(Published Monday, September 24, 2007 11:12:06 AM CST)
A d v e r t i s e m e n t
By Jim Leute jleute@gazetteextra.com
Think you've been paying attention lately?
If so, consider these findings from a recent survey conducted by RSM McGladrey, a national business consulting, accounting and tax firm that focuses on mid-sized companies:
-- Smaller companies are more likely to incur higher health care cost increases than larger companies, but they're less likely to pass those costs on to their employees.
-- Despite perceptions that unskilled labor is easier to come by than skilled labor, most mid-sized companies said they need just as many entry-level production workers as engineers or sales people.
-- Companies are more focused on domestic markets than international markets for sales of both existing and new products, And because of that, they're missing opportunities overseas.
RSM McGladrey, which has an office in Janesville, annually surveys senior executives at small and mid-sized companies about the state of their businesses and the challenges presented by today's global economy.
This year, the result is the 2007 Manufacturing and Wholesale Distribution National Survey, which is based on the responses of 947 business leaders from around the country.
More than 5 percent of the responses came from Wisconsin, and the results show that some sectors of manufacturing in Wisconsin are rebounding, said Scott Bjornstad, a director with RSM McGladrey in Madison.
"Obviously, there are differences based on industries," he said. "The printing and publishing industry is still struggling, and we'll have to wait to see how what's going on with the Big Three automakers will affect Wisconsin manufacturers."
While some industries are in turmoil, others, such as medical device makers, are doing well, Bjornstad said.
"It seems that those manufacturing companies that have survived the last five or six years are now starting to see a turnaround," he said.
Here's a look at some of the particular findings from a Wisconsin perspective.
Business climate
Half of those surveyed said their business is "thriving and growing," a considerable drop from the 65 percent who reported the same condition in 2006.
Still, 86 percent are optimistic about their company's growth prospects over the next 18 months.
Growth strategiesSales of existing products in domestic markets will be the manufacturers' top strategy, followed by increasing brand recognition, sales of new products domestically and existing products internationally and, finally, sales of new products globally.
Global strategyWisconsin companies are running ahead of the national average when it comes to either moving production or other components of the business offshore.
That's probably a reflection of the findings that showed 37 percent of the respondents said working globally is part of their strategy. Thirty-five percent said their companies are experiencing revenue growth in foreign markets.
Operational effectivenessMore than half said they need improvements in their supply chain, well above the national average of 41 percent.
Health careMore than 90 percent said they are seeing health care cost increases in the 5 percent to 15 percent range. And more so than in 2006, the majority are passing those costs on to employees.
Along with that pass-through cost comes efforts to help keep costs under control. Fifty percent said their companies offer wellness programs, while 31 percent said they have disease management programs in place.
Tax strategiesWhen it comes to reducing tax expenses, 44 percent of the respondents said their companies take advantage of local tax credits and incentives. That's a 53 percent drop from the previous year.
But Wisconsin companies are well ahead of their national counterparts when it comes to using research and development credits to reduce their taxes.
WorkforceDespite the drop in business optimism, 72 percent of those surveyed said they will expand their payroll over the next 18 months, with just 16 percent expecting a workforce decrease.
As for the skilled versus unskilled debate, 47.1 percent said their greatest hiring need is for engineers. Forty-seven percent said they need entry-level workers.
Hiring aside, what's the best strategy Wisconsin companies use to keep their workers? Flex time in a landslide, followed by cash bonuses, supplemental benefits, long-term incentives and educational expense reimbursement. On-site daycare and childcare allowances were missing from the Wisconsin responses.
"One of the challenges we're seeing in Wisconsin is that manufacturers just don't have enough people," Bjornstad said. "We've got to get people interested in manufacturing again."
Bjornstad said many students who graduate with traditional four-year degrees are returning to technical colleges for degrees that lead to skilled positions paying $75,000 a year.
"We're finding that there is a disconnect between what university grads bring to the table and what manufactures need," he said. "The students need to work on their communication skills, their ability to lead project teams and they have to want to learn.
"They need to realize that the degree is not the end; it's just the start of learning process."
