2023 Manufacturing Outlook: Optimism, But Not Too Much
Optimism (but not overwhelming) and plans for expansion will be a big part of 2023, if the responses to our Manufacturing Survey are anything to go by.About 18% of our respondents said they are “very optimistic” heading into 2023, and another 42% called themselves “somewhat optimistic.” That 60% vote of confidence may not sound bad, but it’s quite lower than the 72% in those two positive categories when we reported this survey last year. However. It’s a hair above the 58% vote in our 2021 survey.
This optimism is reflected in plans for the near future. Some 77% of respondents anticipate that this year, their company’s plant production will increase, with 21% saying it will go up by 20% or more over last year. Another 27% said they expect output to go up by 10% to 19%. Only 6% think that their companies’ production will go down.
Asked about immediate plans for production capacity, 42% said their companies would probably expand production by opening lines or plants. Another 36% said their companies would stay the same, and only 14% anticipated that lines or plants would be closed.
All of this will require additional capital spending, which has been on the rise. The 2022 capital expenditure budgets for the public companies in Food Processing’s Top 100© list collectively rose 14% over actual 2021 expenditures – we haven’t calculated their actual 2022 spending yet.
Our respondents’ predictions for their companies’ capital budgets in 2023 show that they expect this trend to continue. Just over half (54%) said they expect their capital spending to increase, with 20% saying it will go up more than 10%, and another 21% saying it will rise 5% to 10%. Only 9% of respondents anticipated a drop in capital spending.
Upgraded buildings will remain a priority in capital spending; at 25%, it was the most popular choice from a list presented to respondents. The next most popular response was process equipment, at 20%, followed by packaging equipment at 13%.
Some of the respondents added comments that, in some cases, gave intriguing hints as to what their companies are planning – things like “We are modernizing our brewing system”; “new filler and two micro blend mixers” and “adding a new packaging line, milk standardization before going into vats.”
Others weren’t as fortunate: “Unfortunately, due to inflation, we will withhold any projects and stick to expenses on maintenance.”