The National Association of Manufacturers' 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,” said David Huether, the NAM's chief economist.
An improved focus on foreign markets is a highlight of this survey. 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 to increase capital investment in 2006 by more than five percent.
Dampening these positive figures is the news of rising health care costs. Nearly half of respondents said their health care costs have risen from 11 to 20 percent in the past year.
Even more costly, are the increasing legal fees to fight the frivolous lawsuits brought against nearly half of the manufacturers surveyed. “These cases cost small manufacturers an average of $195,000 a year,” said Larry Fineran, the NAM's vice-president of legal reform policy.