Manufacturing industry optimism on the rise, survey says

As concerns about a potential recession are subsiding in early 2024 and the economy continues to experience better-than-expected growth, manufacturers’ optimism of business prospects over the next six months has increased, according to the latest Sikich Industry Pulse: Manufacturing and Distribution report.

In February, Sikich surveyed more than 100 executives from manufacturing and distribution companies across numerous sectors including metal fabrication and industrial equipment. They rated their optimism an average of 7.07 on a scale of one to 10—the highest rating since June 2021, when manufacturers were coming out of the COVID-19 pandemic slump. In comparison, executives’ optimism averaged 6.76 on a scale of one to 10 in August 2023.

Two factors in the increased optimism across the industry are an increase in customer demand and a decrease in labor challenges. While four in 10 respondents noted increasing customer demand in August 2023, 51% of manufacturers attributed their positive outlook to increasing demand in 2024. At the same time, labor shortages and costs have less of an impact on manufacturers’ outlook, with only 18% and 15% of respondents noting these factors as a challenge, compared to 25% and 24% in August 2023.

Seventy-six percent of manufacturers implemented one or more operational efficiency projects in the past three years, and three out of four respondents to the survey are planning an operational efficiency project in 2024. These projects help manufacturers reduce costs (as reported by 58% of respondents), better measure results, and eliminate rework.

Of the organizational efficiency projects planned for 2024, 33% are organizational redesigns, 23% are kaizen events, and 22% are implementations of robotic process automation.

Further, 9% of manufacturers are planning a reduction in force in 2024. This is up 3% from March 2023, when 6% of manufacturers were planning a reduction in headcount.