Survey: Manufacturers Anticipating Growth in Revenue, Employment and Capital Spending

Sept. 27, 2011
Economic confidence on the upswing among small- and midsized-manufacturers, though concern remains over rising costs for raw materials, logistics and fears of inflation, according to Prime Advantage survey.

The U.S. might still be limping through an anemic recovery and a lingering period of joblessness, but new data suggests that confidence is picking up within midsized manufacturers, who are anticipating growth in revenue, employment and capital spending through the rest of 2011.

The survey, conducted by Chicago-based Prime Advantage Corp., a buying consortium for industrial manufacturers, showed respondents have "optimistic expectations" compared to six months ago, but retain deep concerns over the rising costs for raw materials, logistics and fears of growing inflation.

At a time when economic uncertainty continues to linger through the U.S., 65% of respondents indicated they planned to purchase new manufacturing equipment this year, while roughly 72% expect increases in revenue. Nearly a quarter of those polled anticipate increases of more than 10%.

Perhaps most significant is that 36% of those polled said they expect to hire new workers in the coming year.

"These are some pretty strong signals of optimism and that's great to see," says Mike McDonald, vice president of new business relationships at Prime Advantage. "It's taken a while for [manufacturers] to start adding head count. This has been a long time coming. Manufacturers are inherently cautious, whether its investing in equipment or employees. So this is extremely encouraging."

According to McDonald, the push toward capital expenditures for manufacturing equipment and tools is triggered in large part by available federal tax credits.

Sustainability and the development of sustainable products were cited as major company initiatives by 80 percent of those answering the survey.

Another significant finding was that 40% who currently source products from offshore sources said they plan to bring sourcing back to the U.S., while 60% plan to add additional offshore vendors, according to the results.

When asked about potential obstacles that would prevent their companies from achieving purchasing goals, survey respondents cited the ability to maintain forecast accuracy and demand variability, followed by the ability of suppliers to keep pace with predictable demand. Respondents also pointed to understaffing in purchasing departments as a potential obstacle.

Th esurvey was conducted in August among professionals representing durable goods manufacturing firms with annual revenues ranging between $10 million and $10 billion, with the majority of respondents profiling within the range of $20 million to $500 million in revenues.

"We're pretty bullish on where manufacturing is going," says McDonald. "We're encouraged by what we'e seeing. Clearly, manufacturing's climbing out of [the recession]. It's taken a while, but the tail of that is manufacturers are going to start hiring -- and it's starting now. Clearly, it's not as fast as anyone would like, but it's certainly the tortoise here and not the hare."

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