Manufacturers are primed for business growth in 2013

PLANT’s 2013 Business Outlook Survey shows senior executives are investing and banking on higher profits.

December 13, 2012

Canadian manufacturers are confident about their prospects in the coming year, despite a high-value dollar that’s messing up their exports, escalating costs that they will have difficulty controlling, overseas competition, troublesome American protectionism and poor productivity, according to PLANT’s 2013 Business Outlook report.

Of the senior manufacturing executives that responded to the annual PLANT survey sponsored by accounting and advisory firm Grant Thornton LLP, 61% expect orders to increase, 59% are looking at sales dollar values to rise, while 46% bank on higher profits and 37% anticipate higher pricing.

The responses show a significant jump in the percentage of companies that intend to hire over the next three years (from 43% in 2011 to 54% this year), add new lines of business (33% to 39%), expand their plants (29% to 33%) and acquire companies or lines of business (22% to 28%), all of which suggests they are confident that sales will grow.

Fifty-seven per cent of respondents identify their biggest challenges as increasing sales, followed by controlling and reducing costs (48%).

Manufacturers are planning to spend an average of more than $1.2 million in 2013, an increase of almost 40% over 2012. Seventy-eight per cent of them are investing in machinery and equipment, which is the top priority for 39%. Training, technology and R&D are also priorities over the next three years.

Canada’s historically poor productivity growth is a challenge for 39% of the companies and 90% say improving it is a major issue, although they intend to address it primarily through training (66%) and to a lesser extent technology (45%). Finding the skilled workers to train is a concern for 39%. Also of concern are being competitive (32%) and the economy (31%),

The value of the Canadian dollar will be a pain over the next three years for 28% of the companies and a concern for 49% of those who agree it’s making it harder for them to sell to export markets. Only 22% see the loonie’s high value as a positive. Forty-one per cent of them have a formal strategy for managing the dollar and most (46%) are doing so by dealing in US funds, finding a niche to serve (38%) and diversifying their markets (35%).

Canadian manufacturers continue to sell close to home. Biggest markets are in the US (25.1%) and Canada (66.4%) but some are also looking for new business in the next one to five years in Brazil (16%), Central/South America (16%), Mexico (15%), China (15%) and India (12%).

The PLANT survey conducted by Bramm Research and in partnership with sponsor Grant Thornton has a margin of error of +/- 4.5% 18 times out of 20.

Download the survey results and a roundtable discussion about the findings featuring panellists from Canada’s manufacturing sector here.