2023 Manufacturing Outlook

2023 Manufacturing Outlook: Optimism, But Not Too Much

Jan. 6, 2023
Our Manufacturing Survey shows people still coping with shortages of supplies and labor.

Optimism (but not overwhelming) and plans for expansion will be a big part of 2023, if the responses to our Manufacturing Survey are anything to go by.

About 18% of our respondents said they are “very optimistic” heading into 2023, and another 42% called themselves “somewhat optimistic.” That 60% vote of confidence may not sound bad, but it’s quite lower than the 72% in those two positive categories when we reported this survey last year. However. It’s a hair above the 58% vote in our 2021 survey.

This optimism is reflected in plans for the near future. Some 77% of respondents anticipate that this year, their company’s plant production will increase, with 21% saying it will go up by 20% or more over last year. Another 27% said they expect output to go up by 10% to 19%. Only 6% think that their companies’ production will go down.

Asked about immediate plans for production capacity, 42% said their companies would probably expand production by opening lines or plants. Another 36% said their companies would stay the same, and only 14% anticipated that lines or plants would be closed.

All of this will require additional capital spending, which has been on the rise. The 2022 capital expenditure budgets for the public companies in Food Processing’s Top 100© list collectively rose 14% over actual 2021 expenditures – we haven’t calculated their actual 2022 spending yet.

Our respondents’ predictions for their companies’ capital budgets in 2023 show that they expect this trend to continue. Just over half (54%) said they expect their capital spending to increase, with 20% saying it will go up more than 10%, and another 21% saying it will rise 5% to 10%. Only 9% of respondents anticipated a drop in capital spending.

Upgraded buildings will remain a priority in capital spending; at 25%, it was the most popular choice from a list presented to respondents. The next most popular response was process equipment, at 20%, followed by packaging equipment at 13%.

Some of the respondents added comments that, in some cases, gave intriguing hints as to what their companies are planning – things like “We are modernizing our brewing system”; “new filler and two micro blend mixers” and “adding a new packaging line, milk standardization before going into vats.”

Others weren’t as fortunate: “Unfortunately, due to inflation, we will withhold any projects and stick to expenses on maintenance.”

Help wanted

The plants that are expanding will need more people as well as facilities and equipment. Fully three-quarters of our respondents said their companies planned to increase hiring next year, with 28% saying they anticipate the payroll increasing by 2% to 9%. Another 27% said they expect an increase of 10% to 19%, and 21% said it will go up by 20% or more.

The labor shortage is one of the biggest things on the minds of food company leaders right now, and our survey respondents were no exception. Asked an open-ended question about “vital manufacturing issues” not elsewhere covered, several respondents returned to the labor situation, with comments like “labor shortage, quality of available labor” and “the increase of capacity while dealing with automation & worker shortages.”

The nature and requirements for labor in food plants are constantly changing, with automation creating a demand for workers with specialized skills. We asked what respondents’ companies were doing to find such workers, and the most frequent response by far, at 55%, was “expanding in-house technical training.” Other popular responses were “adding in-house engineering capabilities” (26%), “hiring more line operators for semi-automated tasks” (24%) and “outsourcing more job functions” (23%) (multiple responses were permitted).

Specialized skills are especially in demand for maintenance functions. When we asked what strategies were being followed for maintenance, the most popular answer, at 48%, was “on-the-job training.” In addition, 40% said they are trying to hire more maintenance technicians, but 42% said they are assigning routine maintenance duties to machine operators. (Again, multiple responses were permitted.) Other popular options were using third-party maintenance services (31%) and using condition-monitoring tools to drive preventive maintenance (27%).

That last has to do with digital technology, which is an area where the food industry is still undergoing growing pains. Asked what they are doing in that area, the most popular answer was the most basic one: “Replacing paper records with electronic records,” chosen by 24% of respondents. The next most popular one was, essentially, nothing: “No action/taking a wait-and-see approach” was selected by 21%. Other popular options were “shifting from local servers to cloud computing” (17%) and “providing more remote access to machine controls” (13%).

There are plenty of other issues, of course. Ask to rank a list of them, a plurality of respondents had “food safety” as the most popular choice, followed closely by “cost control” and “inflation/price increases.”

Supply problems

One of the biggest issues that the food industry, as well as many others, had to deal with in 2022 was supply chain problems, both incoming and outgoing. There are signs that these problems are straightening out, but they were top-of-mind for our respondents in 2022.

Only 12% reported having no appreciable problems in obtaining needed supplies of ingredients, packaging or other vital materials. Asked about coping strategies, 69% reported seeking alternative or supplementary suppliers; 51% said they were budgeting more for supplies and/or extending their delivery deadlines; and 34% said they have adjusted formulations or other procedures to use fewer of whatever is in short supply. (Again, multiple responses were permitted.)

A couple of people furnished ad hoc written answers that included “more open communication with suppliers” and “address the government supply chain regulations and shortcomings.”

A somewhat similar pattern took place when it comes to equipment, which was affected by supply chain difficulties and labor shortages in 2022 just as much as consumable supplies like ingredients. Only 18% said they were experiencing no appreciable problems with equipment. Two-thirds said they have had problems getting parts on time, while 53% said they have had to wait unusually long for equipment to be delivered. Another 15% said they had been unable to find needed equipment at all.

As always, we solicited general comments on the state of the industry to cover what we hadn’t asked about. Some of the more intriguing were:

“Disgruntled workers and acting lazy purposefully.”

“While market-related issues are some of their most challenging problems, concerns about regulations, costs of doing business, labor quality, and other business and policy climate issues also emerge as leading industry concerns.”

“Availability of spare parts, poor skills of engineering section.”

And finally, one comment that probably applies to everyone:

“Not sure until it happens. But there is always something popping up.” 

About the Author

Pan Demetrakakes | Senior Editor

Pan has written about the food and beverage industry for more than 25 years. His areas of coverage have included formulations, processing, packaging, marketing and retailing. Pan worked for Food Processing Magazine for six years in the 1990s, where he was operations editor (his current role), touring dozens of food plants of every description. He has also worked for Packaging and Food & Beverage Packaging magazines, the latter as chief editor, during which he won three ASBPE awards. He is a graduate of Stanford University with a BA in communications.

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