ALLENTOWN, PA, October 10, 2017 — Kreischer Miller, a leading independent accounting, tax, and business advisory firm serving the Lehigh Valley and Greater Philadelphia areas, today announced the results from its inaugural Lehigh Valley Manufacturing Survey.
The survey found that Lehigh Valley manufacturers are by and large feeling optimistic and expect growth to continue into 2018. Eighty-five (85) percent of survey respondents expect revenues to increase this year, and 44 percent anticipate a growth rate of 5 percent or greater. And the majority of respondents (76 percent) are optimistic about the overall U.S. economy.
Amidst this continued growth, however, the skilled labor shortage the industry is grappling with will be amplified. A lack of qualified workers was cited by survey respondents as the top barrier to business growth for 2017. Forty-two (42) percent indicated their labor turnover rate is over 5 percent in 2017, and 71 percent anticipate increasing their headcount in 2018.
Increased wages are a natural byproduct of a tight labor market. More than 65 percent of survey respondents said wages have increased at least 3 percent in 2017 and 81 percent anticipate an increase in 2018. Manufacturers will need to plan for these increased labor costs and explore creative ways to attract and retain their skilled workforce.
“The data collected in our survey is very consistent with the conversations we’ve been having with manufacturers in the Valley,” said Brian J. Sharkey, Director, Audit & Accounting and co-leader of the firm’s Allentown office. “While manufacturing in the region remains healthy, nearly every manufacturer I’ve spoken with has said that concerns about the labor market are tempering their enthusiasm.”
More key findings:
Investments in equipment and technology are increasing
Anticipated growth also means that manufacturers are making capital investments to improve profitability, output, and overall performance. Eighty (80) percent expect to invest in manufacturing equipment over the next year, and more than 60 percent plan to invest in computer software and hardware.
The need for cyber security is growing more critical
Manufacturers are particularly vulnerable to cyber security threats due to their increased use of automation on the shop floor and a growing number of Internet-connected machines. As a result, manufacturers have become more aware of the need to address IT security as part of their organizations’ risk management strategy. However, there is still work to do. While 90 percent of survey respondents indicated they have taken steps toward improving their company’s information security posture, 67 percent have not performed any form of disaster recovery testing and 50 percent have not conducted any form of information security training for employees or vulnerability assessments in the past year.
Manufacturing Survey questionnaires consisting of 38 questions were distributed electronically to middle market manufacturers in the Lehigh Valley region, which primarily included Carbon, Lehigh, and Northampton counties in eastern Pennsylvania and Warren county on the western edge of New Jersey. The survey was conducted during June and July 2017. Respondents included both privately-held (77 percent) and public companies (23 percent) and represented a diverse cross section of the manufacturing sector.
Melanie L. Vivian
About Kreischer Miller
Kreischer Miller is a leading independent accounting, tax, and advisory firm serving the Lehigh Valley and Greater Philadelphia areas. The firm is built to respond to the unique needs of growth-oriented private companies, helping them smoothly transition through growth phases, business cycles, and ownership changes. Kreischer Miller offers a wide range of services, including Audit & Accounting, Tax Strategies, Business Advisory, Human Capital Resources, and Technology Solutions across an array of industries, including manufacturing, distribution, construction, real estate, not-for-profits, media, government contracting, professional services, family-owned businesses, and investment firms. The firm provides insight and creative services to organizations that need to be able to quickly adapt and respond to changing market opportunities and challenges. To learn more, call us at 215.441.4600 or contact us.