Small, Midsize Manufacturers' Confidence Doubles

More executives expect revenue increases in 2011, but cost challenges still exist.

The number of small and midsize manufacturing executives expecting revenue increases in 2011 has doubled over the past six months, according to survey results released April 21 by Prime Advantage.

While small and midsize manufacturers appear more optimistic, they also cited rising raw materials costs, inflation and health care costs as top challenges in 2011, small and midsize buying consortium Prime Advantage reported.

A total of 72% of approximately 75 executives responding to Prime Advantage's Group Outlook survey in February said they expect revenue to increase in 2011, compared with 36% in August 2010.

Of those responding, 96% said raw materials costs are among their top three concerns. Inflation followed with 52% citing it as a top cost pressure and 37% indicating health care expenses as a top challenge.

About 40% of respondents who source products from off-shore vendors are planning to bring sourcing back to North America in the near future. Another 60% said they are planning to add more offshore vendors.

Nearly half of respondents said they expect to increase hiring over the next six months.

Another 49% said they expect hiring activity will remain at 2010 levels. Only 3% said they expect workforce reductions.

Small and midsize manufacturers also are taking advantage of federal business investment tax credits as 65% plan capital expenditures for manufacturing equipment and tools in 2011.

More than 80% of respondents said their companies were making changes toward developing more sustainable products, largely driven by customer requirements and compliance regulations.

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