“We’re very encouraged when we see such strong numbers indicating continued growth,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage.
Chicago, IL (PRWEB) September 30, 2014
Prime Advantage, the leading buying consortium for mid-sized manufacturers, announced the findings of its thirteenth edition of the Purchasing and Manufacturing Survey, revealing financial projections and top concerns of more than 700 U.S. industrial manufacturing companies. The results show continued optimism about revenues and employment, despite concerns about rising costs and a lack of qualified workers.
Summary of findings
- Forty-nine percent of respondents reported they expect revenues to increase in the second half of 2014 compared to the first half. Of these, 22 percent anticipate revenue growth will be more than 10 percent, while 28 percent expect revenue growth of up to 10 percent.
- Capital expenditures are expected to increase in the second half of 2014 for 42 percent of the mid-sized manufacturing companies in the group, an increase of twelve percent from 2013’s survey projections.
- Fifty percent of companies expect to hire in the next six months and only one percent are predicting layoffs.
- The cost of raw materials continues to be the main purchasing concern for members; the survey indicates an increased focus on process cost savings and efficiency. The top prediction for potential barriers to continued business growth is a lack of qualified workers at 53 percent.
Revenues and capital spending remain strong for the rest of 2014
Forty-nine percent of small and midsize manufacturers anticipate revenues will increase in the second half of 2014, an increase from the 42 percent that predicted a revenue increase in the last half of 2013. Just two percent believe they may be looking at a decrease in revenue up to 10 percent. Survey respondents indicate that improved customer demand (63 percent) will fuel this expected revenue increase.
Once again, capital expenditures appear to be on solid ground for the last half of 2014 among these small and mid-sized U.S. manufacturers, with 42 percent predicting an increase from 1H 2014 spending (a significant increase over the 30 percent of companies that planned to increase in capital expenditures over the final six months of 2013).
These numbers echo the August PMI, which increased to 1.9 percent to 59. A PMI of 50 or greater represents growth in manufacturing.
Employment up in manufacturing
Half of all survey respondents are predicting new hires for their small and mid-sized manufacturing operations in the next six months (an increase of three percent from the 2H 2013 survey). Forty nine percent predict that hiring will match first half levels, with only one percent anticipating layoffs by year-end.
Top concerns: raw materials concern weakens, healthcare cost pressure aggravates
Procurement professionals continue to cite the cost of raw materials as their top purchasing concern for 2H 2014, at 41 percent. Processes and efficiencies within purchasing were the second greatest purchasing concern (38 percent), followed by the cost of baseline materials for components, such as oil and gas (17 percent).
When asked to identify the top three cost pressures for the last half of 2014, respondents cited raw materials (45 percent), up 13 percent from last year and on par to the 42 percent cited in February 2013). Healthcare cost pressures remain the second greatest concern (21 percent), though down from a year ago, followed by labor costs (18 percent), which have been steadily climbing since February 2013.
Lack of quality workforce could impact business growth
Survey respondents identified the top barriers to business growth over the next 12 months: a lack of qualified workers (53 percent), legislative and regulatory pressures (45 percent), and foreign competition (30 percent).
“We’re very encouraged when we see such strong numbers indicating continued growth,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage. “We’re thrilled to see continued improvement in the employment numbers, which is directly driven by the increase in business.”
Methodology:
Formerly known as the Group Outlook Survey, Prime Advantage’s Purchasing and Manufacturing Survey will now be conducted on an annual basis, mid-year. The beginning-of-the-year survey has been merged with a survey of CFOs, and will continue to be conducted each January. Results for both will continue to be benchmarked against past Group Outlook surveys.
In August 2014, Prime Advantage surveyed purchasing executives and professionals 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 received 82 responses from 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 Prime Advantage 2014 Purchasing and Manufacturing Survey visit:
http://www.primeadvantage.com/surveys/. *Graphics of survey data available upon request.
In the past 14 years, Prime Advantage has paid more than $155,000,000 in rebates and discounts to its manufacturing industry Members.
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About Prime Advantage
Founded in 1997, Prime Advantage is a buying consortium for manufacturers with more than 750 Members and more than 130 Endorsed Suppliers. For more information on Prime Advantage, visit the website at http://www.primeadvantage.com.