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Only 25% of Manufacturing Companies Plan To Increase Hiring in Next Six Months and More Than Half Plan to Reduce Bonuses

Friday, 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:

                                   Manufacturing        National
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:

                                  Manufacturing       National
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:

                                  Manufacturing       National
Increase                    25%                       22%
Remain the same      63%                       67%
Decrease                   12%                       11%

Over the next six months, do you expect your headcount to:

                                  Manufacturing       National
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?

                                  Manufacturing        National
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.)

                                    Manufacturing      National
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.)

                                             Manufacturing                         National
                                     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.

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