PEORIA, IL - Following recent reports that the economic downturn is continuing to linger as expansion of the gross domestic product slows, a new survey shows that 25 percent of U.S. manufacturers say they have seen no impact at all on their business due to the recession.
The survey of 150
manufacturers commissioned by Advanced Technology Services with Frost and Sullivan suggests that large manufacturers seem to have weathered the
storm the best, with 29 percent of companies with more than 1,000 employees
reporting no impact at all. The report indicated that only 19 percent of
companies surveyed said the economic downturn has had a “great” impact or “very
great” impact on their business.
“This recession was a
reality check for many businesses, I think those that reported seeing little or
no impact were certainly in the minority,” said Jeff Owens, president of ATS.
“Many of our customers began drawing down their inventories early on in an
attempt to circumvent getting hit hard, that may have spared some of them.
Others saw the early indicators and decided to focus their resources on core
competencies and leave the rest to outsourced providers like
(those with 1,000 or more workers) reported the least impact due to the
recession, whereas medium-sized organizations reported seeing the greatest
impact, saying that the economy has resulted in layoffs of full-time workers.
The aftermath of the
recession has left many manufacturers wondering what the repercussions will be
on the skilled labor shortage. According to the survey, respondents reported the
lack of skilled labor is expected to cost their organizations on average $11
million dollars over the next five years. The cost reported is highest for
larger companies and is estimated at $17 million dollars. The majority of
respondents indicated they would fill positions with full-time workers when the
economy recovers, however, close to a third said they would also fill positions
through outsourcing with contract/flexible workforce.
manufacturers reacted to the economic swings by cutting back or even eliminating
in-house apprenticeship and training programs, vendors that handle IT,
maintenance or repair were ramping up such programs,” said Owens. “While
manufacturers have implemented layoffs and early-retirement programs, vendors
have cherry-picked those available workers.”
Not everyone appears
to agree that there will be a skilled labor shortage. In fact, only a quarter of
respondents expect to be affected by a lack of skilled labor with the greatest
impact among medium and larger organizations. One-third say the availability of
skilled workers will not change, while 38% expect a surplus supply of
“I believe there are
two reasons for these varying viewpoints,” said Owens. “First, I believe the
recession has caused many companies to be shortsighted and look at the numbers
and potential problems for next quarter instead of next year and five years down
the road-and that’s when these Baby Boomers will be retiring and taking all
their knowledge and experience with them. Second, manufacturers have repeatedly
failed to make the case for the skilled labor shortage and now we are paying the
price. There is a difference between low-skilled jobs that are easily
transported to low-wage countries, and the high-skilled jobs that do-and
will-remain. These are the elite technicians who are skilled in hydraulics,
robotics, electrical and computer science. Even if the economic recovery is slow
the emptying of the pipeline won’t be.”
believe this points to a bigger public-policy issue the nation needs to address,
especially larger organizations. In fact, 69% of survey respondents in
both corporate and plant roles within their organization say the Obama
administration should institute policies to encourage and promote skilled-trades
training and education.
As manufacturers look
to the future and attempt to move past the effects following the downturn,
viewpoints on when a real recovery will take place vary widely. 36% said economic growth will resume by the first or second quarter of this
year, whereas 23% expect growth later in the third or fourth quarter.
One-fourth of respondents don’t expect growth until 2011 or later. Small and
large manufacturers don’t see eye to eye on what’s in store for U.S.
manufacturing. Nearly a third of small manufacturers polled expect to see no
growth at all in demand in 2010, with business only starting to pick up in 2011,
whereas many bigger companies say they are already seeing tentative signs of
growth and expect economic recovery to take hold this
“Companies of all
sizes are certainly approaching this year with caution,” said Owens. “Many of
the larger companies aren’t guaranteeing orders right now and the smaller
companies depend on supplying large manufacturers, so there’s certainly a
cyclical effect. One thing we feel strongly about is that the weak dollar will
continue well into this year and that means U.S.-based production will look more
attractive to manufacturers, so companies need to stay flexible and be
Manufacturers May Have Escaped the Wrath of the Economic Downturn
January 20, 2010