Manufacturers express optimism

Wall Street is agitated about a possible recession, but small and midsized manufacturers apparently do not share this consternation according to results of a new survey conducted by Chicago-based Prime Advantage, a manufacturers’ buying group. The “Group Outlook Survey” of Prime Advantage’s members— business owners, vice presidents of procurement and purchasing di...
By Control Engineering Staff May 1, 2008

Wall Street is agitated about a possible recession, but small and midsized manufacturers apparently do not share this consternation according to results of a new survey conducted by Chicago-based Prime Advantage, a manufacturers’ buying group.

The “Group Outlook Survey” of Prime Advantage’s members— business owners, vice presidents of procurement and purchasing directors at small-to-midsized manufacturers throughout North America—conducted in January 2008, reveal their top perceived economic concerns in 2008. In contrast to some business indicators, small and mid-sized manufacturers are apparently optimistic about the 2008 economy, with significant capital improvements planned by two-thirds of the group’s members. Raw material and energy costs topped the list of cost pressure concerns. More than 46% of respondents agreed that raw materials (including stainless steel, nickel, copper and other metals and plastics) were a major concern. Energy costs were the second biggest concern, with 17.5% and logistics and supply chain costs followed closely at 16.4% in agreement. Inflation (8%), labor (4%), foreign competition (3.4%), overhead costs (2.8%) and healthcare costs (1.7%) were among other concerns identified.

The survey also found that 66% of Prime Advantage members plan significant capital improvements in 2008, including equipment upgrades such as press brakes, turret punch presses, plus equipment for laser cutting, robotic welding and stamping. This is supported by findings from the Business Roundtable’s “CEO Economic Outlook” survey for the fourth quarter of 2007, in which CEOs were predicting a 35% increase in capital spending over the first six months of 2008.

In the Prime Advantage survey, 88% of respondents indicated planned efforts to improve at least one of the following in 2008: cost savings, efficiency measurements or supplier diversity goals. Another 11% plan to address IT systems improvements, including investments in new applications, data visibility and data accuracy, while just two percent are planning investments in industry certifications or education.

Especially good news for the overall economy, the survey identified a positive outlook for revenue expectations and hiring, with 59% indicating a revenue boost in 2008. Just 1% indicated that job cuts in 2008 could occur, while 23% are planning new hires and 76% are planning to keep their current employee base at the same level as 2007.

www.primeadvantage.com