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Manufacturers are confident and investing in 2012

Canadian manufacturers are making investments today that will put them in a position to cash in on business opportunities when global economic conditions settle, according to a survey of senior executives.


December 19, 2011
by PLANT STAFF

TORONTO: Canadian manufacturers are making investments today that will put them in a position to cash in on business opportunities when global economic conditions settle, according to a survey of senior executives.

The Business Outlook 2012 “Investing in Manufacturing” survey conducted by Grant Thornton LLP and Canadian PLANT magazine, attracted 367 responses from the leaders of mostly small to medium-sized enterprises (SMEs) with average annual revenues of $62.3 million who are optimistic about the coming year and beyond.

(Click here for a pdf of the results and a roundtable discussion of the details).

The manufacturing executives are concerned about economic conditions, but 83% are confident about their 2012 forecasts, 58% expect orders to increase, 59% are looking at sales dollar values rising next year, 31% anticipate higher prices and 41% are banking on higher profits.

“With the Canadian dollar seemingly stabilized and continuing to ride high, many in the manufacturing sector are planning to take advantage by investing in machinery and equipment, which promises to help foster Canadian innovation and increase the demand for skilled labour,” said Jim Menzies, national leader, manufacturing and distribution, at Grant Thornton LLP in Toronto. “The expected impact on the Canadian economy from these trends alone should be a positive one.”

Many of the companies are investing in their plants over the next two years. Machinery and equipment top the list for 61% of senior executives and are among the top three priorities for 75% of them. Forty per cent of the companies cite machinery as their top priority. Training is next for 55% of those who plan to invest, followed by technology (51%) and R&D (49%).

Almost half (47%) the companies will be hiring new employees next year and 43% of them intend to do so over the next three years.

Canadian companies prefer to do their shopping closer to home: 88% look for machinery from Canada, 83% from the US. Germany is a distant third (34%) followed by Japan (18%) and Italy (15%).

Almost three-quarters (74%) of the respondents are aware of or have used government incentives, but there are still 24% who identify themselves as unaware.

Most (26%) are investing under $100,000 next year, while 19% are putting up between $100,000 and just less than $500,000. Looking at all companies, their investments averaged $835,000 in 2010 compared to almost $1.4 million this year and an anticipated $1.3 million or so in 2012.

The survey results show manufacturers are also focussing on addressing productivity issues. The majority (96%) have already taken steps to improve productivity, and have invested more heavily in improving internal resources (58% improving employee training and 50% investing in technologies) than outsourcing.

The Business Outlook 2012survey was conducted in September and October. The margin of error is +/- 4.3% 18 times out of 20.