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2016 Indiana Manufacturing Survey reveals roadblocks to industry prosperity

Oct. 26, 2016

Hoosier manufacturers, which represent the largest industry in the state, are bullish on the future even as financial performance markers are diminishing from the impressive rates seen early in the decade, according to the 2016 Indiana Manufacturing Survey: Roadblocks to Prosperity.

2016 Indiana Manufacturing Survey

The annual survey is designed to assess the state of Indiana's manufacturing industry and provide insights into management choices made by manufacturing companies across the state. | IMAGE COURTESY OF IUPUI

The annual survey -- authored by faculty from IU's Kelley School of Business Indianapolis; commissioned by Katz, Sapper & Miller; and promoted by the Indiana Manufacturers Association and Conexus Indiana -- is designed to assess the state of Indiana's manufacturing industry and provide insights into management choices made by manufacturing companies across the state.

Respondents to this year's survey reflect views from rural to urban Indiana communities and industries as diverse as industrial equipment, automotive, aerospace/defense, packaging, high-tech and health care.

"While Indiana manufacturers remain confident about the future, for the second year in a row, respondents indicate that expected financial growth rates have stalled," said survey co-author Steve Jones, a professor of finance and chair of the IU Kelley School of Business Indianapolis Evening MBA Program. "One possibility is that these diminishing growth rates reflect a recovery that has matured, but we believe attributing it solely to this factor would be shortsighted and implies that this trend is inevitable. On the contrary, we believe there are steps that can be taken to improve the environment and help our manufacturing sector succeed. They just need the right tools and support."

"This year's findings are consistent with our client feedback: There are deep concerns about the future of Indiana's manufacturing sector, particularly as it relates to workforce and regulatory concerns," said Jason Patch, partner-in-charge of Katz, Sapper & Miller's manufacturing and distribution services group. "Indiana's manufacturers seek seismic changes in health care, tax law and economic development in order to confidently build their businesses in the future."

The authors of the 2016 survey analyzed the data and suggested several reasons that expected growth rates for revenues, profits and capital investment are diminishing:

  • The maturing of the national economic recovery.
  • New technologies, facilities and process-improvement philosophies (e.g., Six Sigma) that were key investments post-recovery to boost productivity have now matured, limiting additional growth opportunities.
  • A shortage of skilled workers continues to hamper growth; additionally, relatively low unemployment rates in the state further impact prospects.
  • Regulatory and reporting burdens, particularly health care regulation and high corporate tax rates.

"In short, the day may be sunny, but there are clouds on the horizon," said survey co-author Mark Frohlich, an associate professor of operations management at IU's Kelley School of Business Indianapolis. "Given our regulatory burdens and lack of skilled workforce, how do manufacturers continue to grow? That is the biggest concern identified in this year's study."

"Lawmakers, industry leaders and educators can all shape a positive future for Indiana's manufacturing industry, which serves as a tremendous economic engine and employer of hundreds of thousands of Hoosiers," said David Resnick, managing partner of Katz, Sapper & Miller. 

The 2016 Indiana Manufacturing Survey: Roadblocks to Prosperity includes valuable data for the manufacturing community as well as for service providers and economic development officials.

To learn more about the survey's supporting contributors, view the original press release from the IUPUI Newsroom.

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