Managing Automation - January 2008 - (Page 19) U.S. manufacturers’ confidence in the economy drops 14 points as the credit crisis spreads, a new MA poll reveals. BY DAVID R. BROUSELL 19 January 2008 Photo: Vinko Murko all it a gut feeling. About two weeks before Federal Reserve Chairman Ben. S. Bernanke told a Senate committee on Nov. 8, 2007 that he expected the U.S. economy to “slow noticeably” in the coming months, manufacturers had already sensed that economic storm clouds were gathering. In a new, exclusive Managing Automation poll conducted in mid-October, U.S. manufacturers reported a 14 percentage point drop in expectations about economic growth for the coming year, compared with 2007. Moreover, fully one-third of the poll’s respondents said they are beginning to feel the heat from the nation’s deepening credit crisis brought on by the sub-prime mortgage lending fiasco. The sharp downturn in manufacturers’ confidence in the state of the U.S. economy in 2008 has also begun to trickle down to how they feel about the prospects for their own businesses in 2008. The latest poll registered a 6 percentage point drop in confidence levels year over year. These are just some of the findings of the new MA reader poll on manufacturing’s business and technology outlook for 2008. More than 360 MA readers voiced their opinions on the state of the U.S. economy, their confidence levels for their businesses, and their attitudes about technology investments in 2008. In addition, they weighed in once again on the importance of becoming agile, a business discipline this magazine first began investigating in its 2006 outlook poll. This year, poll respondents are signaling that less emphasis is being placed on this business technique. But, clearly, the most dramatic finding in this year’s poll has to do with feelings about the U.S. economy and where it may be heading in 2008. Many respondents, no doubt, have been influenced by a confluence of factors in 2007: the mortgage/credit crisis, the weak U.S. dollar, stock market gyrations, and continued uncertainty in such key industrial sectors as automotive. In the new poll, as a result, just 39% of survey respondents said they expected the U.S. economy to improve moderately, the most watched gauge in the poll, compared with 53.2% who felt this way last year. Those expecting the economy’s numbers to be flat increased to 35.4% from 29.9% last year, and those expecting the beginning of an actual decline rose to 13.5% from 8.8%. When asked what impact the mortgage/credit crisis may be having on their businesses, a sizable majority, 60.8%, said they haven’t felt anything — yet. But more than 34% said they are now feeling an impact in varying degrees, with 13.1% of this group indicating a “moderate” effect on their business as of the fall. This number could grow if the credit crisis reverberates further into the economy this year. This cause-and-effect dynamic is also something to watch closely with regard to manufacturers’ actual business performance over time. When asked in October about the health of their own businesses, confidence levels didn’t suffer as much as attitudes about the economy, but there were some noticeable changes. This year, 49% of respondents indicated they were more confident about their business prospects going into 2008, down more than 5 points from last year. Those expressing somewhat less confidence going into the new year, while only a small percentage, grew to 12.7% of respondents, compared with 7.4% in last year’s poll. The shift is certainly not of sea-change proportions at this point, but, taken in context with feelings about the economy and the impact so far of the credit crisis, it could be a harbinger of things to come. If the economy takes a sharp turn for the worse in coming months, bets will certainly change, but when it comes to business priorities going into 2008, manufacturers still seem to be focused on a set of business activities designed to advance a goal they established a couple of years ago — growth. By contrast, once ma
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