Despite manufacturing being one of the few good things happening since the recession, U.S. manufacturing leaders are increasingly cynical, according to the latest survey from Grant Thornton (www.grantthornton.com), which shows extreme pessimism. Few of those surveyed expect any economic improvement in the next six months.
In Grant Thornton’s first Business Optimism Index of the year, 60% of those surveyed looked favorably on the coming six months; but in the third quarterly survey, only 13% expect the situation to improve. That’s a considerable drop from the 40% that were optimistic in May. In fact, 40% believe the U.S. economy will actually get worse over the next six months, up from just 3% in February.
Almost all of those surveyed in February (91%) were at least somewhat optimistic about their own businesses. That stands at just over half in the latest survey, down from 80% in May.
"Manufacturing has been one of the few bright spots in the economy since the end of the recession, generating more than 300,000 new jobs since December 2009, according to the National Association of Manufacturers," said Jim Maurer, partner and practice leader of Grant Thornton's Consumer and Industrial Products Practice in Chicago. "Strong export growth in 2010 and the first half of 2011 helped increase revenues and create jobs. However, the slowing global economy coupled with a lack of confidence in domestic and global economic policy has caused senior manufacturing executives to turn cautious as these are matters over which they have very little direct control."
Instead, manufacturers are focused on what they can control, such as reducing costs by improving processes; using techniques such as Lean Manufacturing and Six Sigma; upgrading production equipment and IT systems to enhance efficiency; and reinforcing quality and customer satisfaction.
When asked what public policy initiative would make business leaders most optimistic about the country's future, a job creation program was most popular (46%), followed closely by deficit reduction (43%). Only 21% of manufacturers say they will increase hiring in the near future, and 35% say they plan layoffs. More than half of the executives are least optimistic about the reduction of effective corporate tax rate having a positive effect on the economy.