Plants plan to invest in R&D, executives and automation

April 15, 2011
Mike Bacidore, chief editor, asks should you hire more maintenance workers or invest in automation and technology.

Things are looking up. Aren’t they? Most senior-level executives agree the economy is improving. But as manufacturers rebound, their plants continue on journeys toward more-effective predictive maintenance programs. And thus, managers and directors struggle with the decision of whether to hire more maintenance workers or invest in automation and technology that improves reliability and often reduces the costs or recruiting and onboarding new employees.

Senior management is significantly more optimistic about their own companies’ growth than they were in November, according to a Grant Thornton survey of 70 executives at U.S. manufacturing companies. More than 90% of participants reported they’re optimistic about their companies’ growth in the next six months, up from 81% in November.

As for the economy, 60% believe the U.S. economy will improve in the next six months, up from 49% in November. However, those planning to increase hiring in the next six months saw a drop to 44% in February.

“We believe that the decrease in expected hiring, despite an overall high level of optimism, is because manufacturing executives feel some uncertainty about the future of manufacturing in the United States,” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products and a member of the board of directors of the National Association of Manufacturers (NAM). “These executives believe the U.S. government has no battle plan to make American manufacturing more competitive in order to create more good-paying jobs. In fact, to the contrary, they believe Washington has created a climate that has made American manufacturers less competitive over the years. Rather than spending scarce resources on employees, manufacturing executives are spending on capital equipment purchases and technology to improve productivity and lower costs in an effort to be more competitive globally.”


Similar to the Grant Thornton findings, almost 90% of companies expect revenue growth in 2011, according to a Nick Pierce & Associates survey of 200 senior executives at mostly larger industrial manufacturing and pharmaceutical companies. However, the bulk of them expect a moderate increase of less than 25% over 2010, which isn’t exactly a bold or aggressive projection.

Still, these companies expect their executive hiring for 2011 to grow. Seventy percent predict their hiring of executives earning more than $250,000 to stay the same or increase. But almost half of the respondents admit the biggest impediment to hiring is the unstable economy, clearly the most common influence. Yet more than three-quarters of companies plan to invest in R&D.

So, in these delicate times, as the world steps from the mud fields of recession into more fertile opportunities, consider where investment makes the most sense for management of all assets.

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