Industry Reports

Manufacturers Anticipate Growth, Despite Skepticism

CLEVELAND – Nearly nine out of 10 northeastern Ohio manufacturers expect their revenues to grow in 2019 despite overall lowered expectations for the economy, a survey released Thursday showed.

The Ohio Manufacturing Survey was one of two documents presented at the 2019 State of Manufacturing event by the Manufacturing Advocacy and Growth Network – or Magnet – and Team NEO. Purolator International conducted the survey of 500 manufacturing companies on behalf of Magnet, according to a joint news release from the two organizations.

Of those surveyed, 88% of the respondents expect increased revenue for their company this year, up from the 86% who projected revenue growth going into 2018. That is despite skepticism about the overall economy’s prospects. The number of companies anticipating an economic expansion this year declined to 35% from 58% in 2018 and 56% in 2017. Companies anticipating an economic contraction or recession quadrupled to 17%, up from 4% in 2018.

According to the survey, 69% of respondents reported increased revenue in 2018, up from 63% the year before, and 48% reported they increased their workforce last year, up from 44% in 2017 and 32% in 2016. This year, 48% of respondents say they expect to increase their workforce by 5%, down from the 62% who projected growth in 2018.

Among the issues employers face is attracting talent, according to the survey. In 2018, 53% of respondents reported that the shortage of qualified workers would directly affect their company’s bottom line, up from 50% in 2017 and 45% in 2016.

In response, 47% plan to increase wages to attract more talent, and 79% report that they work actively to make their companies’ culture “more desirable to attract and retain talent.” To boost retention, 69% report they are increasing wages for current employees, 43% are offering more coaching and mentoring, and 42% are increasing rewards and bonuses.

While just 12% of respondents said drug use was a major issue last year among their current workforces – the same as the year before – 30% of respondents said that new applicants could not pass drug tests, up from 7% in 2017.

Out of 378 survey participants, 64% report being negatively affected by tariffs, while just 13% say they are benefiting.

With regard to automation, 44% of respondents said they increased their use last year, though 84% said they were increasing their current workforce to improve productivity, and not replacing employees or open positions through automation.

“We are encouraged by the growth of the Ohio Manufacturing Survey, which continues to give us powerful insights into the state of manufacturing in Ohio,” Ethan Karp, Magnet’s president and CEO, said. “We tremendously appreciate the partnership of our collaborating organizations, the financial contributions of our corporate sponsors, and of course the time and energy of the manufacturing respondents who make this possible.”

Also released Thursday was Team NEO’s Cleveland Plus Economic Review. According to the report, the $41 billion manufacturing industry makes up 20% of gross regional product for the 18-county region, and manufacturing employs more than 264,000 workers, with more than 21,000 manufacturing openings projected annually through 2023.

The chemical sector accounted for $7 billion in output in 2017, followed by fabricated metal product and transportation equipment, each more than $6 billion.

Total GRP for the region is projected to reach $238.5 billion for 2018 and total employment is at 1.95 million, with employment increasing by nearly 9,000 jobs annually. The manufacturing sector added 5,500 jobs from the second quarter of 2017 to the same period last year.

The 500 companies responding to Magnet’s survey reported that they currently have more than 3,000 openings.

“Moving forward, the rapid changes in manufacturing we’re beginning to see now will likely result in higher wages and increased productivity,” said William Koehler, CEO of Team NEO. “We expect these improvements to lead to increases in demand for our products, opportunities for a diverse workforce and the strengthening of our region’s global competitiveness.”

Published by The Business Journal, Youngstown, Ohio.