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Survey: More Indiana manufacturers financially 'challenged'

October 6, 2015

Indiana’s manufacturers are signaling that Hoosiers should temper their expectations about the health of the industry—despite recent rosy growth announcements from Subaru of Indiana Automotive Inc. and Rolls-Royce Corp.

A new annual survey of Indiana manufacturers found 38 percent of companies rate their overall performance as “healthy,” a drop of about 10 percentage points in a year. And the most manufacturers since 2009 are rating their financial performance as “challenged.”

Workforce shortages, global competition and government policies are fueling the mounting gloominess, according to the report set to be released Tuesday by CPA firm Katz Sapper & Miller LLP and the Indiana University Kelley School of Business.

“The evidence suggests that many companies that thought they had escaped the recession may be backsliding now, as compared to just 12 months ago,” according to the report, which includes responses from about 200 employers in the automotive, aerospace and industrial-equipment fields.

Indiana currently has about 520,000 manufacturing jobs, and the state has seen rapid growth in the sector in recent years that has outpaced that of most states.

But most manufacturers who responded said a shortage of skilled workers—primarily production and production-support workers, scientists and design engineers—is a top challenge. Seventy percent of respondents said they had either “moderate” or “severe” shortages of skilled production workers.

And the number of survey participants who said they plan to open a new Indiana facility within the next year dropped 9 percentage points, to 11 percent of respondents.

Steve Jones, an associate professor of finance who wrote and analyzed the survey, said the workforce shortages were resulting in a “talent tax.”

“Paying overtime and investing in their own training programs is a costly burden for companies that already fear shrinking margins,” Jones said in a written statement.

Though manufacturers are seeing opportunities for market growth, they didn’t have high marks for the public sector in helping them achieve that.

About one in four respondents found both Indiana and national policymakers to be “unsupportive of manufacturing.” Just one in 10 see both state and federal governments as doing a “good job.”

“The post-recession bounce is over for many manufacturers, and they feel suddenly besieged by burdens – government regulation, rising energy costs, skill shortages and global competition,” Jones said.

The full report, which was done in partnership with the Indiana Manufacturers Association and Conexus Indiana, can be viewed here.
 

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