The survey definitively shows that product innovation leads to more growth, while “grow your own workforce” strategies will be needed to fill the major labor shortages hampering small manufacturer growth. Emerging technologies like the Internet of Things (IoT), 3D printing, and digital manufacturing are beginning to enhance innovation and productivity, but still have significant room for adoption amongst Ohio’s small manufacturing businesses.
ABOUT THE SURVEY
Under the direction of the Ohio Manufacturing Extension Partnership (Ohio MEP), MAGNET: The Manufacturing Advocacy and Growth Network conducted a thorough survey of Ohio’s manufacturing base. Contributing approximately 20% of Ohio’s jobs (and driving in some regions up to 50% of Ohio’s economy), and generating a disproportionate amount of export revenues and Gross Regional Product, manufacturing is critical to Ohio. Greater than 95% of Ohio’s manufacturers are small (under 500 employees), and these manufacturers need to remain competitive both nationally and internationally to ensure our economy’s health. Ohio’s Development
Services Agency and the National Institute of Standards and Technology, which runs the MEP, recognizes the importance of this sector and fuels MAGNET and the Ohio MEP program to directly serve and support innovation, efficiency, and growth in small and medium manufacturers. What manufacturers need today is not the same as what
they needed 10 years ago. Cybersecurity, internet of things, automation, workforce shortages and more mean that getting to know the economic drivers themselves is increasingly important. This summary shares the major concerns, insights, and facts that face our region and our small and medium manufacturers.
Key partners and supporters include:
More than 400 Northeast Ohio Ohio manufacturing companies took this survey, representing nearly 8% of manufacturers in the region, the majority of whom were C-level or plant managers, making this the largest survey of its kind. Most companies were well-established (10+ year in business), and they ranged in all sizes of employment and manufacturing industry sectors. Geographically, the companies were from all over Northeast Ohio, but were concentrated in counties with significant manufacturing bases like Cuyahoga, Stark, Lorain, Summit, and Lake. As you will see below, optimism remains high, productivity will continue to grow, innovation and use of technology is increasing, and while more is being done to address workforce shortages, the problem still looms large.
KEY TAKEAWAYS Manufacturers are feeling good.
Optimism for 2018 is extremely high – 86% of respondents expect their revenues to grow this year, and 58% plan to make capital expenditures.
Tax reform helps, but other regulations are still concerning.
Tax reform was definitely a positive for manufacturers, who report that they plan to invest in both their wages and in equipment this year because of these changes. However, they are still very concerned with other government regulations that cost money and hamper growth with top concerns around EPA, OSHA, and healthcare
Productivity will continue to grow with automation.
Manufacturing productivity continues to grow with steady employment in the sector – more product, more company revenue, better wages, and even more difficulty finding people for these jobs.
Automation plays a significant role in increasing productivity – 40% of respondents use some automation
55% of small companies say that they are looking for more automation this year
FOCUS: Innovation, Technology, and Growth Manufacturers are more innovative and are winning because of it.
Innovation in new products and new services is a winning growth strategy, leading to higher revenue growth than customized services, superior customer service, better quality, or lower price.
There is more innovation happening – 70% of small companies have launched a new product in the last year, up 15% from previous year.
Use of 3D printing has doubled to 30% of small companies.
IOT, 3D printing, and other technologies are important but underutilized.
These emerging technologies are not well incorporated into small companies yet.
IoT (the Internet of Things) will revolutionize productivity in companies who deploy it well, but only 16% of companies are dabbling with it.
Use of big data can drive different ways of thinking about business, but only 10% of companies are thinking about this.
Awareness of 3D printing for common applications is growing, but more sophisticated uses (like in tooling) remains low (7%) among manufacturers.
Everyone is aware of cybersecurity and online hacking, but not enough companies formally protect themselves.
As machines and devices become interconnected, companies recognize the need to protect themselves from cyber threats: with 67% of respondents saying it’s a growing concern, cybersecurity was #1 for most-concerning trend. However, many do not realize the need for formal assessments.
64% of respondents say that they understand cybersecurity and have taken steps to protect themselves (up 10% from previous year)
Only 22% of companies have undergone a formal assessment of how well they are doing at protection
FOCUS: Workforce Shortage An inability to hire enough employees is hampering growth in big ways.
No matter the growth prospects of our sector, manufacturers still rank attracting skilled workers as their #1 challenge hampering their growth – twice the number of manufacturers in 2018 said that the shortage will affect their bottom line (9% last year to 19% this year). Over 40% of respondents said their workforces grew 5% or more in
2017, and fully 62% of respondents expect to grow their company’s workforce in 2018.
