Prime Advantage Survey of Financial Executives Reveals Confidence in Manufacturing for 2016 among Midsized Industrial U.S. Manufacturers

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Eighth edition of CFO Survey from Chicago-based manufacturers buying group show that optimism in the state of manufacturing among the group's members is outpacing enthusiasm for the U.S. economy as a whole.

"The results of our 2016 CFO Survey are quite encouraging as it follows four previous years of growth and innovation for our manufacturing members," said Louise O'Sullivan, founder, president and CEO of Prime Advantage.

Prime Advantage, the leading group purchasing organization for midsized manufacturers, announced the findings of its eighth edition of the CFO Survey, revealing the financial projections and top concerns of industrial manufacturing companies. The results show that optimism in manufacturing among the group's Members is far outpacing enthusiasm for the U.S. economy as a whole.

Summary of Findings

Manufacturing Expectations High
CFOs remain confident in their organizations with an average optimism ranking of 6.9 out of 10, an increase over the previous year. In contrast, optimism in the U.S. economy is lagging as it fell to an average ranking of 5.4. Prime Advantage Members' confidence is in contrast to participants in the Duke University/CFO Global Business Outlook which have seen a continued decline in organizational optimism since December 2014.

Plummeting Oil Prices Helping Increase Margins
Eighty-one percent of Member companies are relishing in the positive impacts of decreased oil prices. The good news is mainly taking the form of increased margins, due to lower component costs and savings on freight expenses.

Health Care Costs Have Become Main Concern
Medical insurance expenses take over the top spot of internal concerns for manufacturers, with 68 percent of respondents listing healthcare costs in their top three concerns. Attracting and retaining qualified employees comes in as a close second, at 64 percent. Preserving morale and productivity continues to be an initiative of note, with 36 percent of financial professionals listing this concern. On the bright side, there was a 24 point decrease in respondents worrying about their ability to maintain margins in comparison to last year. This result is possibly attributable to dwindling concern over the price of raw materials and components, which saw an 11 point decrease.

Growth in Existing Markets Tops All Priorities
Items topping the priority list for 2016 for financial executives have shifted from 2015, with 68 percent of respondents mentioning the importance of growth in existing markets, which is up 8 points from 2015. Success is likely to come from new products and services, according to 63 percent of those responding. Cutting operational costs rounds out the top three at 54 percent, which is down 5 points from 2015. The focus on cost cutting has been in steady decline since 2013 when it peaked at 68 percent.

"The results of our 2016 CFO Survey indicate a continuing state of manufacturing optimism, coupled with strong expectations for increased revenue for our Members and Endorsed Suppliers," said Louise O'Sullivan, founder, president and CEO of Prime Advantage. "This is quite encouraging as it follows four previous years of growth and innovation for our manufacturing Members."

Methodology:
In January 2016, Prime Advantage surveyed financial executives and leaders from Member companies, with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey respondents are top professionals representing U.S.-based manufacturers in more than 25 different industries, including commercial foodservice equipment, packaging, truck and trailer, material handling, food processing and construction equipment. Prime Advantage has polled its Members for their impressions of current economic conditions since February 2008.

To request a copy of the full Prime Advantage 2016 CFO Survey report, please visit: https://www.primeadvantage.com/public/companynews/surveys/. *Graphics of survey data available upon request.

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About Prime Advantage
Founded in 1997, Prime Advantage is a group purchasing organization for manufacturers with more than 750 Members and 125 Endorsed Suppliers. Over the past 19 years, Prime Advantage has paid more than $180 million in rebates and discounts to its Members. For more about Prime Advantage and its cost savings programs, solutions and services, visit primeadvantage.com.

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PETER WILTJER
PWMG, INC.
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