The certified public accounting firm of Katz, Sapper & Miller LLP today released the results of their seventh annual Indiana manufacturing survey. This statewide study of employers in Indiana’s largest industry was commissioned by Katz, Sapper & Miller and developed in partnership with the IU Kelley School of Business – Indianapolis, Conexus Ind., and the Indiana Manufacturers Association.

The results from the 2013 Indiana Manufacturing Survey: Manufacturing’s Renaissance, reveal an often unnoticed but growing renaissance is underway in Hoosier (and American) manufacturing. Nearly 80 percent of respondents over the last two annual surveys describe their businesses as ‘healthy’ or ‘stable’ – a strong rebound from the dismal days of 2009-2010, when nearly half used the term ‘challenged’ to characterize their operations.

“Indiana remains the nation’s most manufacturing-intensive state by employment and share of economic output,” noted Scott Brown, partner-in-charge of Katz, Sapper & Miller’s Manufacturing and Distribution Services Group. “The state’s economic future is inseparable from its production industries – and we see a cautious return to investment and growth that bodes well for all Hoosiers.”

Other key findings reveal that more than 70 percent of Hoosier manufacturers are actively investing in capital and labor again, while less than 5 percent are continuing to cut costs across the board. These results suggest that even in today’s still turbulent economic times, companies are stepping up investment in their own employees and facilities, along with products and services, out of a recognition that failure to do so will hinder their ability to compete in the future.

In addition, the pro-investment attitude of Indiana manufacturers comes in the face of worries about the federal regulatory climate (notably the implementation of healthcare reform), concerns over global competition and a pragmatic outlook about the potential for market growth.

Despite these headwinds, manufacturers realize that cost containment alone is not a sustainable business strategy, and are willing to spend on superior product design, logistics and customer service to compete even in an uncertain economy.

Human capital continues to be a major obstacle confronting Indiana manufacturers. Survey respondents identified skilled production workers as the most significant labor shortage facing their companies. Fortunately, there is significant momentum among industry leaders, policymakers and academic institutions to focus on the middle-skill challenge, align curricula with employer needs and re-energize vocational and technical education.

“Our findings from this year’s survey show cause for optimism, as Hoosier manufacturers continue to invest and grow,” said Mark Frohlich, associate professor of operations management at IU’s Kelley School of Business. “But economic and public policy hurdles, plus our ongoing human capital challenges mean that Indiana can’t take its position as the nation’s most manufacturing-intensive state for granted,” added Steven Jones, associate professor of finance at IU’s Kelley School of Business.

Frohlich and Jones went on to emphasize the need for continued focus on human capital and business climate to support the continued forward momentum in the manufacturing sector.

“While this year’s findings are a snapshot of attitudes and short-term reactions to the business cycle, it is the collective actions of employers, educators, economic developers and elected officials that will help determine the results of future surveys in years to come.”

Source: Inside INdiana Business