Small Manufacturers Expect Growth

Survey shows optimism, but also concerns over health care, legal costs.

A National Association of Manufacturers’ (NAM) 2006 Small Manufacturers Operating Survey showed respondents anticipate solid growth in the months ahead from strong sales and increases in exports and capital investment. Yet hopes were tempered by rising health care costs, taxes and legal fees.  

Well over half of respondents, or 63 percent, expect their sales to grow more than five percent this year. “This is the second most optimistic response in a decade and more positive than the expectations of sales growth in the later half of the 1990s,” noted David Huether, the NAM’s chief economist.  

More than one in 10 (10.7 percent) of the survey respondents say that exports account for at least a quarter of their company’s sales. This is an improvement from 2001 when less than four percent of survey respondents got a quarter of their sales from exports. Similarly, 41 percent of survey respondents expect they will increase capital investment in 2006 by more than five percent.  

Health care costs 

Dampening these positive figures is the news of rising health care costs and continuing legal expenses. “According to the study, health care costs are one of the most serious problems for our members,” said Jeri Gillespie, the NAM’s director of human resource policy. Nearly half of respondents said their health care costs have risen from 11 to 20 percent in the past year. “Legal fees, such as spending on death tax planning, continue to pose an unfair burden on small manufacturers,” added Bob Shepler, the NAM’s director of corporate finance and tax.  

Even more costly, are the increasing legal fees to fight the frivolous lawsuits brought against nearly half of the manufacturers surveyed, the NAM said. “These cases cost small manufacturers an average of $195,000 a year,” said Larry Fineran, the NAM’s vice president of legal reform policy.

National Association of Manufacturers

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