Small and midsized manufacturing CFOs anticipate increase in revenue, plan capital investments and hiring while still concerned about health care costs and maintaining margins. Sixty-four percent of executives feel more optimistic about financial prospects for their own companies, down slightly from 69% a year ago.

• Seventy-two percent of respondents rated their optimism about financial prospects as moderate to high, an increase of 10 points over last year.

• Seventy-three percent of respondents forecast moderate to rapid growth for their key customers for the next 12 months.

• A record number of companies (72%) are planning capital expenditures in computer hardware and software.

• Health insurance premiums increased for most respondents in the past year and nearly every company (94%) is anticipating an increase in healthcare premiums this year.

• Top priorities in 2013 include cutting operational costs, developing new products and services, and seeking new markets for products and services.

• Nearly half of U.S. manufacturers (46%) have engaged with local educational providers in order to train workers (up from just 19% in 2012).

• More companies are planning to increase the number of employees in 2013 (49% of respondents, up from 41% in 2012).

Still Bullish on Financial Prospects and the U.S. Economy

Only 5% of companies feel the U.S. economy will contract this year and over half of respondents (56%) feel the economy will expand. Nearly all CFOs (96%) believe U.S. manufacturing will expand or stay the same in 2013.

The level of optimism among CFOs about their own companies increased this year. Seventy-two percent of respondents rated their optimism about financial prospects of their companies as moderate to high, which is 10 points higher than last year (which was a record high). Executives are more optimistic about the business outlook for their key customers, with 73% of respondents forecasting moderate to rapid growth (up from 59% in 2012).

Fifty-one percent of respondents feel more optimistic about the economy this year compared to last year, when 67% felt more optimistic about economy. At the same time, the level of optimism about U.S. economy has risen from the previous year to 36% (in 2012, only 26% of respondents felt this strong).

When asked to cite the top potential threats to economic growth in the United States, executives named healthcare reform, the U.S. budget deficit, and European fiscal conditions as the biggest hurdles to the growth and stability of the U.S. economy.

To address current economic conditions, U.S. manufacturers would support simplification of the business tax (91%), balancing the U.S. budget (78%) and reducing regulations (72%) as the most desired government actions.

Focus on New Markets and New Product Development

As companies actively explore new markets, they are also increasing investment in R&D. Fifty percent of companies are planning to increase their spending for new product development, the highest percentage since 2009.

Top Priorities

Cutting operational costs and developing new products and services, the top priorities of 2012, retained their positions for 2013. However, long-term strategic planning was replaced by seeking new markets for products and services, which moved 29 points up to the 3rd position from the 7th position it occupied in 2012.

"We're very encouraged to see our Members' optimism regarding business for 2013. To see continued growth in revenue, capital expenditures and hiring expectations, following a record setting 2012 for many, is a true indication of a solid manufacturing economy," said Louise O'Sullivan, founder, president and CEO of Prime Advantage.

The Prime Advantage Group CFO Survey was conducted in March and April of 2013 using an online survey platform. Prime Advantage surveyed a cross section of finance executives from its Member companies consisting of industrial manufacturing firms representing more than 25 different industries with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey received a 24% response rate from 233 surveyed.

Read the full Prime Advantage CFO Outlook Survey.