NMW 2002: NAM survey says manufacturers expect 0-2.5% GDP growth this year
Chicago, Ill. - Of the 312 manufacturers answering the National Association of Manufacturers' (NAM, Washington, D.C.) latest annual survey, 91.7% expect U.S. gross domestic product (GDP) to grow 0 to 2.5% during 2002.
Chicago, Ill. - Of the 312 manufacturers answering the National Association of Manufacturers' (NAM, Washington, D.C.) latest annual survey, 91.7% expect U.S. gross domestic product (GDP) to grow 0 to 2.5% during 2002. Released at National Manufacturing Week 2002 on March 18, the survey's data showed that 29.5% expect U.S. gross domestic product (GDP) to grow by 0 to 1% in 2002; 39.4% think GDP will grow by 1.1 to 2%; and 22.8% believe GDP will grow by 2.1 to 2.5% this year.
Meanwhile, 40.4% of respondents expect recession, or negative growth, in their own industries during the first half of 2002, while 48.7% expect their industries to grow by less than 2% during this period.
In addition, while 27.2% of the manufacturers project that they will work off surplus stocks during the first half of 2002, another 18.9% expect their excess inventories to persist into the second half of 2002.
Also, 77.6% of respondents anticipate their firms' capital investment in computers, peripherals and software to grow 5% or less during 2002, while 82.4% project their capital investment in other equipment, such as machine tools and vehicles, will grow by 4% or less.
"More than two-thirds of respondents expected earnings-per-share for the first half of 2002 to be 3% or below, confirming that manufacturing"s emergence from prolonged recession will be slower than the rest of the economy," says Jerry Jasinowski, NAM's president. "This trend and other factors, such as credit difficulties and the overvaluation of the U.S. dollar, led 70% to say they plan to preserve profits by aggressively cutting costs.
"Not surprisingly, the top three public policy issues cited by respondents as priorities were tax relief (58%), health care (55%), and tort reform (35%). Unfortunately, most manufacturers are already so lean and mean that further economies will go well into the bone: reducing health coverage, 401(k) matching programs, even considering moving production abroad. Congress should bear this in mind when considering burdensome new regulations or other legislation."
NAM's survey document indicated that the organization's tax relief public policy priority would be "pro-growth tax relief to encourage capital formation and productivity-enhancing investments." The health care public policy priority would focus on "preventing so call 'patients rights' legislation that would allows workers to sue their employers and HMOs over health benefits disputes. More than 30% of respondents said their companies' health care costs increased 11-20 in 2001; 27% experienced 21-30% increases; and 27% faced more than 30% hikes last year. Almost half expect another 11-20% increase in health care costs this year.
Mr. Jasinowski added that the NMW survey also confirmed the result of last week's separate poll of NAM's board of directors. "Cutting costs continues to be the preferred way of increasing profit margins, followed closely by the introduction of new product lines, and an even tighter embrace of Six Sigma or lean manufacturing."
Many of the 312 manufacturers reported that these cost cuts included layoffs. In fact, 1.9% of respondents downsized by 5%; 5.1% reduced their workforce by 10%; 1.9% eliminated 15% of their jobs; 4.5% laid off 20% of their staffs; and 2.2% slashed 30% of their employees.
Control Engineering Daily News Desk
Jim Montague, news editor