2011 Manufacturing Trends Survey: One Percent Better

Pick an analysis: Either last year's responses were overly optimistic, or 2010 was better than expected or 2011 begins with very cautious optimism.

By Bob Sperber, Plant Operations Editor

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Manufacturing PrioritiesLast year, when we asked managers involved in plant and company operations for their expectations of 2010, they predicted a post-recession rebound, and we reported that the proverbial glass was half full. This year, they're just as optimistic about 2011 – no less, thankfully, but no more either.

When asked the perennial question, "How do you feel going into 2011?" 66 percent of respondents reported being "optimistic" and only 7 percent said they were "pessimistic." These numbers match last year's sentiments to a fraction of a percent (results are rounded to whole numbers in this report) -- although, if you want to split hairs, this year's optimists increased by 0.2 percent.

Similarly, when asked if you think your plant's production and throughput will increase in the new year, there was a 1 percentage point increase in the 3-9 percent increase bracket. With the other two "increase" brackets staying the same (see Fig. 6), that was enough to raise all "increase" numbers by the same 1 percentage point, to 69 percent expecting more production this year.

If you expected a full economic recovery in 2010 and a glorious boom in industry-wide production, you're likely to be displeased with the continued if modest gains made in the past year. But if perception is the precursor to reality, the coming year will bring cautious optimism.

This is Food Processing's 10th annual Manufacturing Trends Survey. Invitations went out in late November for the web-based survey. We had 425 total responses, up from 388 last year.

Figure 2 - OptimismSafety first – always
Asked to rank a list of issues according to their priorities for the coming year, processors always have and likely always will put food safety first.

This year, processors gave this issue a score of 8.4 (weighing first-place votes as 10 points and last-place votes as 1), exactly the same score as last year. And while it's probably insignificant, 57 percent of voters ranked it first, down slightly from last year's 60 percent.

Cost control took second place with a 7.9 score; 29 percent of respondents cited it as their top priority. This item did not appear in last year's survey. This affected the statistics a bit as respondents "made room" in their list of priorities for the coming year. But not that much; the following items garnered an above-average priority ranking this year as well as last: Sourcing and materials (6.3 this year vs. 6.5 last year), Inspections/certifications (6.3 this year vs. 6.2 last year), labor (6.1 this year vs. 6.5 last year) and Energy issues (6.0 this year, vs. 6.4 last year).

In addition to that slight downward movement in energy issues, environmental concerns also lost a bit of ground in the rankings, slipping half a point to a score of 5.6.

"Water issues" was another new addition to our prefabricated Top 10 list – but apparently not a good one. It came in ninth, with a score of just 4.6, barely ahead of "consolidation challenges" with a 4.4.

Growth, year after year

Figure 3. EconomyHow are food companies dealing with the economy? When given measurable choices to describe their company's outlook, the largest share of respondents – 44 percent – said, "We're growing," a notable increase over last year's 37 percent – which itself was significantly higher than the 27 percent who expected growth in 2009. All the negative answers (see Fig. 3) were down significantly from last year's report, especially "staff reductions" – this year, 22 percent still think that could happen, but 34 percent thought it was likely last year at this time.

Given the opportunity to provide open-ended answers, cost-cutting figured prominently, as it did last year. One processor explains how his company is "trying to look for cost saving measures in production processes, and trying to source cheaper raw materials so more consumers can be able to afford products." Related comments cited the need to increase yield and efficiency and to lower insurance costs, while others mentioned constraints on labor, capital projects and credit availability.

Labor, salaries looking up

Figure 4. AuditingThis year's outlook for human resources seems to be healthy, as respondents revealed expectations for continued good news.

Staffing was another category that showed a 1 percentage point improvement. Last year, 48 percent of respondents said their plants would maintain staffing levels, 25 percent said staffing would increase and only 17 percent – despite the bad economy – foresaw staff reductions, mostly through attrition. This year's expectations are similar; 49 percent expect to maintain the current level; 26 percent plan to grow their workforce and only 13 percent expect staff reductions, less than four percent of which will come from "active" reductions vs. passive attrition.

On the issue of salaries, things are looking up. We ask two questions in our survey: What actually happened to salaries in 2010? And what do you expect will happen in 2011? Last year, 35 percent of respondents expected salaries to rise at their plants, and this year we found that salaries actually did increase for a larger share: 45 percent. (Another 45 percent of plants maintained salary levels from 2009 to 2010, 6 percentage points higher than expected.) A rare miscalculation in your expectations last year: About 3 percent expected salaries to decline at their plants, while a year later, double that number reported an actual decrease. Ouch.

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