Manufacturers are Optimistic, Finds Marcum Survey
AUGUST 11, 2022 (New York City, NY) – Manufacturers are feeling optimistic, according to the 2022 Marcum Manufacturing Survey. The annual survey is produced by the Manufacturing & Distribution group of accounting and advisory firm Marcum LLP.
Nearly all respondents to this year’s survey saw an increase in revenue year over year, and well over half expect to keep growing through 2022, approximating the positive outlook that two out of three respondents expressed as a whole.
Among the report’s key findings:
- 85% of respondents reported revenue increases, despite headwinds from labor and logistics, sourcing difficulties, and ongoing struggles with inflation. 95% of respondents expect 2022 revenue to meet or exceed 2021, and only 5% anticipate a decline. Overall, 60% of respondents have positive feelings about manufacturing’s outlook in 2022.
- Replacing the skilled labor lost during the Great Resignation was cited as the biggest challenge by 83% of respondents — by far the largest concern among manufacturers. At the same time, 77% of respondents plan to increase headcount in the next 12 months. Given that, and knowing how competitive the labor environment remains, 86% of respondents raised wages, 66% improved benefits, and more than half increased bonuses last year.
- The top three priorities cited by manufacturers for the immediate future are increasing productivity, leveraging technology to drive innovation and improve quality, and expanding product and service offerings.
- Half of all respondents invested in new technology last year, and another 40% plan to do so this year.
- 40% of respondents are seeking to diversify their supply chains, with 63% of respondents reporting shipping delays and a third unable to meet demand last year due to supply chain issues. Ongoing supply chain disruption was a top concern for 45% of respondents, up from 23% last year.
- Manufacturers are responding to escalating inflation with price changes. 70% of respondents plan to raise prices this year; renegotiate with suppliers; and a have renewed focus on efficiency.
“It is encouraging to see that optimism among manufacturers remains high, although the 60 percent who expect higher revenues this year is down from 80% last year, when the pandemic was first showing signs of sunsetting,” said Jonathan Shoop, a Marcum audit partner who focuses on the manufacturing sector.
“It is not surprising that more than 75% of respondents view their workforce as a critical to the success of their businesses, and that the ongoing tight labor market —– especially for skilled workers —– remains a major concern. More than 60% of respondents told us they plan to increase their workforce by at least 5% in the next year, and more than 80% expect to replace 15% or more of their workforce in the next four years. While most manufacturers are offering higher wages and looking to improve benefits, those approaches can be a zero-sum game if everyone is applying them,” Shoop said.
While smart manufacturing continues to drive companies’ investment in technology, the sector often lags other industries in upgrading systems.
“Manufacturers — many of whom consider IT a necessary evil — often keep legacy systems running for a decade or even longer. That approach is simply not viable anymore. Manufacturers already work in an interconnected supply chain. But what they may not recognize is how vulnerable lagging IT systems really make them,” said David Mustin, vice president of Strategic IT Consulting for Marcum Technology.
“There have already been more than a half dozen major updates to cybersecurity and privacy regulations so far this year, and contractual obligations are imposing greater accountability on organizations to protect their data, systems, and people. Regulators are also pushing public companies to provide greater transparency around data security breaches, and new rules are being proposed to mature the security management and operations, particularly for the sake of investors. All of these considerations must be taken into account by manufacturers in their budgeting and strategic planning,” he said.
“Assess your current cybersecurity capabilities across your key systems, and understand where you might have exploitable weaknesses,” wrote Frederick Johnson, Marcum Tech’s vice president of cybersecurity and digital forensics. “It is critical that manufacturers understand their compliance obligations and their contractual promises to clients, and close their security gaps. Instead of fearing cybersecurity threats and just hoping it will never happen, manufacturers need to build a plan and test it by conducting tabletop exercises with the company’s top leadership.”
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