Study Shows Manufacturing Optimism Buoyed by Innovation and Adaptability
The study found that manufacturers appear more likely than other sectors to do business differently than they did pre-pandemic, with a new focus on productivity and efficiency.
While manufacturers continue to face supply chain disruptions as a result of the pandemic, these companies are more optimistic (65%) than the national average (52%), saying they expect overall economic conditions in the U.S. will improve, according to a recent study from Umpqua Bank. Manufacturers also appear more likely than other sectors to do business differently than they did pre-pandemic. About 73% of companies surveyed expect to maintain most or all of the changes put in place since March of last year. That’s far higher than the national average of 54% and any of the eight industry cohorts covered in the survey.
The findings are part of a “2021 Business Barometer” report released by Umpqua Bank that provides insight on the mood, mindset, and strategic priorities of nearly 1,200 leaders at small and mid-size U.S. companies. The survey breaks down results into seven major industries.
The survey shows that manufacturers will continue to retool their approaches over the next year. About 61% of manufacturers said they were likely to change their products and services, more than any other sector and well above a survey average of 37%. Half of the manufacturing businesses said they plan to change their pricing model, slightly higher than the 45% average for all survey respondents. In addition, 70% of companies surveyed say they want to find ways to automate repetitive tasks previously performed by workers, more than any other sector and much higher than the national average of 44%.
“Manufacturers from small shops to mid-sized companies have showed remarkable resilience during the pandemic, investing in automation and evolving the way they’ve done business over the years,” said Richard Cabrera, executive vice president and head of middle market banking at Umpqua Bank. “Even through all the difficulty, the pandemic has served as a catalyst in jumpstarting new approaches, with a newfound focus on efficiency and productivity.”
Additional key takeaways from the survey include:
- Roughly 55% of manufacturers said they were more likely to take on debt to finance growth over the next 12 months, compared with an average of 29% for all companies and by far the highest among all industries (business services, 35%; construction, 34%; and wholesale, 27%).
- The optimism of manufacturers (65%) was higher than any other industry, such as wholesale (59%), finance/insurance/real estate (58%), and construction (56%).
- About 36% of manufacturers said that they’re considering an increase to their real estate footprint, vs. 32% for all sectors.
- About 30% of manufacturers said they are more likely to acquire another business in the coming year, vs. 26% of all companies.
- Manufacturers’ focus on automation (70%) far outpaced the other sectors, such as wholesale (56%), business services (50%), retail (40%), and healthcare (27%).
“Without a doubt it has been a difficult time for many manufacturing businesses over the last year or so, but we see very encouraging signs,” Cabrera said. “We’re likely entering a new phase of competitiveness, marked by entrepreneurship, creativity and innovation.”
Conducted annually, the Umpqua Bank “2021 Business Barometer” surveyed 1,196 owners, executives, and financial decision makers from U.S. small and middle-market companies. The online survey was conducted in partnership with DHM Research, a public policy and business research firm, and targeted executives at companies with $500,000 to $500 million in annual revenue. The survey has a 2.8% margin of error and was fielded from May 24-June 4, 2021.
Full survey details are available at www.umpquabank.com/business-barometer-survey-report.
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