The biggest issue with hiring that manufacturers have is that applicants don’t have enough skills or education (34%)
Applicants don’t have the work ethic or interest (27%)
There just aren’t enough applicants (15%)
But, it’s not drug issues that drive the shortage.
Surprisingly, drug issues are not a major issue hampering finding qualified candidates, but rural counties are affected more than urban manufacturers. Fully 50% of respondents said drug use is not affecting their business; only 7% of companies said new applicants can’t pass the drug test.
And, manufacturers don’t expect a rise in retirements in the next 3 years.
Upcoming retirements are also not as big a concern to the majority of manufacturers: 92% of manufacturers are expecting less than 15% retirements in the next 3 years, with most expecting under 5%.
Manufacturers are working hard to fix the issues, adapting their hiring practices to widen their talent pipelines.
Manufacturers are taking action to solve these problems:
65% actively working to transfer knowledge from veteran workers to young
58% plan to increase wages
49% offer tuition reimbursement
40% are collaborating with higher-ed institutions and high schools
47% are open to hiring ex-offenders (under the right circumstances)
Growing your own talent is even more critical for the future.
More companies will need to engage with training in “grow your own” strategies in the future as demand for individuals with technical training doubled from 35% of manufacturers searching for this role to 69%.
There still isn’t enough hiring innovation happening.
Still the major ways to recruit and grow talent are not highly varied or innovative:
More than 70% of manufacturers rely on online job postings and employee
referrals for their talent and 58% use a recruiter
Only 30% actively recruit through colleges, training center, career centers,
Article submitted by Bank of America For mid-market companies, business success and responsible growth aren’t mutually exclusive. In fact, prioritizing responsible growth is becoming increasingly important, and successful companies are making sustainability central to their growth strategies. Beyond good corporate citizenship, they are recognizing the intrinsic link between the strength of their business and that of the communities and economies in which they operate. Leading your growth with those goals in mind builds resilience and better solutions for the future. Consider the following: Responsible growth companies perform better. Companies that consider the impact of risks and opportunities on the environment, local communities and society may produce better financial results than those that don’t. Additionally, 90% of companies believe a sustainability plan is important for remaining competitive. Responsible growth companies attract investment. A 2016 study by MIT Sloan Management Review and Boston Consulting Group surveyed 3,000 executives and managers from more than 100 countries. Findings revealed that 75% of senior executives in investment firms agree that a company’s sustainability performance is materially important to their investment decisions, and nearly half would not invest in a company with a poor sustainability record. Ninety percent of executives see sustainability as important, but only
HEADLINE The survey definitively shows that product innovation leads to more growth, while “grow your own workforce” strategies will be needed to fill the major labor shortages hampering small manufacturer growth. Emerging technologies like the Internet of Things (IoT), 3D printing, and digital manufacturing are beginning to enhance innovation and productivity, but still have significant room for adoption amongst Ohio’s small manufacturing businesses. ABOUT THE SURVEY Under the direction of the Ohio Manufacturing Extension Partnership (Ohio MEP), MAGNET: The Manufacturing Advocacy and Growth Network conducted a thorough survey of Ohio’s manufacturing base. Contributing approximately 20% of Ohio’s jobs (and driving in some regions up to 50% of Ohio’s economy), and generating a disproportionate amount of export revenues and Gross Regional Product, manufacturing is critical to Ohio. Greater than 95% of Ohio’s manufacturers are small (under 500 employees), and these manufacturers need to remain competitive both nationally and internationally to ensure our economy’s health. Ohio’s Development Services Agency and the National Institute of Standards and Technology, which runs the MEP, recognizes the importance of this sector and fuels MAGNET and the Ohio MEP program to directly serve and support innovation, efficiency, and growth in small and medium manufacturers. What manufacturers need
How Virtual Reality and Augmented Reality Can Help Keep Our Engineers Safe and Our Manufacturing Strong Recall how difficult it was to put together complex LEGO creations when you were a child or helping a child. Now, picture assembling a fighter plane from a room full of parts. Even highly trained engineers can benefit from technology to help improve consistency and quality. Virtual reality (VR) and augmented reality (AR) are making near-perfect assembly a possibility in the manufacturing space. By wearing AR glasses that use cameras, depth sensors and motion sensors to overlay images onto the real working environment, engineers and factory workers can visualize the exact bolts, parts, part numbers and instructions on how to assemble a particular component correctly. Lockheed Martin began using AR goggles and improved F-35 assembly time by 30 percent, in addition to increasing accuracy to 96 percent. In order to remain competitive, businesses should consider the ways VR and AR can improve efficiency and supply chain productivity. According to a recent BofA Merrill Lynch Global Research report, AR platforms can provide companies up to 25 percent in cost savings on installation of equipment. Here are four ways VR/AR is disrupting the mid-market manufacturing space: