Small and Mid-sized Businesses Continue to Face Uncertainty

Small and mid-sized industrial manufacturers were feeling somewhat confident at the beginning of the year. But, new research suggests that this positive attitude is now giving way to some uncertainty mid-year, in terms of expectations for revenue and customer demand.

The new survey, conducted by Prime Advantage, collected data in August from 53 representatives of industrial manufacturing companies, including business owners, vice presidents of procurement and senior purchasing professionals. The results of the sixth Prime Advantage Group Outlook (GO) Survey show that:

More than one-third (36 percent) of those who participated expect revenues to increase for the second half of 2010 that's nearly identical to the survey results from 12 months ago, when 37 percent of respondents predicted that revenues would increase for the remainder of 2009.

However, 18 percent now predict revenues will decrease over the next six months, compared to only 11 percent in the last GO Survey, which was conducted in February 2010.

45 percent of respondents said they expect revenues to stay the same for the second half of 2010, a slight uptick from February's survey when 43 percent estimated no new growth in the immediate future, but still well off the 2009 Mid-Year GO Survey, when 55 percent predicted no new growth. Also, 20 percent predicted a decrease in capital spending from the first half of 2010.

When asked about their top sourcing concerns for 2010, survey participants cites: the ability to manage costs of raw materials (63 percent), followed by the costs of components (45 percent). As Prime Advantage points out, this is a departure from the past two surveys, when at least 36 percent of manufacturers cited the ability to focus on business process issues, such as cost savings and efficiency measurement.

Prime Advantage also asked survey respondents about supply chain disruptions and delays over the past six months.

Nearly half (49 percent) of those polled indicated that they had experienced supply chain disruptions since the beginning of 2010.

78 percent said they had experienced some type of increase in lead times from their supply networks.

40 percent agreed that they had experienced at least two-week increases in lead times from suppliers over the past six months.

These results tell me that it remains critically important for companies to work on developing collaborative relationships with their strategic suppliers. These relationships can mitigate risk, improve supply chain transparency and agility, enhance value, and lower costs.

More results from the Prime Advantage Group Outlook (GO) Survey are available here.

TAGS: Finance
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