Only You Can Control Your Future

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Or so Dr. Seuss was once quoted as saying. I don’t read Dr. Seuss as often I should, but it is not always good to put away childish things despite the admonishment of James McMurtry in his song “Childish Things.” Every January, I take some time to look at what our MEP clients are saying about the future and the challenges they face. It’s usually part of my New Year’s resolution to tally the responses. It’s useful to step back and consider what is going on with our clients and their businesses, but also provides important market intelligence to guide future activity.

As part of the NIST MEP client survey, we’ve asked MEP center clients to identify the top three challenges their companies face over the next three years. We’ve been asking this question for seven years and thousands of clients take the time to give us their thoughts regarding the challenges facing their business in the future. The challenges have changed as the economic environment has changed. Some have been enduring (continuous improvement and growth) and others have become more, or less, important over time.

Top Challenges Facing Manufacturers

Seven in ten clients cited cost reduction as a challenge in FY 2015, which has declined slightly. While continuous improvement is consistently cited as the top single challenge over the past seven years, there are some important shifts since FY 2009.

    • Growth, reported by slightly more than five in 10 clients as a challenge and product development/innovation, cited by nearly 47 percent (up from 45 percent), rank second and third respectively.

 

    • Nearly 45 percent reported employee recruitment and retention as an important obstacle, which compares to less than 20 percent of the clients previously.

 

    • Technology and supply chain needs are more important than they were previously. The share of clients citing technology needs as a challenge rose by 4 percentage points, from roughly 10 percent in 2009 to over 14 percent in 2015. Managing partners (or supply chains) rose by 1 percentage point.

 

  • Smaller shares of clients report that growth, sustainability, and financing are important challenges versus seven years ago. For instance, the share of clients identifying financing as a challenge fell from 18 percent in 2009 to roughly 10 percent in 2015. This probably reflects changes in credit becoming more available and the fact that many firms have cleaned up their balance sheets. The declining share of clients saying that growth is an important challenge (even though more than half the clients still cite it as important even now) may likely reflect the uptick in manufacturing activity. The share of clients reporting sustainability fell by 5 percentage points, while the share of clients reporting exporting only fell slightly.

These changes, I suspect, reflect underlying changes in the economic environment and changes across MEP client companies as they respond to new opportunities and challenges in their companies and markets.

It is interesting to note how these trends play out and what they may suggest for future work with manufacturing clients, such as developing new services to respond to emerging needs. This data, while drawing on only MEP clients, represents an important piece of information and insight into the top of mind challenges facing a broad cross section of manufacturers across the United States. As challenges remain in helping companies improve their performance, we welcome your thoughts on how we can better serve you.

Challenges Chart

About Author

Ken Voytek

Mr. Voytek is the Manager of the Manufacturing Policy and Research group and the Chief Economist with the Manufacturing Extension Partnership (MEP) program in the National Institute of Standards and Technology (NIST). In his spare time, he collects baseball cards, reads obscure books and articles, and shares his bubbly personality with family, friends, and colleagues.

8 Comments

  1. This is a great article, providing readers information on current needs in the manufacturing community. I would be interested to hear how centers and clients are addressing these needs. Remember also that grants for the manufacturing community are out there, and can help address the needs identified. Contact me or your local MEP center to find out more!

    • Thank you for the comment Micki. We hear from many centers about how they use the information but don’t want to speak for them. Maybe a center will post something to show how they use the information. Yes, there is grant money out there but that is only part of the solution.

    • Thanks Ove. Some of this reflects the set of challenges we have asked of our clients that are pre-determined but a glance at the responses to the “other challenges not listed” category did not reflect much identification of that as a particular challenge when they are given an opportunity to identify something else on the list. It may reflect either a lack of awareness of this as a coming issue but know that many centers are developing services to help manufacturers in that arena. It may also be subsumed under other challenges they noted.

  2. Alan Gehringer on

    Hi Ken,

    Thank you for sharing the information. Manufacturers always seem to focus on cost reduction, although I am pleased that growth, product development and employees are right behind it. A lot of the clients we consult with, have many opportunities for growth, and we find that it is imperative to narrow down the list and choose the opportunities with the greatest potential and that are easiest to implement. We also see that building the right team of “A” players is the only route to successful execution and growth.

    I hope all is well.

    Best, Alan

    • Thanks Alan. It is nice to hear from you. Yes, cost reduction is a common response to company ails but I would not discount it entirely. You are correct to say that growth, product development and actually having folks around to do those things are important but you need to keep and eye on both the top and bottom-line so you need to keep an eye on the costs as well. I don’t think there is a magic bullet. Take care.

      Ken

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