As rising interest rates, poor economic conditions and an ongoing talent shortage continue to plague manufacturers, optimism amongst industry leaders remains low, according to a new industry report. The latest Sikich Industry Pulse: Manufacturing and Distribution found that more than half of manufacturers (57%) rated their optimism about business prospects over the next six months at a seven or lower on a scale of one to 10. This is similar to the same time last year – in March 2022, 53% of manufacturing leaders rated their optimism a seven or lower on a scale of one to 10.
When asked about factors contributing to decreased optimism, three main challenges were cited:
Compounding these challenges, manufacturers have had to increase wages to meet labor needs and support employees through an economic slump. More than half (53%) of manufacturers have increased wages by 5% to 8% in the past 12 months, and nearly one-quarter (22%) have increased wages by 9% or more. Thirty six percent of manufacturers reported that wage increases over the past 12 months are significantly higher than increases over the past five years.
On a positive note, nearly half of survey respondents (43%) reported consistent or increased customer demand and 34% noted improvements to the supply chain. In comparison, in October 2022, 43% of manufacturers reported supply chain issues.
“While manufacturers are working through turbulent economic conditions, customer demand remains consistent – putting an even bigger strain on labor challenges,” said Jerry Murphy, partner-in-charge of manufacturing and distribution services at Sikich. “Manufacturers that invest in talent strategy differentiators today will be able to meet customer demand and weather the economic storm, setting themselves up for long-term success.”
The need to increase workforce
To keep up with customer demand, manufacturers are focused on talent acquisition. Half of manufacturers plan to increase their workforce…
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