New Jersey Manufacturers Face Continued Challenges
New Jersey manufacturing companies are facing a variety of challenges to maintaining and growing their profitability. Not only are they tasked with managing traditional business issues such as labor, production, and logistics, but outside issues with tariffs and the economy are also becoming a concern. While challenges persist, there are mixed reactions about the future. According to the National Association of Manufacturing Outlook Survey – 3rd Quarter 2019, there is softening confidence about the future. Manufacturers are struggling with attracting and retaining labor, increasing raw material costs and changing economic conditions. The survey findings provide excellent insight into what industry companies may expect to experience in the coming months. To help clients, prospects and others understand the highlights, Klatzkin has provided a summary of key information below.
About the Manufacturing Survey
The NAM Outlook Survey was conducted in the field between August 20th and September 4th, 2019, seeking critical insights from manufacturing companies of various sizes. In total, there were 448 companies surveyed with 91 identifying as small manufacturers, 189 as medium manufacturers and 168 as large manufacturing companies.
- Overall Outlook – Attitude and outlook can have an impact on managements strategic decisions and the willingness to take risk. The survey wanted to uncover the overall outlook of industry companies for the coming year. According to respondents, 19% are very positive, 48.7% are somewhat positive, 30.1% are somewhat negative and 2% are very negative.
- Top Challenges – Uncovering the top concerns of management was an essential part of the survey. According to respondents, 69.9% are struggling with attracting and retaining a quality workforce, 63.4% about trade uncertainties, 45.3% about the weaker domestic economy, 41.7% with the increased cost of raw materials and 27% on changing transportation and logistics costs. Overall it appears the slowing economy and workforce challenges top the list of key concerns.
- Company Sales – One indicator of a company’s vitality is the projected amount of sales. According to the survey, 10.2% expect to see an increase greater than ten percent, 20.7% an increase between five to ten percent, 23.4% an increase of up to 5 percent and 24.7% expect sales rates to stay the same. The rest expected a decrease in sales over the same period. On average, all respondents predict there will be a 2.1% increase in sales.
- Expected Production – The number of respondents expressing a production increase dropped from 2.4% to 1.8%. While it appears in the short term the industry will experience a reduction in overall production, the survey did uncover that many respondents expect there to be an upswing within the year. What’s interesting is that medium-sized manufacturers were far more positive in growth forecasts than others, anticipating a 2.7% production growth over the next twelve months.
- Employment – An area that many New Jersey manufacturing companies are struggling with is finding qualified labor to meet employment needs. The survey wanted to identify expected changes to staff levels. According to the survey, 2% expect an increase by more than 10 percent, 8% expect an increase between 5 to 10 percent, 27.8% expect an increase up to 5%, 46.6% expect to maintain about the same levels. The balance of respondents predict a decrease in staffing levels in 2020.
- Product Prices – The expected price of products is another area where the survey wanted to explore expected changes. It appears that product prices are expected to increase 1.7% over the next 12 months, which represents another quarter where a decline from the high (3.2%) was expected. This number reflects the slowest pace of product price growth in three years.
- Exports – The impact of various tariffs and economic issues with other essential and major economies is an area that many New Jersey manufacturers are concerned about. According to the survey, respondents expect the rate of exports to increase by just .2% over the next 12 months, slowing considerably from prior surveys.
While the challenges manufacturing companies face vary based on a number of variables, these findings provide useful insights for management about the state of domestic manufacturing. If you have questions about the survey or need assistance with a manufacturing tax, audit or accounting issue, Klatzkin can help. For additional information please call us at 609-890-9189 or click here to contact us. We look forward to speaking with you soon.