2023 ISA Global Economic and Risk Outlook found the over-65 population is the fastest growing segment of the U.S. population, predicted to grow from 9% today to 16% by 2050. This is not ideal for employers. I encourage industry leaders to focus on long-term solutions to backfill their aging workforce and automate as much as they can.”
– Jerry Murphy, Partner-in-Charge of Manufacturing & Distribution Services
More optimistic vs. less optimistic comparison
“Our customers are still ordering – perhaps a ‘spend it while you have it’ mentality.”
“We have enough work in-house to keep our employees busy for at least the next five to six months, even if we didn’t get any more work. We also have acquired several new customers that have ordered a significant amount of work from us.”
“Demand for service is increasing.”
“Backlog of orders will keep everything good for at least six months.”
“I’m fairly positive; our backlog and pipeline look strong.”
A recent Sikich webinar with internationally recognized economic forecaster, Michael Weidokal, highlights key contributors to a “more mild recession to 2008″
Industry executives aren’t touching wages, but they’re planning to cut costs in other ways:
“Focus on growth; create additional revenue streams; be more competitive”
“Business is better in a downed economy”
“Build up cash reserves”
“Skip my bonus”
“Bring outsourced work in-house”
FACTORY FLOOR A PRIORITY
Manufacturers are less focused on Robotic Process Automation (RPA)
with their eyes set on tangible bots for the factory floor.
When asked about RPA implementation plans,
half wrote it off entirely:
Instead, the factory floor is the biggest focus for existing and future automation:
Department Slated for More Automation in Next 12 Months:
67% of those that currently implement the most automation on the factory floor are planning to double down and pursue more automation moving forward.
“It’s great to see more companies have purchased bots in the past year – up from 18% in 2021 to 20% today. The majority of manufacturers using bots know they’re just scratching the surface. Companies that dedicate resources to automation efforts will move the needle and reap benefits for years to come.”
– Debbie Altham, Senior Director, Technology
See where bots are most effective:
Manufacturing leadership is no stranger to fielding offers to buy their business, but what happens when they want to take an offer seriously? Only 25% have an idea of what their business is worth and only 36% have a grasp on the time and effort needed to position their business for sale.
Top Motivation to Sell Business
*respondents in the “Other” category commented that they had circumstances precluding them from an upcoming sale (recently sold, are ESOP owned, etc.).
Approached with an Offer to Sell Business
“From recent trends we’ve seen and in talking with our networks, private equity firms will continue to lead the pack of motivated, potential buyers. We are also seeing many strategic buyers looking at their competitors as a way to increase market share or diversify their portfolios.”
Cheryl Aschenbrener, National Leader of Transaction Advisory Services
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