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Manufacturers Reluctant to Invest in New Hires
NEW YORK -- U.S. industrial manufacturers expect to reduce their overall work force by 1.9% over the next 12 months, according to the first quarter 2004 PricewaterhouseCoopers Manufacturing Barometer. At the same time, the survey shows that more manufacturers plan to add to their workforce than reduce it (36% versus 23%).Despite these mixed signals, however, these executives are increasingly optimistic about the economy and expect top-line growth for the year."Job growth is a concern, as manufacturers desire to remain lean, doing more with less," says said Dean Simone, U.S. leader of PricewaterhouseCoopers' Industrial Products practice. "These results show that manufacturers who plan to add to their workforce will do so cautiously, while those who plan to reduce it will do so more aggressively. However, there are several positive indicators that point to improved prospects for U.S. manufacturers. The pricing environment appears to be firming, and manufacturers expect to benefit from the growing economy."In fact, a solid majority of industrial manufacturers are experiencing top-line growth; 65% reported positive revenue growth over the last 12 months while 18% reported negative growth. Looking ahead, 83% expect positive revenue growth over the next 12 months.Manufacturing executives, though, have scaled back their expectations based on a pause in performance during the first quarter. Operating capacity slightly dropped to 77.5% versus 80% in the previous quarter. Corresponding with this drop, manufacturers reduced their projected revenue growth over the next 12 months to 6%, a decrease from the projected 7% growth reported in the previous quarter. Additionally, spending for manufacturers planning to make major new investments of capital over the next 12 months is expected to average 5.5% of revenues, a decline from the 6% reported in the previous quarter.Even with the slight pullback in plans that occurred during the first quarter, manufacturers are still optimistic about their current and future growth prospects. Fully 90% believe that the economy grew in the first quarter, while none describe it as declining. Looking ahead, 79% are optimistic about the economy's prospects over the next 12 months while only 3% are pessimistic.Perhaps one indication of this optimism is that more manufacturers are willing to raise prices in what has been a difficult pricing environment; 23% of manufacturers reported prices were up in the first quarter, an increase from the 13% who reported similarly in the previous quarter. Although 28% reported that prices were down, this gap has closed significantly over the past three quarters.PricewaterhouseCoopers' Manufacturing Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research Inc.PricewaterhouseCoopers provides industry-focused assurance, tax and advisory services for public and private clients in 139 countries.Visit PricewaterhouseCoopers: www.pwc.com"