Manufacturers have an overwhelmingly optimistic view of the U.S. economy for 2019, according to a recent survey by Blue & Co., LLC.
“It’s the highest point we’ve had in the past three years from an optimism standpoint,” said Kurt Beier, CPA audit and accounting director and director-in-charge of Blue’s Carmel, Ind. office.
“At the national level, it’s still staying consistent there,” Beier said. “The only place it’s gone down a little in terms of optimism is from the global perspective, which I would expect with the tariff issues, and some of the issues on a global scale might slow it down internationally.”
Conversely, 48% of respondents said they expect international sales to grow in 2019 for their respective organizations – a result Beier said was surprising.
Blue last month released the results of their survey of 357 manufacturing executives in five countries collecting data on their expectations, priorities and perceived challenges to be overcome in 2019.
Beier said it’s vitally important that accountants stay abreast of manufacturing trends and challenges.
“If you want to connect with your client base, it’s good to have this kind of information at your fingertips to be able to have conversations about your client’s businesses and what’s going on in the overall economy,” Beier said. “I think the manufacturing sector is a driving indicator for our economy, and so I think it’s important to be aware.”
One issue on the minds of respondents was the workforce shortage, as 43% of respondents named it a priority and said their companies expect to hire more employees and increase wages and training.
“The biggest challenge in the manufacturing sector, it seems, is labor; it’s the most common thread,” Beier said. “And you have pockets where material prices are increasing, trying to keep that under control, that’s always difficult as well when you’re in these types of environments when demand is so great it pushes up material costs as well.”
He noted that respondents expect to spend substantially more on cybersecurity in 2019.
“Seventy-six percent are either looking into it or making cybersecurity a priority in the coming year,” he said. “That is a substantial number for this group – the majority of which are middle market manufacturing companies.”
Beier said manufacturers of this size are usually looking to make investments that have a return on investment to increase profitability. The fact they’re pumping cash toward cybersecurity speaks volumes about the perceived risk of an attack.
Finally, he noted that many respondents expect their taxes to go up in 2019 “despite some of the tax acts and despite the 109A deduction, and despite the corporate tax rates going down to 21%.”
Beier said a CPA’s manufacturing knowledge is pivotal to producing the highest quality work for their clients.
“If you’re in the industry of serving your client base in the manufacturing sector, it’s important to be aware of your clients’ concerns and what keeps them up at night and what’s their main focus, so you are able to advise them beyond just the history.”