Ups & Downs - What’s on the Minds of Manufacturers?

Hoosier manufacturers have a lot on their minds this year, with many predicting an array of ups or downs that could impact business operations. Their sentiments are a mixed bag. Some are indicating great optimism, with expectations of jobs added or new facility expansions. Others though are understandably concerned about the broader economic outlook, evolving industry trends, and great uncertainty throughout the industry.

Representatives from 80 firms expressed their views in a statewide survey that was conducted by Katz, Sapper & Miller with the IU’s Kelley School of Business and the Indiana Manufacturers Association. These findings were compiled in a report titled “Sailing in Troubled Waters,” which is a rather accurate way of describing the ability of Hoosier manufacturers to push forward through turbulent times.

“While we may be sailing in the troubled waters of economic uncertainty, we expect Indiana manufacturing to continue to prosper, even if those waters remain rough for a while,” said Mark Frohlich, associate professor at the Indiana University Kelley School of Business Indianapolis and director of the IU Kelley School Center for Excellence in Manufacturing. “They remain committed to investing in technologies, developing the workforce, and finding ways to maintain profitability.”

Challenges and Hopefulness

According to the responding Hoosier manufacturers, macroeconomic issues are among their main reasons for concern. But Indiana firms in this industry are nothing if not resilient. As explained by the survey’s authors, “Inflation persists, interest rates remain high, labor shortages endure, and recession is a very real possibility. Yet, once again, Hoosier manufacturers appear prepared to face these challenges in the months and years ahead.”

Some of the biggest challenges and issues that resulted from the survey found that:

• A majority of respondents (55%) believe the economy will slip into a recession in 2024, which is making them overly cautious. Conversely, 19% believe a recession will be avoided this year.
• Companies are finding it difficult to maintain margins, hire labor on a steady basis, and deal with supply chain shortages because of significant inflation. In fact, 53% of the responding companies said that inflation is their biggest challenge currently.
• Because of these issues, only a minority (30%) of survey respondents said they consider their businesses to be “healthy.” Adding to that, about one in four companies said their financial performance is “challenged.”
• Also, due to high interest rates, about 33% of responding companies said they are planning to invest less in new equipment or facilities.

Reasons for Optimism

Despite all of the major challenges and concerns facing the Hoosier manufacturing industry today, there are still several bright points that provide reasons to be optimistic. Many of the companies that participated in the survey are expecting growth in the near future, in terms of employment, market share, and more. Specifically, the report found that:

• Forty-one percent (41%) of respondents indicated the number of manufacturing jobs at their organization are increasing, while just 19% reported they are decreasing.
• For those indicating that the number of jobs are increasing, 52% attributed this to increasing market share for their current products.
• Another 35% attributed job growth to the addition of new product lines, while 13% plan to relocate more jobs to Indiana from overseas.

On the subject of technology, most companies are expecting the rise of new processes like advanced manufacturing and automation will have a positive impact on jobs and competitiveness. Almost half (45%) of the respondents expect the number of skilled jobs to increase, while just 12% anticipated that automation will reduce the number of positions in manufacturing.

One responder even said the best decision their company made over the past year was to invest in new manufacturing tech. According to their response, this investment will enable their company to produce their current products faster and add in new products at competitive prices.

Resilience is Key

Hoosier manufacturers may be sailing through troubled waters, but their sails are filled with both resilience and momentum. That’s the hallmark of what makes Hoosier manufacturing so strong. Although the journey ahead may be choppy, the destination – continued prosperity and a leadership role in the industry – remains clear. And when combined with the spirit of innovation and adaptability, Indiana manufacturers will always find a route to success.