Survey: Manufacturers anticipate growth
A survey shows that most small and mid-sized manufacturers are counting on continued economic growth for U.S. manufacturing for the rest of 2011.
Prime Advantage, a buying consortium for midsized manufacturers, announced the results of its eighth Prime Advantage Group Outlook (GO) Survey, revealing the top economic concerns of small and midsized North American manufacturers for the second half of 2011.
Revenue Expectations for 2011 Continue to Show Optimism
Forty percent of survey respondents expect revenue increases over the last half of 2011. The leading drivers include new product lines and overall growth in customer demand. Respondents are more positive this year than in August 2010, when 36% of respondents expected revenues to increase in the next 6 months. Another 47 percent believe that revenues will remain the same for the rest of the year, on par with August 2010, where 45 percent felt revenues would remain the same.
Just 13 percent said they predicted revenues would fall in the last half of 2011, with anticipated slowdown in specific markets and overall customer demand listed as main reasons for the decline. This number shows improved confidence when compared to August 2010, when 18 percent anticipated revenues to decline.
Capital Spending More Careful
Seventy-nine percent of those surveyed stated capital spending, such as purchases of property or equipment, would stay equal to February projections or increase over the last half of 2011. Of these, 54 percent predicted their capital spending would remain steady and 24 percent predicted an increase. Another 21 percent said they would decrease their spending as compared to the first half of 2011, on par with August 2010 (20 percent). Similar projections were just announced in the National Association of Manufacturers Survey, with 82 percent of manufacturers expecting capital spending to increase or stay the same over the next year.
Employment Outlook More Conservative
Eighty-eight percent of the respondents surveyed expect employment levels to either match February projections or increase, with 51 percent holding steady and 36 percent expecting to increase employment in the second half of 2011. These numbers show a slight increase over the expectations from August 2010 (when 32 percent expected more hiring), while results of the June RSM McGladrey Manufacturing & Distribution Monitor Report reflected slightly more optimism, with the majority of respondents expecting an increase in hiring.
Survey respondents also expect a slight increase in layoffs from the beginning of this year (11 percent over the last half of 2011, compared to just three percent predicted for the first half of 2011, and six percent in August 2010). This result is far from the levels of January 2010, when 20 percent of companies expected layoffs.
Top Cost Pressures: Raw Materials and Components, Logistics and Health Care
The top cost pressures that most concern mid-sized manufacturing companies over the next six months include the cost of raw materials (82 percent), followed by the cost of base materials for components (72 percent). Logistics and healthcare nearly tied as the third highest cost pressure concern (43 percent and 40 percent, respectively).
Raw materials and components (such as metals and plastics) have appeared as the top cost pressure in every Group Outlook survey conducted since June 2008. However, this survey's results suggest the situation is improving slightly over the January 2011 results, when 96% of respondents including it as a top three concern. The recent Beige Book echoes that, with a majority of districts reporting fewer price pressures.
Supply Chain Focus Issues
When asked to rank supply chain focus points for the remainder of 2011, 81 percent said that cost containment and reduction was the top issue, followed by the need to reduce inventory levels (59 percent), managing and reducing supply chain risks (45 percent) and eliminating inefficient processes (44 percent).
INDUSTRIAL SUPPLY MAGAZINE
The March/April issue of Industrial Supply magazine features an in-depth cover story about Joyce Lansdale and Vallen. Plus, we're featuring articles by contributing writers Dirk Beveridge, Frank Hurtte, and David Kahle, as well as interviews with numerous product and distribution industry experts.
