Western PA Manufacturers Remain Optimistic for Opportunities, Despite Concerns over Economies, Regulations and Taxes
PITTSBURGH, PA –The Western Pennsylvania region’s manufacturers are optimistic about the future and recognize potential opportunities for continued success, while at the same time are realistic in their concerns about such challenges as the domestic and international economies, governmental relations, taxes and ongoing challenges related to hiring and retaining a skilled manufacturing workforce. This according to a just-released 2012 Biennial Regional Manufacturing Survey developed by Alpern Rosenthal and the University of Pittsburgh Institute for Entrepreneurial Excellence.
Although nearly 70% of the respondents said they have seen a revenue increase over the last surveyed 3-year periods, those numbers are still not back to the 85% of the respondents who saw an increase before the 2008-2009 recession. However, 70% is an improvement over the 51% from 2010; and additionally, the number of companies that are reporting revenue decreases of 20% or greater have declined from 22% in 2010 to just over 5% in this year’s survey.
Manufacturers continue to be optimistic about revenues in the future; however, they appear to be more cautious about projections this time around. Nearly 93% of the survey respondents in 2012 projected increases, but only 15% of those are projecting increases of more than 20%. That’s in comparison to 43% from the 2010 survey expecting those kinds of revenue increases over the next three years.
Strengths & Weaknesses. Trained workforce, transportation and (lower) cost of manufacturing remain the 3 most commonly cited strengths of doing business in Pennsylvania. In 2012, more manufacturers noted that transportation and the cost of manufacturing are positive reasons to do business in Pennsylvania. Meanwhile, the availability of a trained workforce has decreased as being an asset for doing business here. The tax structure, regulatory conditions and (lack of) a trained workforce are the three most cited concerns in this year’s survey related to doing business in Pennsylvania.
Marcellus Shale. More than one-third of the manufacturers surveyed see Marcellus Shale as a significant business opportunity. However, this year the percentage of respondents who noted that the Marcellus Shale initiative will reduce the workforce available to western Pennsylvania manufacturers more than doubled.
Larry Barger, Audit & Assurance Shareholder at Alpern Rosenthal and Director of the Manufacturing Services Group, says he suspects that the tempered level of enthusiasm seen in the 2012 Biennial Regional Manufacturing Survey is at least partly reflective of the ongoing uncertainty that business owners feel about where the economy is heading and also the looming ‘fiscal cliff’. “Based on several manufacturing statistics that were released for the month of November, including a contraction in manufacturing activity and reductions in manufacturing inventories and new orders, not to mention the ‘fiscal cliff’ uncertainties, western Pennsylvania manufactures ‘realistic optimism’ appears to be well founded,“ he says.
For a detailed discussion on the results of the 2012 Biennial Regional Manufacturing Survey, contact Larry Barger.
Founded in 1961, Alpern Rosenthal, certified public accountants and business advisors, offers audit & assurance, tax, and business consulting services. As one of the largest certified public accounting and business advisory firms in Western PA, Alpern Rosenthal employs a staff of more than 200 who serve the needs of local, regional, national and international organizations. The firm also has offices in Philadelphia, PA and West Palm Beach and Ft. Lauderdale, Florida.