20% Profitability Increase Experienced By Mid-Market Manufacturers Using Advanced Techniques

Mid-Market Manufacturers Look To Automation, Computer Technologies, Process Technologies and Information Technologies Most Often

Advanced Techniques Have Exposed Widespread Workforce Skills Gap In STEM

COLUMBUS, Ohio, July 17, 2013 /PRNewswire/ -- The nation’s 33,000 middle market manufacturing companies are increasingly leveraging advanced manufacturing techniques to generate increased revenue and productivity growth. A new report released today by the National Center for the Middle Market (NCMM) and the National Association of Manufacturers (NAM) indicates that the 47 percent of mid-market manufacturers currently using advanced manufacturing techniques have experienced a 20 percent profitability increase over the last five years. These companies are most frequently leveraging automation, computer technologies, process technologies and information technologies.

In the past year, mid-market manufacturers using advanced manufacturing techniques report 3.4 percent increase in job growth and project employment growth at 4.7 percent in the next 12 months. According to the research, advanced techniques are most commonly leveraged by middle market companies with annual revenues between $100 million and $1 billion.

The report also highlights that vast opportunities to generate further growth remain. According to the 53 percent of companies who have not yet adopted advanced manufacturing techniques, 78 percent indicate they plan to do so in the next three to five years.

The National Center for the Middle Market, a partnership of GE Capital and the Ohio State University’s Fisher College of Business, defines the U.S. middle market as companies with annual revenues between $10 million and $1 billion. This sector encompasses nearly 200,000 companies - including Jamba Juice, K-Swiss, Fat Burger and Tootsie Roll - and accounts for nearly one-third of U.S. GDP.

Advanced Techniques Highlight Mounting Skills Gap

While widespread adoption of new advanced manufacturing techniques is a positive indicator of economic growth, the report also reveals a startling skills gap in the American workforce to fill these jobs. Ninety-five percent of companies utilizing advanced manufacturing techniques reported that innovation has changed recruitment and training methods and 81 percent of users say demand for skilled manufacturing is significantly higher now than in the past.

Among users, 93 percent report a skills deficiency and 74 percent of users report deficiencies in science, technology, engineering and math. Users identified inadequate technology/ computer skills, lack of technical skills (certification, associate degree, etc.), and inadequate math skills as top recruitment challenges.

“Through a renewed focus on training and collaboration with education institutions, more mid-market manufacturers may be able to break past this skills gap, but there must be a concerted effort to close this void in order to fully reap the benefits that advanced manufacturing has to offer,“said Dr. Anil Makhija, National Director for NCMM.

According to Chad Moutray, Chief Economist for the National Association of Manufacturers, "Mid-market manufacturing growth reflects the new manufacturing - a sleek, technology driven sector with exponential power to drive the economy. However, these positive steps have made a skilled workforce more important than ever. 600,000 manufacturing jobs remain unfilled due to employers' inability to find skilled workers. As a result, efforts to improve STEM education and enacting comprehensive immigration reform are essential to closing the skills gap and continuing this trend of growth in mid-market manufacturing.“

Increased Profitability Creates Middle Market Growth

The growth among mid-market manufacturers reflects the broader resilience of middle market companies nationwide, who together will generate approximately 70 percent of all projected national job growth this year. According to the NCMM’s soon-to-be-released Middle Market Indicator (MMI), companies with annual revenues between $10 million and $1 billion project 2.5 percent employment growth in the upcoming year, compared with the nation’s average projected employment growth rate of 1.11 percent, based on jobs data compiled from the first half of 2013.

The second quarter’s MMI, a survey of 1,000 middle market executives to be released July 24, reveals revenue growth is stabilizing above five percent and employment growth projections have increased 20 percent over last quarter. The MMI also confirms a growing sense of optimism for the national and global economies that is driving increased investment in technology and new employees. A record 48 percent of middle market executives reported confidence in the global economy, compared to 22 percent last year. Further, nearly two-thirds of middle market executives are at least partially confident in the U.S. economy, compared to 50 percent one year ago.

Survey Methodology:

The survey, designed and managed by NCMM in partnership with NAM, was conducted among 200 C-suite executives and financial decision makers of America’s middle market manufacturing firms on key indicators of advanced manufacturing technique usage and future growth; the impact of advanced manufacturing techniques on revenue, profits, and employment; implementation challenges; and barriers to advanced manufacturing technique adoption. The survey was designed to accurately reflect the 33,000 U.S. middle market manufacturers with revenues between $10 million and $1 billion, the upper and lower limits on middle market annual revenue.

Background - National Center for the Middle Market:

The National Center for the Middle Market (NCMM) was founded in 2011 in partnership with GE Capital and is located at The Ohio State University's Fisher College of Business. The Center is the leading source of research on the U.S. middle market economy.

Background - GE Capital:

GE Capital is one of the world's largest providers of credit and expertise. For more than 1 million businesses, GE Capital provides financing to purchase, lease, and distribute equipment, as well as capital for real estate and corporate acquisitions, refinancings, and restructurings. GE Capital is a leader in a number of industries, from airlines, health care and energy financing to fleet, franchise and middle market corporate finance. For approximately 80 million consumers, GE Capital offers credit cards and retail sales finance programs. GE Capital is an extension of GE's rich heritage of building and supporting growth, providing customers with insight, knowledge, and expertise in addition to financing.

Background - Roadshow for Growth:

The GE Capital and Slate “Roadshow for Growth“national tour is a unique platform designed to give middle market businesses a major stage to voice their issues and promote growth within this critical segment of the U.S. economy. The “Roadshow for Growth“tour will make dozens of stops in major cities and at mid-market businesses and will host a series of one-on-one discussions, middle market events, town halls and in-depth sessions with policy makers. The six-month tour will conclude in Columbus, Ohio at the 3rd Annual National Middle Market Summit at Ohio State University in late October where the learning from the tour will be shared with hundreds of middle-market executives. Learn more at http://roadshow.slate.com.

Background - National Association of Manufacturers:

The National Association of Manufacturers (NAM) is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 12 million men and women, contributes more than $1.8 trillion to the U.S. economy annually, has the largest economic impact of any major sector and accounts for the lion’s share of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. Learn more at http://www.nam.org.


Kate Bernard
Hamilton Place Strategies for the National Center for the Middle Market kbernard@hamiltonps.com
(202) 822-1206

Jeff Caywood
GE Capital
(513) 530-7028

Ann Hamilton
The Ohio State University Fisher College of Business
(614) 292-8150