This Industry Outlook is a portion of the 2019-2020 Arizona CFO Spotlight Survey Report
Levels of Optimism: High
Key concerns for Arizona manufacturers are supply line disruptions, exchange rates and tariffs for exports. These concerns lead to modest predictions of 2-5 percent growth in 2019. Demand is heigh through 2020, however additional concerns over component obsolescence and retooling costs could require investments in alternative component approvals through 2022.
“It will be at least mid-2020 before we see much of a reduction in current demand based on the dating of government mandates, but 2021 is a little scary with far more concerns.”
Manufacturing CFO, Tucson, 2019
More than economic shifts, manufacturing leaders with government contracts note that government regulations inpact business–for better or for worse. For example, changes in safety regulations or competitive technologies create a cascade of product and process changes. Concerns about more automation or investing in artificial intelligence appear to be a future concern, but leaders say they are monitoring industry trends.
Many manufacturers in Arizona have multiple locations and/or publicly owned parents, which helps to manage local economic risks, but expands their global risks.
Talent shortages have shifted positively from desperate to manageable. Leaders are investing in training of existing and/or unskilled new employees to meet their needs. In verticals that don’t face too much customer pressure, moderate wage increases have been offset with targeted pricing increases.
As stated earlier, inventories may need to be higher in some cases to manage trade disputes, rising supply costs or obsolescence. For now, manufacturers are focused on production and keeping machinery at full capacity. Leaders don’t expect the industry to take off, but the economy for products remains robust.