Manufacturing is growing, despite concerns

Departments - From the Flight Deck

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Business is growing, but tariffs and trade remain a concern in 2019, according to a broad range of manufacturers. Half of all suppliers cited availability of materials or supplies as a concern, while tariffs worried 44%. Unexpectedly, logistics and shipping costs were a concern for one-third of survey respondents. The summary comes from the MFGWatch 2019 Manufacturing Report, which includes companies manufacturing parts for machinery, tools, and equipment (31%) and aerospace/aeronautics (22%). Nearly half of the industrial professionals surveyed were small businesses, with fewer than 50 employees.

Most of these custom manufacturers have at least one industry certification, ISO9001:2015 being the most popular (42%), and AS9100 certification next at 14%. This makes them a realistic cross-section of our readership.

Supplier companies reported having a good year in 2018, with 65% receiving more work than in the previous year. Nearly half (45%) increased staff last year, and the majority increased available capacity. Those changes were required because 65% of companies reported an increase in requests for quotes (RFQs). Only 12% had a decline in RFQs.

The sales increase is causing demand for more suppliers in 2019. Almost half (49%) of buyer respondents said they plan to add suppliers to their network this year. This is up from 41% of buyers who increased their supplier base in 2018.

A surprising finding for researchers was one-third of respondents saying the availability of competent suppliers was threatening their sourcing/supply chain, with almost an equal number citing product quality compliance. More than four in ten respondents experienced a significant supply chain disruption, causing them to seek new suppliers. This suggests opportunities for companies that can reliably deliver quality products.

Buoyed by the positive results of last year, 44% of suppliers plan to invest in their workforce and acquire new technology this year. Slightly more than one-third say they will invest in new technology rather than workforce; a nearly equal number plan to invest in both.

The challenge of finding and retaining skilled workers remains the number one issue for manufacturers. The skilled labor shortage and finding ways to entice newer generations to embrace physical labor instead of desk work were concerns cited most often.

A key finding was most respondents are bullish about the aerospace industry, identifying it as a growth opportunity. (You, our readers, knew that already.) Other manufacturing areas thought to be advancing this year include robotics, electric vehicles, and medical. We’ve seen signs of that growth already. We’ll know by year-end how well other cited potential growth areas such as energy/ power, mass transit, and metals and mining fared.

– Eric