Manufacturing Hiring Plans Reach Five-Year High, but lack of qualified workers is slowing gains

The report showed that hiring plans are on the rise, with expectations reaching the highest level in five years and the second highest quarterly percentage in the past 10 years. The majority, 58 percent of U.S. industrial manufacturers surveyed, plan to add employees to their workforce over the next 12 months, up 16 points from second quarter 2013 estimates. Only three percent plan to reduce the number of full-time equivalent employees, and 39 percent will stay about the same. The most sought-after employees will be skilled labor (35 percent), professionals/technicians (35 percent), and production workers (30 percent).

Virtually all US industrial products manufacturers (87 percent) will be hiring new skill function employees over the next 12-24 months. The broadest needs are in engineering/design (48 percent) and in manufacturing (45 percent). Next are R&D (33 percent), financial/ bookkeeping (32 percent), marketing/sales (27 percent), and IT (18 percent).

Despite healthy hiring expectations, the survey identified problems in securing qualified workers. Three-fourths (77 percent) of respondents cited a need to fill certain skill gaps over the next 12-24 months, with only 23 percent claiming to have all the right skills needed at present. The biggest skill gaps were in middle management (70 percent) and skilled labor (67 percent). At the same time, half of U.S. industrial product organizations admitted to having open positions that they were unable to fill with skilled employees.

Talent Management a Priority
Virtually all US industrial product manufacturers (89 percent) currently rank talent management– the development of talented/skilled workers – as a top 10 priority, 47 percent as one of their top 5 priorities, and 42 percent as priorities 6 through
10. Another 7 percent believe it important but not a high priority, and only 2 percent rank it as a non-priority.

Moderate Growth Expected – 48% Planning Capital Investments
Reflecting the healthy level of optimism pertaining to the domestic economy, 82 percent of U.S. industrial manufacturers surveyed expect positive revenue growth for their own companies in the next 12 months, with only two percent forecasting negative growth. The projected average revenue growth rate over the next 12 months remained moderate at 4.2 percent, down from 4.6 percent in the second quarter and last year’s third quarter. Only seven percent forecast double-digit growth, while 75 percent expect single digit growth.

With regard to capital spending, 48 percent of industrial products manufacturers surveyed plan major new investments of capital during the next 12 months, up eight points from the prior quarter’s 40 percent, and on par with a year ago (49 percent). The mean investment as a percentage of total sales was 6.5 percent, higher than the prior quarter’s four percent, and representing the highest level in the past nine quarters.

Growth barriers over the next 12 months include legislative/regulatory pressures (58 percent), lack of demand (45 percent), competition from foreign markets (32 percent), lack of qualified workers (22 percent), capital constraints (20 percent) and oil/energy prices (28 percent).

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