U.S. industrial manufacturers optimistic about domestic future

January 29, 2013

Optimism continues to be the prevailing emotion among U.S. industrial manufacturers after nearly 50 percent expressed the sentiment in a recently released survey.

According to a fourth-quarter financial report conducted by PricewaterhouseCoopers, 48 percent of respondents believed that the U.S. economy would continue to grow over the next 12 months, with only 7 percent adopting a more pessimistic attitude. The Q4 2012 Manufacturing Barometer, a quarterly survey of 57 senior executives at U.S. industrial manufacturers, also showed that 83 percent of those interviewed were confident that revenues would rise at their firms, while 58 percent indicated that hiring would also increase, a jump of 21 percent from the third financial quarter.

However, these sentiments seem to be confined to the domestic market, with 32 percent of respondents revealing that they expected growth overseas, while uncertainty over the economic situation in Europe and the perceived commitment to manufacturing best practices in the Asia-Pacific region scored highly with 53 percent of interviewees. According to the Dow Jones, U.S. industrial production in December was at its highest level since 2008, which economists credit to a shift in attitudes to the long-held practice of offshoring.

Spending on infrastructure was another sign of optimism, with 47 percent of companies expected to implement major capital projects over the next 12 months.

Forty-three percent were intending to expand facilities, while increased operational spending among manufacturers was predicted to rise by 80 percent of respondents. This was tailored with a decrease in overseas spending, with only 17 percent of interviewees considering facilities abroad, another sign perhaps that the principle of lean enterprise is better serviced in domestic rather than foreign work environments.

While the report showcased a mainly positive attitude from U.S. manufacturers, it sounded the odd note of caution. Lack of demand was considered to be a barrier to potential growth, with 52 percent of respondents citing it as a concern. The industry has also benefited from cheaper domestic energy prices in recent months, a situation that 42 percent of senior executives interviewed highlighted as susceptible to change in the next 12 months.

“Overall sentiment among U.S. industrial manufacturers regarding the prospects for the domestic economy rose in the fourth quarter along with company growth projections, which trended higher as well,” said Bobby Bono, U.S. industrial manufacturing leader for PwC, in a press release. “The improved sentiment regarding the domestic outlook contrasts with the continued high level of uncertainty concerning the international stage. Management teams are placing their bets on the U.S. economy as they seek avenues to strengthen their competitive positions and foster growth.”