Despite the stronger economic outlook, manufacturers continue to express frustrations with the political environment. In fact, 72.7% of those taking the survey said that the United States was on the wrong track, with just 9.1% feeling we are headed in the right direction. The remainder were unsure. To put a slightly positive spin on the data, we asked this same question six months ago. In June, 79.3% said that the country was on the wrong track, and 5.0% suggested it was on the right track. As such, while sentiment marginally improved, it remains less than ideal.

This survey took place after the midterm election, allowing us to gauge manufacturers’ reactions to the results. In general, respondents were pleased with the outcome, with 64.8% more optimistic that policymakers would address our long-term challenges. Indeed, 36.8% said they would raise their outlook for 2015 as a result, with 15.2% and 20.0%, respectively, suggesting they would increase employment or business investment. At the same time, 38.4% said the election outcome would have no impact on their activity or outlook.

Note: Respondents were able to check more than one response. Therefore, responses exceed 100 percent.

Manufacturers were asked about which policy actions they would like to see pursued by the Obama Administration and the new Congress (Figure 4). Most respondents, 82.8%, cited reducing the regulatory burden. This was followed by a desire to tackle the growth in entitlement spending (79.2%), passing comprehensive tax reform (74.0%), controlling health care costs (73.7%) and finding a long-term federal budget deal (70.5%). Other pressing issues included enacting a true “all-of the above” energy policy, enacting a long-term solution for infrastructure investment, addressing the skills gap and expanding global opportunities through new trade agreements. For some sample comments, see the end of this write-up.

Note: Respondents were able to check more than one response. Therefore, responses exceed 100 percent.

Beyond these policy goals, respondents were also asked about their current primary business challenges (Figure 5). A majority of survey respondents, 77.1%, again cited rising health insurance costs as their top challenge. In the manufacturing sector, businesses see benefit costs rising an average of 6.3% over the next 12 months, with health insurance premiums anticipated to increase 9.5% on average in 2015.More than 83% of those taking the survey said their health insurance premiums rose by 5% or more, with 50.9% indicating that their costs rose by 10% or more. As one might expect, firm size mattered in these results. The average premium increase for large manufacturers was 7.7%, which was lower than the 9.4% and 10.6% averages seen for medium-sized and small manufacturing businesses.
We asked manufacturers about what kinds of changes they might make to their health insurance coverage next year, particularly in light of expected premium increases (Table 1). Roughly half indicated they intend to keep the same plan, nearly 42% said they would have to increase copays and deductibles, and 38.4% said they would need to increase the share of premiums paid by employees.

Note: Respondents were able to check more than one response. Therefore, responses exceed 100 percent.

The second-most pressing issue for manufacturers remains the business climate, noted by 63.4% of those taking the survey this quarter (Figure 5). Businesses would like policymakers to enact comprehensive tax reform and address rising regulatory burdens. In addition, workforce development challenges remain top-of-mind for many manufacturers, with 56.7% listing attracting and retaining workers as a primary challenge. For its part, manufacturers have pushed for solutions to the skills gap issue for a long time, establishing a skills certification system and creating the NAM Task Force on Competitiveness and the Workforce. This fall, it issued a set of action items to proactively address this problem.

Sample Comments

  • “Can’t find skilled machinists.” (Primary metals or fabricated metal products)
  • “Government regulation and an increasing cost of complying with regulations at all levels: local, state and federal governments.” (Chemicals)
  • “Growing strength of [the U.S. dollar] will make our export sales more expensive and therefore more challenging.” (Machinery)
  • “Lower taxes and have the government stop interfering with energy policy.” (Miscellaneous manufacturing)
  • “Not enough capacity to meet customer demand!” (Computer and electronic products)
  • “One of our biggest threats is the lack of a skilled and trained workforce. We can find college grads, but they don’t have any skills [that we need] to go with their education.” (Machinery)
  • “Passing immigration reform.” (Miscellaneous manufacturing)
  • “Pass laws that encourage business and job growth.” (Machinery)
  • “Resolving tax issues before taxable year begins.” (Primary metals or fabricated metal products)
  • “Rising costs of environmental compliance.” (Primary metals or fabricated metal products)
  • “The shortage of railcars in the United States is severely hampering our ability to keep enough inventory on hand.” (Nonmetallic mineral products)
SOURCE: Industry Week