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PwC: M&A among US industrial manufacturers on the rise

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PwC:  M&A among US industrial manufacturers on the rise

Recent survey shows increased M&A and hiring.

A recent survey conducted by professional services firm PwC indicated a notable rise in plans for M&A spending among US industrial manufacturers.

Thirty eight percent of respondents planned M&A activity in the year ahead, compared to 28% in the first quarter and 23% in the second quarter of 2013.  The majority of that group is focused on purchasing another business, followed by the sale of part/all of their own business or a spin-off.   

"The intense competitive environment combined with strong balance sheets at many companies is leading to an increased interest in M&A among industrial manufacturers. Companies are doubling down on what they do best, and are primarily looking to tap their cash to further strengthen their core product offerings, rather than entering new markets or expanding abroad," said Bobby Bono, PwC's U.S. industrial manufacturing leader.   

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Regarding hiring, 48% of US industrial manufacturers surveyed plan to add employees to their workforce over the next 12 months.  This is down from 56% in the previous quarter, but remains above the 42% reported in last year's second quarter.  Consistent with the previous quarter, the most sought-after employees will be skilled labor, followed by production workers and professionals/technicians. Conversely, plans to hire sales and marketing professionals dropped to eight percent in the second quarter from 15% in the first quarter.  Plans to hire white collar support also decreased to eight percent in the second quarter from 20% in the first quarter.

Among the survey findings, the major headwind to growth over the next 12 months is now seen as legislative/regulatory pressures, rising nine points to 47% from a low in the first quarter of 38%, but still well below the 53% recorded in last year's second quarter.  Lack of demand was cited as the second leading potential barrier to growth in the next 12 months for 42% of respondents.  This was followed by competition from foreign markets and oil/energy prices, which were both cited by 28% of respondents.  Conversely, concerns regarding capital constraints dropped to 17% of respondents, compared to 28% in the first quarter.

 

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