Manufacturing.net Editorial Director Jeff Reinke discussed the outlook for manufacturers in 2015 with Matthew B. Elliott, Michigan State President, Global Commercial Banking, Bank of America Merrill Lynch. They talked about upcoming trends, the skilled labor shortage, and domestic expansion.
What will be the biggest trend impacting the investments manufacturers make in 2015?
Driven in part by a favorable financing environment in the U.S. for the manufacturing industry, we are expecting a continued increase in manufacturing companies reshoring their businesses. Now is a great time to invest in bringing business back to the states and making capital expenditures and commercial real estate investments. Businesses make these decisions to benefit from a number of factors, such as favorable energy prices, rising wages in China, shorter supply chains and faster speed to market. On the other hand, given recent exchange rate volatility, it will be interesting to see how the strengthening dollar impacts these sourcing decisions.
There has been a lot of positive news regarding U.S. manufacturing over the last 18 months. Is there one particular report of piece of data that stands out to you? Why?
In our recently released Bank of America Merrill Lynch 2015 CFO Outlook, we found that CFOs at manufacturing companies are significantly more optimistic about their year-over-year growth. In fact, nearly half of CFOs at manufacturing companies surveyed expect to see an increase in profits (46 percent), while over two thirds expect higher sales in 2015 (68 percent). We are excited about these forecasts, which reveal 2015 as a year of optimistic growth for the manufacturing sector.
If you could fast-forward 12 months, what would be the most interesting thing to see or learn about in regards to how manufacturing performs over the next 12 months?
We will see manufacturers seeking opportunities to expand and grow – both domestically and internationally. According to the 2015 CFO Outlook, manufacturers are looking to increase their presence in Asia, while also establishing new operations in Latin America, Asia and Europe. On the domestic front, manufacturing plants are being developed all throughout the U.S., but the Midwest specifically is seeing a lot of activity – as more than 70 companies have reshored to that region, according to the Reshoring Initiative Library. It will be interesting to see this new manufacturing hub emerge and how that will impact local businesses and the regional economy.
If you could give U.S. manufacturers one thing, what would it be?
Currently, we are experiencing a skilled labor shortage in the U.S., particularly within the industrial industry. U.S. manufacturers are focusing on attracting and retaining the right talent, including engineers and machinists. As the economy improves and manufacturers look to ramp up activity, companies will need to invest in people in order to successfully carry out their operations.