Manufacturing summit projects 3.3% sales growth

Manufacturers are increasingly optimistic across the state and the country, but wages are not expected to keep pace with sales during the next 12 months, according to Missouri Association of Manufacturers Executive Director Rita Needham.

Needham spoke about industry trends to a crowd of more than 280 at the association’s 10th annual Manufacturing Summit held Sept. 18 at the Ramada Plaza Hotel & Oasis Convention Center.

Based on data gathered by the National Association of Manufacturers and Industry Week as part of its third-quarter survey, sales from manufacturing businesses across the country are projected to rise 3.3 percent during the next year, while wages and salaries are projected to increase by 1.7 percent.

According to the third-quarter survey released Sept. 16, 76.1 percent of participants said they were either very positive or somewhat positive about their company’s outlook, which is up from 72.3 percent in the second quarter.

Although manufacturers are feeling more positive than earlier this year, they are still less optimistic than they were last year. According to Industry Week, the average tally for those either very positive or somewhat positive about their company’s outlook in the first three quarters of 2013 was 72.8 percent, more than seven points below the average of 80.3 percent in the same time period last year.

A possible reason for optimism among those leading and working for the Show-Me State’s 6,600 manufacturing businesses: Machine tool orders, a leading economic factor, are back to 2007 levels, Needham said at the event.

In Missouri, manufacturing accounts for 12.8 percent of the state’s gross domestic product, or roughly $32 billion annually, and the sector employs 250,000 workers, Needham said, citing data from the Missouri Economic Research and Information Center.

Addressing issues related to future hiring during the event, MAM released results from a commissioned study of 800 individuals who responded to an American Viewpoints online and phone survey conducted in July designed to gauge voter support of right-to-work legislation in the state.

David Barklage, a conservative political strategist with St. Louis-based Barklage & Knodell LLC and MAM government affairs and policy consultant, said the survey shows more people support Missouri becoming a right-to-work state than don’t. Right-to-work laws are designed to prohibit employment based on the condition that workers join and support a union.

Barklage said as part of the survey, voters identified jobs as the single most important voting issue and hiring fairness as a concept they identify with.

“We simply asked the following question: ‘The proposal is often referred to as right-to-work and would allow workers to decide whether to join a union or pay union dues. Knowing this, if an election was held today would you vote yes in favor of this constitutional amendment or no in opposition to it?’” Barklage said to the crowd, pointing to a slide showing 63 percent of survey participants who indicated they would support such a constitutional amendment, with 32 percent opposed.

He said polling further identified the intensity of those opinions, with 39 percent strongly supporting right-to-work laws and 21 percent identifying themselves as strongly opposed. “Having an intensity of two-to-one is a very good place to start with any issue,” he said.

Keynote speaker SRC Holdings Corp. CEO Jack Stack spent roughly an hour detailing the importance of utilizing employees to improve company balance sheets. In 1983, Stack led an employee buyout of the closing International Harvester plant in Springfield after what he said were several failed attempts to secure funding. Stack said the initial $100,000 in equity secured to support the fledgling Springfield ReManufacturing Corp. is worth roughly $90 million in stock today.

In 1993, Stack authored “The Great Game of Business,” which has sold nearly 300,000 copies; a 20th anniversary edition was published by Crown Business this summer.

“Numbers are nothing more than stories,” Stack said at the event, adding income statements are the same across all industries and educating employees on how to read a company’s financials engages them and gives them the opportunity to find solutions to improve the numbers and to improve the company’s story.

Stack’s platform for open-book management led to a March 2004 White House request to become a secretary of manufacturing for the Department of Commerce, he said at the event. Through a process that involved Stack meeting the George W. Bush’s chief of staff and being subjected to 14 interviews in one day, Stack said he was told the job required him to sell the administration’s economic policies to those in the industry.

“The economic team is there, and they give me one piece of paper, and there are nine points on the piece of paper,” Stack shared with the crowd, adding he was disappointed with what he saw. “The guy looks at me and said, ‘What do you think?’ Those who know me know I’m kind of a smart aleck, and I said, ‘Sir, I couldn’t deliver this to my third-shift employees let alone members of the National Association of Manufacturers.’”

The point, Stack said, was the change employers and employees need best comes from the ground floor up and not the top down.

“We are the people who are going to make the change,” Stack said. “Winning doesn’t come from the sky. It isn’t rain. You have to build it a little bit at a time.”  

Although increases in wages and sales are on the horizon for manufacturers, many obstacles to growth remain, Needham said, noting Missouri manufacturers need tax reform and reductions in health care costs and expenses related to meeting regulatory requirements.

“All of those things put our manufacturers at a competitive disadvantage,” she said after the event. Needham added the national deficit remains a concern among many job creators. “There’s a lot of uncertainty as to what is going to happen in our economy.”