2016 Indiana Manufacturing Survey reveals roadblocks to industry prosperity

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Annual Katz, Sapper & Miller Survey of Hoosier Manufacturers Indicates Concerns About Long-Term Prospects

INDIANAPOLIS – Hoosier manufacturers, which represent the largest industry in the state, are bullish on the future even as financial performance markers are diminishing from the impressive rates seen early in the decade, according to the 2016 Indiana Manufacturing Survey: Roadblocks to Prosperity.

The annual survey – authored by faculty from the Indiana University’s Kelley School of Business Indianapolis, commissioned by Katz, Sapper & Miller, and promoted by the Indiana Manufacturers Association and Conexus Indiana – is designed to assess the state of Indiana's manufacturing industry and provide insights into management choices made by manufacturing companies across the state.

Respondents to this year’s survey reflect views from rural to urban Indiana communities, and industries ranging from industrial equipment, automotive, aerospace/defense, packaging, high-tech and healthcare.

“While Indiana manufacturers remain confident about the future, for the second year in a row, respondents indicate that expected financial growth rates have stalled,” said survey co-author Steve Jones, a professor of finance and chair of the IU Kelley School of Business Indianapolis Evening MBA Program. “One possibility is that these diminishing growth rates reflect a recovery that has matured, but we believe attributing it solely to this factor would be shortsighted and implies that this trend is inevitable. On the contrary – we believe there are steps that can be taken to improve the environment and help our manufacturing sector succeed. They just need the right tools and support.”

“This year’s findings are consistent with our client feedback: There are deep concerns about the future of Indiana’s manufacturing sector, particularly as it relates to workforce and regulatory concerns,” said Jason Patch, partner-in-charge of Katz, Sapper & Miller’s Manufacturing & Distribution Services Group. “Indiana’s manufacturers seek seismic changes in healthcare, tax law and economic development in order to confidently build their businesses in the future.”

The authors of the 2016 survey analyzed the data and suggested several reasons that expected growth rates for revenues, profits and capital investment are diminishing:

  • The maturing of the national economic recovery
  • New technologies, facilities and process improvement philosophies (e.g., Six Sigma) that were key investments post-recovery to boost productivity have now matured, limiting additional growth opportunities
  • A shortage of skilled workers continues to hamper growth; additionally, relatively low unemployment rates in the state further impact prospects
  • Regulatory and reporting burdens, particularly healthcare regulation and high corporate tax rates.

“In short, the day may be sunny, but there are clouds on the horizon,” said survey co-author Mark Frohlich, an associate professor of operations management at IU’s Kelley School of Business Indianapolis. “Given our regulatory burdens and lack of skilled workforce, how do manufacturers continue to grow? That is the biggest concern identified in this year’s study.”

“Lawmakers, industry leaders and educators can all shape a positive future for Indiana’s manufacturing industry, which serves as a tremendous economic engine and employer of hundreds of thousands of Hoosiers,” said David Resnick, managing partner of Katz, Sapper & Miller.

The 2016 Indiana Manufacturing Survey: Roadblocks to Prosperity includes valuable data for the manufacturing community as well as service providers and economic development officials. A full copy of the report with complete findings can be found here.

Mark Frohlich, IU Kelley School of Business Indianapolis associate professor of operations management, discusses the 2016 Indiana Manufacturing Survey.

About Katz, Sapper & Miller
As one of the top 60 CPA firms in the nation, Katz, Sapper & Miller has earned a reputation as a leader in the areas of accounting, tax and consulting services. Founded in 1942, the firm has more than 300 employees and is headquartered in Indianapolis, Ind., with offices in Fort Wayne, Ind., and New York. Katz, Sapper & Miller was named one of the “Best of the Best” accounting firms in the nation by INSIDE Public Accounting magazine and has been recognized by the Indiana Chamber of Commerce as one of the “Best Places to Work in Indiana.” The firm is an independent member of PrimeGlobal, a global association of independent accounting firms. Learn more at ksmcpa.com.

About the Kelley School of Business Indianapolis
The Indiana University Kelley School of Business has been a leader in American business education for more than 95 years. With over 105,000 living alumni and an enrollment of nearly 10,500 students across two campuses and online, the Kelley School is among the premier business schools in the country. Kelley Indianapolis, based on the IUPUI campus, is home to a full-time undergraduate program and four graduate programs, including master’s programs in accounting and taxation, the Business of Medicine MBA for physicians and the Evening MBA, which is ranked 6th in the country by U.S. News & World Report. Learn more at kelley.iupui.edu.

About the Indiana Manufacturers Association
Formed in 1901, the Indiana Manufacturers Association is the second oldest manufacturers association in the country and the only trade association in Indiana that exclusively focuses on manufacturing. The Indiana Manufacturers Association is dedicated to advocating for a business climate that creates, protects, and promotes quality manufacturing jobs in Indiana. Indiana is one of the top manufacturing states in America in wealth and jobs created, sustained, and supported. More than 50 percent of all employment in Indiana has some connection to manufacturing.

The staff of the Indiana Manufacturers Association has more than 160 years of combined governmental affairs experience and are recognized as experts in many areas including tax, environment, labor relations, human resources, and healthcare. Learn more at imaweb.com.

About Conexus Indiana
Conexus Indiana is the state's advanced manufacturing and logistics initiative, dedicated to making Indiana a global leader. Conexus is focused on strategic priorities like workforce development, creating new industry partnerships and promoting Indiana's advantages in manufacturing and logistics. Learn more at conexusindiana.com.