Manufacturers’ confidence is picking up for 2012: PwC study

TORONTO: Canadian manufacturers have started the year feeling confident about their prospects, according to a PwC study.

The global consulting company’s fourth-quarter 2011 manufacturing barometer study show more than half the respondents are confident about the next 12 months, a 25% jump from the previous quarter.

Ninety per cent expect positive revenue growth for their own companies, with 10% forecasting double-digit growth.

“Industrial manufacturing CEOs are now focusing on the upside rather than the downside,” says Calum Semple, consulting partner, PwC. “Across the board we're seeing Canadian manufacturers with positive projections associated with company growth, international sales, and spending trends. One area of concentration is operational spending. Eighty per cent of Canadian respondents are hoping to increase spending in this area over the next year.”

Leading areas of increased spending are information technology (47%), research and development (47%), and new product or service introductions (37%).

"Manufacturing CEOs plan to change their company's research and development innovation capacity in the next year. CEOs are using innovation to make their products more sustainable. Also, with signs of global manufacturing activities on the rise and US manufacturers showing signs of resilience, there is a need to upgrade existing systems, associated business intelligence and introduce mobility as a source of success for firms of all sizes.”

Barometer panelists expect international sales to contribute 66% of their total revenue over the next 12 months.

PwC says international data shows manufacturing peers around the world are thinking the same. Nearly three-fifths of CEOs said they would like to develop operations outside of their home markets. The four BRIC (Brazil, Russia, India and China) are cited as potential opportunities.

At the same time, foreign market competition is cited by 43% of Canadian manufacturers surveyed as a barrier to growth. To reduce this barrier, initiatives such as new strategic alliances and joint ventures in markets abroad are on the minds of companies this year.

“An example of this is Canada's Magna International Inc.'s application to produce 300,000 vehicles annually in Russia,” says Semple in a release. “Its current Magna Steyr operation in Austria is the largest contract manufacturer in the world, assembling vehicles for Mercedes -Benz, PSA Peugeot, Minis for BMW AG, and others.”

Other barriers to business growth highlighted by manufacturing companies include concerns over oil and energy prices and monetary exchange rate and a lack of qualified workers. Respondents planning to hire within the next year are seeking production workers (30%), skilled labour (27%) and professionals and technicians (23%).

Delivering results - Key findings in the industrial manufacturing industry.