Impending Leadership Transition May Be Area of Concern
Kreischer Miller, a leading independent accounting, tax, and business advisory firm serving the Greater Philadelphia area since 1975, today announced that its Manufacturing Industry Group has released the results from its second annual Regional Manufacturing Capability and Outlook Survey. Key areas of the survey included 2014 expectations for the economy, revenue growth, capital investments, and hiring. It also examined trends in supply chain improvements, key operational and production measures, and outsourcing.
In the survey, privately-held manufacturers in the Greater Philadelphia region were overwhelmingly optimistic about their growth prospects for 2014. Nearly all respondents (97%) expect revenues to increase this year, with two-thirds anticipating a growth rate of at least five percent. This optimism may partly stem from their outlook for the U.S. economy. Fifty percent of respondents stated they were somewhat optimistic about the 2014 economic outlook, while an additional 17 percent were very optimistic.
When it came to hiring plans, 52 percent of respondents indicated they expect to increase full time headcount in 2014. This was a dramatic change from the 2013 survey, in which 76 percent indicated no planned headcount increases.
“Privately-held middle-market manufacturers in the Greater Philadelphia region have spoken: their 2014 outlook for the industry is overwhelmingly optimistic,” said Michael A. Coakley, a director in Kreischer Miller’s Audit & Accounting practice and head of the firm’s Manufacturing Industry Group. “Nearly every respondent anticipates some level of revenue growth this year and hiring plans are significantly more promising than last year.”
One area for concern, however, is the future of the industry’s leadership. Sixty-five percent of respondents indicated that the average age of their senior executives is at least 51, with 24 percent over age 60. A full 43 percent of respondents anticipate a leadership transition in the next five years and another 20 percent suggested this was a possibility. As members of the executive suite approach retirement age, effective succession plans will be necessary to ensure the continuity of these organizations.
Other notable findings from this year’s survey:
- While the industry continues to be challenged by a lack of skilled labor, only seven percent of respondents are extensively partnering with vocational schools, high schools, and community colleges to develop skilled laborers.
- The top three planned business initiatives for 2014 are Process Improvement (70%), Quality Improvement/Certifications (67%), and Waste Reductions (53%).
- Major planned supply chain improvements for this year include product design collaborations with suppliers and customers (50%), sharing forecasts with suppliers (47%), and supplier management programs (40%).
Kreischer Miller distributed electronic surveys to privately-held manufacturers in the Greater Philadelphia region, including most of southeastern Pennsylvania and southern New Jersey. Respondents included companies with annual revenues ranging from $4 million to $420 million and averaging $50 million. They represent a diverse cross section of the manufacturing sector, including companies in industrial equipment and machinery, machine shops, nondurable and durable consumer goods, wood, plastics, chemicals, textiles, specialty packaging, medical devices, and defense.
To download a copy of the full survey results, please visit www.kmco.com/industries/manufacturing/survey.
About Kreischer Miller
Kreischer Miller is a leading independent accounting, tax, and advisory firm, serving the Greater Philadelphia area since 1975.The firm is built to respond to the unique needs of growth-oriented private companies, helping them smoothly transition through growth phases, business cycles, and ownership changes. Kreischer Miller offers a wide range of services, including Audit & Accounting, Tax Strategies, Business Advisory, Human Capital Resources, and Technology Solutions across an array of industries, including manufacturing, distribution, construction, real estate, not-for-profits, media, government contracting, professional services, family-owned businesses, and investment firms. The firm provides insight and creative services to organizations that need to be able to quickly adapt and respond to changing market opportunities and challenges.
To learn more, please call us at 215.441.4600 or visit www.kmco.com.