NEW YORK -- Manufacturing is one of the sectors suffering most heavily in this recession and a new survey of small business owners in manufacturing reveals the extent of their challenges and the sharp deterioration in sentiment compared to just six months ago. According to the American Express OPEN Small Business Monitor, one-third of manufacturing business owners have a positive outlook on the economy (34 percent), down significantly from 52 percent just six months ago.
The survey paints a detailed portrait of the challenges small business owners in the manufacturing sector are facing and steps they are taking to weather the economic storm.
Compared to all small businesses and those in the service and retail sectors, manufacturers are the most likely to experience cash flow issues (71 percent) up dramatically from 47 percent last fall. This is due in part to their resistance to cut expenses as they were the least likely industry to do so as compared to 82 percent of retailers.
Manufacturers are employing several tactics to manage in the recession. They are the most likely industry to have hiring freezes; salary freezes and lay off employees. Only 37 percent of manufacturers plan to make capital investments as compared to 59 percent six months ago. Manufacturers are the least likely to have hiring plans -- only 19 percent plan to hire, down from 30 percent six months ago.
Compared to retailers, manufacturers are far more likely to offer healthcare benefits. Three-quarters offer healthcare coverage to their employees versus only 55 percent of retailers. As manufacturers are the most likely to have cash flow concerns, it is not surprising they are also more likely to have shopped for a new insurance carrier or required their employees to pay a larger share of healthcare costs.