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.