Some manufacturers may have escaped the wrath of the economic downturn

Source: Enhanced Online News

Feb 02, 2010

Following recent reports that the economic downturn is continuing to linger as expansion of the gross domestic product slows, a new survey shows that 25% of U.S. manufacturers say they have seen no impact at all on their business due to the recession.

The survey of 150 manufacturers commissioned by Advanced Technology Services (ATS) with Frost and Sullivan suggests that large manufacturers seem to have weathered the storm the best, with 29% of companies with more than 1,000 employees reporting no impact at all. The report indicated that only 19% of companies surveyed said the economic downturn has had a “great” impact or “very great” impact on their business.

Larger companies (those with 1,000 or more workers) reported the least impact due to the recession, whereas medium-sized organizations reported seeing the greatest impact, saying that the economy has resulted in layoffs of full-time workers.

The aftermath of the recession has left many manufacturers wondering what the repercussions will be on the skilled labor shortage. According to the survey, respondents reported the lack of skilled labor is expected to cost their organizations on average $11 million dollars over the next five years. The cost reported is highest for larger companies and is estimated at $17 million dollars. The majority of respondents indicated they would fill positions with full-time workers when the economy recovers, however, close to a third said they would also fill positions through outsourcing with contract/flexible workforce.

Not everyone appears to agree that there will be a skilled labor shortage. In fact, only a quarter of respondents expect to be affected by a lack of skilled labor with the greatest impact among medium and larger organizations. One-third say the availability of skilled workers will not change, while 38% expect a surplus supply of skilled workers.

Some manufacturers believe this points to a bigger public-policy issue the nation needs to address, especially larger organizations. In fact, 69% of survey respondents in both corporate and plant roles within their organization say the Obama administration should institute policies to encourage and promote skilled-trades training and education.

As manufacturers look to the future and attempt to move past the effects following the downturn, viewpoints on when a real recovery will take place vary widely. Thirty-six percent said economic growth will resume by the first or second quarter of this year, whereas 23% expect growth later in the third or fourth quarter. One-fourth of respondents don’t expect growth until 2011 or later. Small and large manufacturers don’t see eye to eye on what’s in store for U.S. manufacturing. Nearly a third of small manufacturers polled expect to see no growth at all in demand in 2010, with business only starting to pick up in 2011, whereas many bigger companies say they are already seeing tentative signs of growth and expect economic recovery to take hold this year.