A national study from Umpqua Bank showed that U.S. manufacturers are prepared to make significant changes in the next 12 months in the face of macroeconomic challenges related to rising inflation, the labor shortage and ongoing supply chain disruption.
Manufacturers surveyed in Umpqua Bank’s “2022 Business Barometer” cited inflation as the number-one economic concern, with 59 percent ranking it as a top challenge, while about six in 10 surveyed companies were also having difficulty finding qualified employees and 59 percent indicated that navigating supply chain issues was the most important area of their business to address for success in the coming year.
To address these challenges, manufacturers are most likely to make significant changes to their products and services and pricing models in the next year, as well as invest in digitization to become more efficient, the study revealed. Compared to other sectors, manufacturers are more focused on finding new suppliers or strengthening relationships with current suppliers and implementing new inventory management techniques to address ongoing supply chain disruption.
Manufacturers are also likely to allow more remote work options, increase pay and benefits and adopt creative ways to support working parents, as attracting and retaining workforce talent poses increasing challenges to growth.
“Manufacturing leaders continue to show the ability to adapt quickly and are taking strong steps to diversify their business as they navigate all of the challenges,” said Richard Cabrera, Umpqua’s head of middle market banking. “Current headwinds present an opportunity for forward-thinking, innovative companies to change in ways that position them for future growth.”
Notable insights from Umpqua Bank’s research also found 35 percent of manufacturers contended that the talent shortage has increased lead times to deliver goods and services, which was the most cited effect in the sector. Rising interest rates was cited as a primary concern, with 41 percent of manufacturers noting it among their top three challenges.
Uncertainty related to Covid-19 or continued outbreaks also ranked as a top concern for 41 percent of manufacturers. Cybersecurity was a focus point for a majority of manufacturing businesses, with nearly 70 percent likely to invest in financial tools to protect their payment systems in the year ahead.
A solid portion of manufacturers have significant strategic moves in mind, with 43 percent saying they are likely to increase their real estate footprint in the next 12 months, while between close to one third said they were likely to consider acquiring or merging with another business.
Umpqua Bank, headquartered in Roseburg, Ore., operates across seven states–Arizona, California, Colorado, Idaho, Nevada, Oregon and Washington. In addition to its retail banking presence, Umpqua Bank also owns Financial Pacific Leasing Inc., a national commercial finance company that provides equipment leases to businesses.