2011 Mid-Year Report: Question 1
Question 1: Everyone seems to feel the worst of the 2009 recession is behind us. In what ways has 2011 met or exceeded your expectations?
Mohamed AbuAli, University of Cincinnati
According to the recently released Institute for Supply Management Report on Business, economic activity in the manufacturing sector has expanded in May for the 22nd consecutive month. It is surprisingly good news to see that of the 18 manufacturing industries, 14 are reporting growth.
William Gaskin, PMA
PMA’s manufacturing members experienced a fairly strong recovery in 2010 after a very difficult 2009. On average, metalforming companies reported year-over-year growth in of 38% in orders and 36% in shipments. The bottom of the business cycle for many companies was in July 2009, just before General Motors and Chrysler emerged from bankruptcy and began operations. Unfortunately, suppliers of equipment and services to the metalforming industry did not fare as well in recovering from the 2009 recession. Investments in new capital equipment dropped dramatically in 2009 and 2010 and are only just now recovering. Overall, for both metalforming companies and their suppliers, 2011 has continued the positive growth of 2010, although there has been some softening in both orders and shipments in the second quarter. Successful companies have cut costs, become masters at implementing lean operations, and worked hard to diversify the markets they serve.
Andy Gravitt, Schneider Electric
One of the largest surprises has been how quickly the focus on energy management and energy efficiency has grown. As late as February 2010, businesses knew these topics were important but were not sure how to implement change. Now, implementation of energy management and efficiency strategies is not only attainable but perceived as necessary.
Another welcomed surprise is the increasingly more significant focus on sustainability; it’s hot but not pressing yet. People are still getting their minds around what it is—just like energy management and energy efficiency in 2010. The impact of a company’s sustainable approach is attractive, even if business isn’t great. The public sees them looking at the long-term impact (i.e., leaving the earth better than we found it), and they like that focus. You now see financial companies using sustainability efforts in their criteria when valuing a company.
Joe Martin, Martin Control Systems
So far, 2011 has been fits and starts. With the second quarter, we saw the beginnings of stall as customers evaluated their project plans after the Japan earthquake. Now, at the end of June, things are coming back around. Based on expectations, we’re probably about three months behind but feel comfortable that we’ll end the year back on track.
Jay Mellen, Savigent Software
From an economic standpoint I think we’re at a dangerous crossroads, while the worst of the 2009 recession is behind us, I am not convinced that we are not at risk of another drop in economic activity. 2011 has been a great year for Savigent; our focus on sales, marketing, and product development during the downturn has paid off nicely.
Tsutomu Nakamura, Japan Institute of Plant Maintenance
The situation and outlook this year in Japan is not very optimistic. The large earthquake that occurred in March and the extensive damage it caused affected many enterprises. Some are already well on their way to making a miraculous recovery, but many small and medium-sized enterprises are still far from such a blessing.
Mike Pulick, Grainger
In many ways, the economic downturn in 2008-2009 was a catalyst for our industry, and we’re seeing that trend continue into the recovery. The recession forced organizations to look for new ways to remove costs and, in doing so, businesses realized the untapped savings potential in managing their MRO supplies. We’ve seen many of our manufacturing customers improve overall productivity by expanding their lean and other continuous improvement initiatives to include their indirect materials process.
Jason Speer, Quality Float Works
2011 has been a year of reflection. My expectations were very uncertain heading into this year in the wake of new federal regulations and state taxes set to take effect. We really had no idea how these things would impact our business and customers. Approaching the close of the second quarter, our expectations have been exceeded. We made several new hires, sales are up from last year, and we’re continuing to branch out and exploring other sources of revenue, which is helping us to compete globally.
Ironically, our sales are up 30% over last year, but we are not as profitable due to the impact of increases in state taxes and the costs or raw materials. Prices for red metal, copper, and brass went up in 2010, and we are still experiencing the carryover effect.
We have continued to think outside the box through exploring new markets overseas which have generated additional revenue through new customers—helping to make up the difference between added costs we’ve had to absorb. It has shown us how much business continues to be available outside our borders.
Dave Tilstone, NTMA
Our members’ businesses have stabilized and many are in a growth mode. They are acquiring new technologies to be more productive and competitive as well as revising their business plans. As a result, our membership is growing and the NTMA is also changing. NTMA is focused on helping our members’ businesses be more successful and profitable by introducing new products and services.
Return to 2011 Mid-Year Report: Grading on the curve.