If you asked a mid-market U.S.-based manufacturer about its projections for growth in 2017, odds are you would get smiles, head nods, and thumbs-up. That is because a recent survey of these manufacturing executive’s reveals record levels of optimism for business growth, the U.S. economy, new hiring, and revenue expectations in 2017.
These optimistic results come from the ninth annual CFO Survey from Prime Advantage, which polled the top finance executives of mid-sized manufacturers that represent more than 25 different industries, including commercial foodservice equipment, packaging, truck and trailer, material handling, food processing, and construction equipment.
Seventy-one percent of respondents to the Prime Advantage Group CFO Survey are more optimistic about their own companies’ prospects in 2017 than they were in 2016 – a 17 point jump from last year.
In examining the survey findings, we see that these executives returned perspectives that consistently demonstrated high hopes for growth and success in 2017, beginning with their opinions for their own companies’ financial prospects. The benchmarked survey findings show that 71% are more optimistic about their companies’ financial prospects for the coming year as compared to last. This result is a 17-point jump from 2016, the largest year-over-year increase in optimism since 2010, when manufacturers were eagerly anticipating that the Great Recession would soon end.
The outlook on the U.S. economy also appears positive, according to these survey findings. When asked if they were optimistic about the economy this year, as compared to 2016, 74% said they were more optimistic for 2017.
With respect to the most realistic and actionable ways the White House administration and Congress can help businesses, 94% of CFOs cited comprehensive tax reform as one of the top three tactics government could use.
This 48-point increase over 2016 is by far the largest jump in CFOs demonstrating optimism for the U.S. economy since the survey began.
Potential obstacles to growth
Hiring qualified talent continues to be a top concern for industrial manufacturing companies in 2017. Sixty-seven percent of survey respondents are expecting to increase their headcount this year, however 78% are also struggling to fill open positions. This growing concern over skills shortages was echoed in the Deloitte 2017 report on business and economic trends.
While 67% of survey respondents are expecting to increase their headcount this year, 78% are also struggling to fill their open positions.
However, these CFOs continue to project fiscal health for the coming year, crediting new product lines, new customer acquisitions, and an overall increase in customer demand. Expectations are high, as 84% are stating that revenues will increase in 2017. A survey history low of only two% expect a decline, a nine-point drop over the previous year.
While there is no doubt that the findings from Prime Advantage's 2017 Group CFO Survey offer a healthy level of optimism in the economy this year for small and mid-sized industrial manufacturers, it should not surprise anyone that these mid-market manufacturing CFOs are also closely monitoring external factors to make sure that these optimistic plans do not get waylaid as the year unfolds.
“We were pleased to see that the ISM’s last PMI report mirrored the sense of economic optimism that is apparent in our own research,” said Dan Grant, president, Prime Advantage. “Given that some electric components are considered in short supply; we know this could have a temporary impact on rising prices. But overall, we feel good about business indicators like an increase in new product plans, a healthy jump in staff leadership development, and a second straight year showing a decline in plans to cut back on operational costs.”
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