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Though More Pessimistic, Manufacturers Will Keep Funding R&D, Capital Projects

Posted By Jeff Moad, October 26, 2011 at 11:48 AM, in Category: The Innovative Enterprise

Although senior US-based manufacturing executives have become considerably less optimistic about the prospects for the domestic economy over the past 12 months, they continue to push research and development and capital investments, apparently convinced the new product and process innovation will position them for growth when the economy finally improves.

Top manufacturing leaders also continue to focus on making their companies easier to do business with, and they believe that customer experience process improvements will have a positive impact on new product development.

According to PricewaterhouseCooper's Manufacturing Barometer Business Outlook Report for the third quarter, only 5% of manufacturing executives described themselves as optimistic about the US economy over the next 12 months. That was down from 48% who said they were optimistic last quarter. Eighteen percent described themselves as pessimistic about the economy's prospects, up from 7% who said so last quarter.

"Current uncertainty reflects a lack of political ability to solve economic and overspending problems in the US as well as in the European Union," says the report which was based on interviews with 60 US-based senior manufacturing executives.

Manufacturers expessed similar pessimism about the outlook for the world economy over the next 12 months.

Despite the dour outlook, however, manufacturers said they are pushing ahead with capital and R&D spending priorities. Fifty-five percent said they plan major new capital spending initiatives over the next 12 months, up from 52% who said so last quarter, and up from 43% who said so a year ago.

At the same time, 48% of manufacturers said they plan to increase R&D spending over the next 12 months, up from 40% who said so last quarter, and 42% who said so a year ago.

Manufacturers also said they are investing heavily in improving customer-facing processes. Sixty-nine percent said they are endeavoring to improve the customer experience, 61% said they are investing in new sales and marketing systems, and 59% said they are investing in customer analytics. And 61% said they believe such investments in improving customer-facing processes, will be "extremely relevant" to their R&D efforts.

How is the current economic uncertainty impacting your company's plans regarding spending on capital, R&D, and customer-facing projects? Do you agree that improvements in customer-facing initiatives such as analytics can benefit R&D focus?

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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