News From Terre Haute, Indiana

October 26, 2013

Manufacturing: Report finds increase in active investment across state


Associated Press

MUNSTER — Indiana’s factory owners are becoming more optimistic and willing to invest in expanding their businesses following several tough years, a new report from Indiana University researchers concludes.

The survey of Indiana’s manufacturers by IU’s Kelley School of Business found that four out of five manufacturing companies consider their businesses healthy or stable. The report also found that an estimated 70 percent of Indiana manufacturers are actively investing in capital and labor.

Indiana University, Conexus Indiana, the Indiana Manufacturers Association and the accounting firm Katz, Sapper & Miller conduct an annual survey that tracks the pulse of the state’s largest industry. The study’s authors described their latest findings as signs of a manufacturing renaissance.

“Indiana remains the nation’s most manufacturing-intensive state by employment and share of economic output,” said 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.”

About half of survey participants described their manufacturing companies as “challenged” in 2009 and 2010 but now use more positive terms, The Times of Munster reported. A majority indicated they are now investing in employees, equipment and facilities to remain competitive.

The survey found that Indiana manufacturers don’t consider uncertainty regarding the Affordable Care Act to be a deterrent to investment. They also are starting to look beyond controlling costs and need more skilled production workers, the report said.

The overall outlook among Indiana manufacturers is now one of growth instead of retrenchment, the survey found. About 19 percent of companies surveyed said they would pursue aggressive growth during the next two years, while 29 percent said they would expand between 2015 and 2017.

“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 Indiana University.

About 12 percent of existing manufacturers are still actively looking for places to cut expenses, the survey found. But only 8 percent of manufacturers plan to downsize within the next four years, and only 5 percent are still slashing costs across the board.

“Manufacturers are having a good year,” Frohlich said. “They probably did a little better the year before. Revenues are higher now, but profits are lower.”