Only 25% of Manufacturing Companies Plan To Increase Hiring in Next Six Months and More Than Half Plan to Reduce BonusesFriday, October 23, 2009
CHICAGO, IL — In a survey of manufacturing CFOs and senior comptrollers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, only 25 percent say their company will increase hiring in the next six months and more than half (57%) plan to reduce bonuses. At the same time, more than half (54%) believe the U.S. economy will improve during the same time period, making manufacturing slightly more optimistic than other industries.
One-third (34%) are reducing health care benefits and more than a quarter (28%) are reducing 401(k) matches. In terms of pricing pressure, they are most concerned about the cost of employee benefits (74%), such as health care and pension costs. Not surprisingly, the second greatest concern is the cost of raw materials.
“Most of our clients are telling us that they have hit bottom and are now seeing an uptick in their orders,” said Walter Gruenes, Grant Thornton LLP National Managing Partner of Consumer and Industrial Products. “In the short term, those manufacturers serving the food/beverage, aerospace and chemical sectors are most optimistic, while those serving the automotive, industrial equipment and housing/construction sectors are least optimistic. Over the next five years the machinery, chemicals, aerospace, food/beverage and metals sectors are expected to experience the largest employment gains.”
Over the next six months, do you expect the U.S. economy to:
Improve 54% 49%
Remain the same 37% 41%
Get worse 9% 10%
Over the next six months, do you expect your company’s financial prospects to:
Improve 43% 45%
Remain the same 43% 43%
Get worse 14% 13%
Over the next six months, do you expect prices or fees charged by your company to:
Increase 25% 22%
Remain the same 63% 67%
Decrease 12% 11%
Over the next six months, do you expect your headcount to:
Increase 25% 24%
Remain the same 53% 54%
Decrease 22% 22%
When do you believe the U.S. economy will come out of the recession?
By the end of 2009 15% 15%
First half of 2010 27% 27%
Second half of 2010 38% 35%
2011 14% 17%
Later 7% 7%
About which type(s) of pricing pressure are you most concerned? (Check all that apply.)
Employee benefits 74% 77%
Energy 32% 30%
Insurance 38% 31%
Raw materials 63% 30%
Other 7% 14%
Is your company reducing average costs per employee in any of these employee benefit and compensation areas? (Check as many that apply.)
Increasing Reducing Increasing Reducing
401(k) match 2% 28% 3% 26%
Bonuses 4% 57% 7% 55%
Disability benefits 3% 9% 3% 10%
Health care benefits 3% 34% 7% 33%
Life insurance benefits 2% 11% 2% 11%
Salary raises 9% 42% 9% 42%
Stock options and
other forms of equity-
based compensation 5% 31% 6% 34%
* Percentages may not total 100 due to rounding.
About the Survey
Grant Thornton LLP conducted the biannual national survey from Sept. 21 through Oct. 2, 2009, with 846 CFOs and senior comptrollers from public and private companies, of which 154 were from manufacturing.
About Grant Thornton LLP
The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.
In the U.S., visit Grant Thornton LLP at www.GrantThornton.com.