Illinois manufacturing down, but not out
While manufacturing executives nationwide are optimistic that the U.S. economy will improve, they have a dimmer view of their own sector, said a survey released Tuesday.
Suburban manufacturers agree, but they said they're using this time to take advantage of the recession, improve their operations and grow at a slow pace.
"They have more time to initiate new product development and other enhancements to their businesses, and the stronger companies will emerge from this downturn in a more competitive position," said Mary Rose Hennessy, executive director of Business and Industry Services at the University of Illinois in Naperville. The group has more than 1,200 area members.
Manufacturing in Illinois has been bleeding jobs for some time. A report released in March by the Illinois Commission on Government Forecasting and Accountability said Illinois has lost more than 240,000 jobs since 1998 and those losses likely are permanent. The Illinois Department of Employment Security last week reported that 2,800 jobs were cut in the manufacturing sector during June, the 17th consecutive month that sector has lost jobs. But it was the smallest decline in the past eight months, the state report had said.
"There's still contraction in the sector, but it may have slowed," said Jin Nelson, spokesman for the Illinois Manufacturers' Association in Springfield. "We'll have to see how the next few months play out."
That light at the end of that long tunnel was also evident in Tuesday's survey released by Baker Tilly Virchow Krause, an accountant and consultancy group with offices in Chicago, and KRC Research. They conducted a survey of manufacturing executives nationwide during June that found six in 10 executives had a positive outlook for the U.S. economy over the next six months. But the executives were more pessimistic about their own sector during that time. Midwest manufacturing executives had similar views, said Brad DeNoyer, firm industry leader, manufacturing sector, for Baker Tilly.
"The feeling is that the worst is over, but no one is talking about the glory days returning," said DeNoyer.
Overall, about 70 percent said they would keep staffing levels the same, according to the survey. Executives also plan to reinvest in their companies and reduce operational costs. Despite the beleaguered auto sector, Midwest manufacturing executives had similar views. In fact, about half of them expected their company's performance to improve. About 10 percent saw their firm in danger of failing, according to the survey.
The survey also said about 47 percent reported no revenue was made outside the country. That surprised Hennessy.
"I am sure that it would be higher among our companies. Exporting is key to growth and smart companies have been involved for some time in global markets," Hennessy said.
Optimism in manufacturing
Here's what some Midwestern manufacturing executives think about their sector and the economy:
Cautiously optimistic: About 60 percent have a positive view of the outlook for the U.S. economy over the next six months as compared with 57 percent nationally. There was a higher level of deep optimism - 14 percent in Midwest were very optimistic versus 9 percent nationally
Right sizing: Over the next six months, 69 percent said they plan to keep staffing levels the same.
Brighter days: Five in 10 executives expect their firm's performance to improve, as compared with 49 percent nationally. A total of 10 percent (disproportionally small businesses) said their firm is in danger of failing.
Strategies: Over the next year, the majority expect to reduce costs across the board, such as operational (78 percent) and supplier (65 percent) costs, and 70 percent plan to increase the diversity of products and customers.
Note: About 300 telephone interviews with senior executives of small, medium and large U.S. manufacturing companies took place between June 2 and June 22.
Source: Baker Tilly Virchow Krause and KRC Research