Energy, Raw Materials Costs Top Concerns for Small, Midsize Manufacturers

Survey shows expected cost pressures in 2008.

Wednesday, February 20, 2008
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Nearly half of small and midsize manufacturers surveyed by industrial buying consortium Prime Advantage say they expect raw materials costs to be their top pricing pressure for 2008.

About 46% of the nearly 100 respondents said raw materials were a major concern, followed by energy at 17.5% and logistics and supply chain costs at 16.4%.

Inflation, labor, foreign competition, overhead costs and healthcare costs were less worrisome.

“More than rising energy costs or inflation, the uncertainty around pricing pressures for raw materials continues to be an obstacle to success for many small and midsized manufacturers,” said Louise O’Sullivan, president and founder of Prime Advantage.

The survey also shows that 66% of respondents plan significant capital investments in 2008, including equipment upgrades such as press brakes and turret punch presses and equipment for laser cutting, robotic welding and stamping.

Additionally, 88% of small and midsize manufacturers surveyed say they planned to improve either cost savings, efficiency measurements or supplier diversity goals. Another 11% plan to address IT systems improvements.

In terms of job growth, 23% are planning new hires, 76% expect to keep their current employee base and only 1% indicated that job cuts are on the horizon.

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