Industrial manufacturing executives are forecasting a continued rise in their own companies' revenues and cash flow, positioning themselves for more and larger new investments, and readying for an increase in new hiring over the next 12 months. But they are less confident about the domestic and global economies than they were three months ago, according to the Q3 2004 PricewaterhouseCoopers' Manufacturing Barometer survey, released in October.

The survey shows that manufacturers are confident about the economic future of their industry.

Executives such as Tim Tevens, president and CEO of Columbus McKinnon Corp. and vice president of the Industrial Supply Assn., agreed, saying, "We feel very confident about our markets. Our user markets are very responsive, and for the past nine months we have been feeling very robust demand."

He said he anticipates increased revenues for his company and the industry in general.

The majority of manufacturers, on the other hand, are less upbeat about the general eco-nomy. In late October, Tevens said rising interest rates, rising oil and natural gas prices, increased health care costs, and the uncertainty of the U.S. presidential elections were factors contributing to the less than positive economic outlook.

Even with the overall economic uncertainty, Manufacturing Barometer panelists continue to maintain a positive—even improving—outlook for their companies. They project higher revenue growth, strong margins, new hiring, new capital investments, and heightened interest in mergers and acquisitions.

Although slightly fewer manufacturers expect positive growth in the year ahead (87 percent, down from 91 percent), they have boosted their average 12-month revenue growth target to 9 percent, up from 7.7 percent in the previous quarter.

According to Ray Reynertson, president and CEO of the Sturtevant Richmont Div. of Ryeson Corp., "We will see growth for our company in the 8 to 10 percent range, with much of the growth coming from products introduced within the last two years and new products to be released this upcoming year."

Though costs were up for 53 percent of manufacturers and lower for only 23 percent last quarter, pricing power remained strong. Forty-five percent increased prices, and only 16 percent decreased them.

Though fewer manufacturers expect to hire over the next 12 months (41 percent, down from 52 percent), overall hiring plans show a strong gain, jumping to 1.7 percent of workforce, from 0.4 percent in the prior estimate.

Tevens said he does not anticipate increased hiring for his company in the next year.

"We've been fooled before and are being more cautious now," he said. "This has not been a period of normal economic recovery. We want to make sure we can keep colleagues for a long time before we hire them. The industry in general is hiring at a slower, more cautious pace because people don't want to be stuck with excess costs."

Reynertson does expect to hire, and anticipates slight growth in overall hiring.

"We will be hiring, and I believe we will see a very modest increase in manufacturing employment," he said.

More manufacturers are planning major new investments at a steady 7.4 percent of revenues. Increased budgets are expected for new product and service introductions, and for research and development.

Over the next 12 months, 55 percent of those surveyed expect to consider mergers and acquisitions, up from 43 percent in the prior quarter. Included are 39 percent contemplating the purchase of another business; 20 percent, the sale of their own business, whole or in part; and 16 percent equity spin-offs.

According to the industrial manufacturing executives surveyed, the year ahead looks promising for their industry, but their outlook on the domestic and foreign economies is anything but confident.