M&A will boost manufacturer sentiment

Manufacturers’ optimism about the Canadian economy has dipped 22 points since last quarter, says the PwC Manufacturing Barometer report for Q2 2012.

Since Canada is dependent on exports, uncertainty in major markets like Asia and the U.S. is weighing on industry sentiment.

But, the survey also suggests revenue projections are moderately strong. The vast majority (93%) of workers expect positive revenue growth for their own companies, with 7% forecasting double-digit growth.

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International mergers and acquisitions will help boost bottom lines; the majority of North American deals this year were made locally, but the five outbound deals were the most significant, says a Q2 M&A report on the global industrial manufacturing industry.

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“The bulk of the outbound transactions involved targets in Europe, as investors looked to tap into attractive niche markets and acquire new technologies,” says Calum Semple, industrial manufacturing leader for PwC. “Companies are aiming to align their product mixes with the growing global demand for energy and energy efficiency.”

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As a result, an increasing number of Canadian manufacturers are planning to look for opportunities abroad, and establish new strategic alliances and joint ventures. More than half anticipate international sales will contribute to their revenue over the next year.

More than half (63%) also says they’ll increase investment in their operations and infrastructure. The leading area of interest is information technology, with 40% highlighting it as a priority.

Overall spending on IT this year is below the 2011 industry average of 3.6%, however.

“Technology is inseparable from strategic thinking in the current business climate,” says Richard Jhang, technology advisory leader for PwC. “Success depends on the right alignment of technology and business strategies.”

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