Indiana manufacturers are upbeat about their prospects for future growth, according to a survey released today, yet their enthusiasm is tempered somewhat by concerns over increased regulation, rising energy costs and a shortage of skilled workers.
The manufacturing survey put together by the Indianapolis accounting firm of Katz, Sapper & Miller and Indiana University's Kelley School of Business is based on responses from companies across the state. Nearly 50 percent of the businesses that responded are in the industrial equipment, automotive, or aerospace and defense manufacturing sectors, and 88 percent of them are headquartered in the United States.
According to the survey, 72 percent of respondents said they anticipated moderate economic growth in Indiana through 2015, while 52 percent of respondents predicted similar moderate growth for the U.S. economy.
Forty-seven percent of respondents said they saw "healthy" financial performance in 2012-2013, while 35 percent characterized it as "stable" and 17 percent described it as "challenged."
Less than 35 percent of companies identified their financial performance as "healthy" in last year's survey. And just three years ago, 47 percent of respondents said their financial performance was "challenged."
The percentage of respondents who said they plan on opening a new manufacturing facility Indiana increased from 8 percent last year to 20 percent this year, and of those planning to expand, more than half said the new facilities will be used to produce new and existing products.
And yet, the percentage of companies that plan on "offshoring" production over the next year rose to 10 percent from 7 percent of respondents the previous year. They cited skilled overseas labor and lower labor costs as the main reasons for doing so.
Perhaps the biggest challenge manufacturing companies face is finding skilled workers. Thirty-one percent of companies indicated a serious shortage of skilled production workers, and 38 percent said they feared a serious shortage of skilled production workers in the next three to five years.
In addition, manufacturing companies are rejecting job candidates because they don't possess rudimentary job skills; 70 percent of respondents said rejected candidates lacked basic skills such as regular attendance, timeliness and work ethic.
Roughly two-thirds of respondents identified four chief issues that could affect future growth: Indiana's business health care laws and regulations (67 percent); Indiana's infrastructure and logistics, and the state's corporate tax policy (both 66 percent); and Indiana's property tax policy (65 percent).
More specifically, 73 percent of respondents said they were concerned about changes to the federal Patient Protection and Affordable Care Act, while 53 percent said they worried about new regulations to control greenhouse gas emissions.
Another 46 percent said the cost of electricity "highly" affected their businesses, and 45 percent said it "somewhat" affected their businesses.