MFGWatch Finds Dramatic Contraction of EU Manufacturing

Economic uncertainty in the EU is leading European manufacturers to scale-back operations, investment projections and optimism.

In fact, recently released Q3 '11 results of the MFGWatch Quarterly Survey of North American & EMEA Manufactures show that:


Only about one-third (35 percent) of the European supply-side manufacturers polled reported business growth in Q3' 11 that's down from 44 percent in Q2.

About the same amount (34 percent) of suppliers said their businesses have contracted that's nearly double the 18 percent who reported contraction in Q2.



Buy-side manufacturers in Europe aren't faring any better. Sourcing manufacturers in the EU reported growth in their businesses fell from 44 percent to 27 percent in Q3'11. Buy-side manufacturers indicating contraction rose from 16 percent to 30 percent over the same period.


In addition, the survey found that both buy-side and supplier manufacturers in Europe are hiring less and laying off more employees. Among supply-side manufacturers, 13 percent fewer added jobs, while another 13 percent more shed jobs (20 percent, up from 3 percent in Q2'11). Sourcing manufacturers also saw employment dwindle with 27 percent adding jobs (down from 31 percent) and 18 percent decreasing payroll (up from 9 percent in Q2'11).

What's more, as MFGWatch points out, perhaps the most telling results that point to the worsening European economic conditions are:


Both buy-side and supplier manufacturers state they will neither invest in technology or hiring in the coming months. Among sourcing manufacturers, 39 percent say they will make no investments (up from 31 percent in the previous quarter), while 37 percent of supplier manufacturers state they will make no investments (up from 25 percent in Q2'11).


Q3 '11 survey results for North American manufacturers were not nearly as grim, although investments in technology still outweighed hiring and significant supply chain disruptions continued to plague buy-side product manufacturers. In North America:


Product manufacturers (Buyers) as well as Job Shops and Contract Manufacturers (Suppliers) reported growth in company sales in Q3'11.


Hiring in the Manufacturing sector increased in Q3'11. However, more manufacturers invested in technology before jobs.


Product manufacturers are investigating supply chain alternatives albeit at lower volume heading into the end of 2011. Nearly one-third (32 percent) reported they are adopting strategies to produce within the markets in which they sell more evidence of a shifting global manufacturing environment.


More results from the MFGWatch Quarterly Survey of North American & EMEA Manufactures are available here.

TAGS: Finance
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