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Manufacturing PMI shows growth for 16th month

Oct 01, 2021

The September Manufacturing PMI registered 61.1%, an increase of 1.2% from August, indicating expansion in the overall economy for the 16th month in a row.

The Employment Index in the PMI report came in at 50.2%, an increase of 1.2% from last month. Industrial parks are lined with hiring banners, and starting wages are like watching a stock market ticker. Despite unprecedented recruiting efforts, results are alarming, and conversations have turned to growth without talent.

There are ways manufacturers can improve recruiting odds, starting with increasing your internal referral bonus. Let’s face it, your next hire is probably gainfully employed and needs to be lured away. Reports are showing people are more likely to make an employment switch if a friend or relative is employed with the company and speaks praises. The winners in this strategy are offering referral bonuses two to three times the rate of the signing bonus. Everyone wins, and retention is holding together.

As an alternative, manufacturers are looking to COVID-19-decimated industries with high unemployment such as hospitality. Starting wages of most manufacturers are multiples of hospitality, and the days of dark, dirty and dangerous manufacturing are well behind us. Manufacturers are recruiting on the platform of stability, wages and countless opportunities to experience “making meaningful differences” every day. There appears to be a winning formula of a higher cause to what they do and much-needed financial stability.

Production Index

The Production Index registered 59.4%, a decrease of 0.6% compared with August, according to the numbers released today by the Institute for Supply Management. Making every minute count is a familiar phase heard across the country. Maximizing through-put with understaffed crews seems like insurmountable expectations, and yet somehow the hearty manufacturers continue to forge ahead.

They are making every minute count with the use of machine sensors that tally where unplanned downtime minutes leak away. These same technologies provide watchdog platforms — sending underperformance alerts, predicting when it will occur again and leveraging AI to pair people and machines to maximize to their full potential.

In the back office, automated workflows forecast materials and place material orders based on inventory levels. Suppliers replenish on electronic triggers, while accounts payable and receivable and banking transactions occur with significant reduction in human talent.

The dependency on automation, robotic processes and AI is emerging as the price of entry for the next manufacturer. We are quickly discovering manufacturers are becoming a technology company first, and as a result, provide goods as an output. It’s a different perspective to consider as we emerge out of COVID-19 and continue testing past business and operating models.

How can Wipfli help

Our team can help you innovate, self-disrupt and unlock the full potential of your business. From back-office accounting and digital transformation to recruiting and strategy, we can help. Learn more on our manufacturing industry web page or check out these additional resources:

Author(s)

Bill Boucher, CPA
Manufacturing, Retail & Distribution Practice Leader, Partner
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