Rumors and alarmists swarm the manufacturing industry, predicting its imminent demise if significant changes do not come to pass. While the concerns are worthy of discussion, manufacturers with fewer than 100 employees are actually experiencing a period of substantial growth. Perhaps, then, it is not the death of an industry, but rather a metamorphosis.
Manufacturing SMBs Setting the Bar for Hiring and Business Growth
In a snapshot survey of 134 SMB executives, nearly three-fourths of them reported hiring more staff. One-third of the respondents indicated they planned to continue hiring in the next six months while over half (53%) expect to maintain their current number of staff members. Looking at the final numbers, this means only 14% of SMBs do not expect to hold steady or grow in the near future. Outside of employment growth, these same respondents also provided insight into their projected business growth:
- 23% expect an inventory increase
- 47% expect a production increase
- 49% expect new orders to increase
Although they are optimistic about their own businesses, manufacturing SMBs are less sure of the economy’s future.
- 27% expect the economy will grow
- 57% expect the economy will remain the same
- 16% expect the economy will decline
While only around a quarter of manufacturing SMBs predict economic improvement, over half expect it to remain in its current condition. This is not a bad sign for them given their current business performance. With the present economy, SMBs are experiencing employment growth and expect to increase production output. While their outlook on the economy is less upbeat, their business projections remain positive.
Why SMBs are Growing and Large Enterprises are Not
Even though manufacturing SMBs are experiencing growth, large enterprises are not experiencing the same development. This is in large part because the manufacturing industry is risk-averse. SMBs are more willing than large enterprises to spend money on new technology, talent acquisition, etc. Once an SMB experiences enough growth to become a large enterprise, their risks grow with them.
Taking risks is often part of being an SMB. The company cannot succeed without a certain level of risk, and it is up to the executive to make those decisions. In large enterprises, risk takes on a new meaning. Some small risks are acceptable; large risks are not. Large enterprises have more to lose, and, in an unreliable economy, large enterprises are playing it safe. However, avoiding risk is also stifling productivity growth and stunting hiring trends in large enterprises.
Compounding this issue is that while large enterprises are hiring less, output has grown. This means they are producing more with less labor. While this indicates improved productivity, large enterprises are not capitalizing on it. Productivity appears to be at a low point as a result. American manufacturers are producing more, and their goods are retaining and gaining in value. While output took a hit during the great recession, it has since recovered. Large enterprises can afford to follow in SMBs footsteps. To improve productivity, manufacturers need to lose their fear of the risks associated with growth. To learn more about the state of the manufacturing industry, contact the experts at Trion.