Survey: Manufacturers see savings paying off

But there is still pessimism over revenue growth in 2009

By Bob Vavra April 16, 2009

Industrial manufacturers are prepared for another tough year in 2009, but that they are counting on the conservative measures taken over the past couple years to help carry them through to better times by year end, according to Prime Advantage’s Group Outlook Survey.

Among the highlights of the survey findings, 87% expect to introduce new products in 2009, even as 62% of respondents are also expecting some level of revenue decline in 2009. And even as most raw material costs continue to drop, managing these costs continues to be a top priority for manufacturers that are coping with varying degrees of revenue shortfalls.
Survey data was collected in late February from 103 representatives of industrial manufacturing companies, including business owners, vice presidents of procurement and purchasing professionals.
"This is our third Group Outlook Survey, and it offers unique insight into the concerns of midsized industrial manufacturers," said Louise O’Sullivan, president and founder of Prime Advantage. "This survey also serves as a strong reminder of the many economic benefits that can be achieved, both immediate and long-term, from strategic sourcing."
There is little optimism on the revenue front, as 28% of respondents expect revenue to stay the same as 2008, while 6% expect revenue to increase up to 10% and only 3% expect an increase of more than 10%. Among the 62% that anticipate revenue declines, 37% of these reported that they expect revenues in 2009 to decrease up to 10%, in comparison to 2008, while another 25% expect revenues to decrease more than 10%.
This is in agreement with other business indexes, such as ISM data that shows the PMI stuck in the mid-30s for the past three months and with U.S. Department of Commerce trade data that shows the export of U.S. manufactured goods fell 20% in January 2009, as compared to one year earlier.
In the area of capital spending, 66% said capital spending for U.S. locations, including significant capital improvements or new purchases of property or equipment, is expected to decrease from 2008 levels. This is nearly identical to the responses garnered from Prime Advantage’s Group CFO Survey that was conducted in January, when 69% of manufacturing CFOs said they expected cutbacks in capital improvements this year.
The top external concern facing manufacturing is customer demand at 83%.‘Credit markets and interest rates’ was the next greatest concern, with 44% reporting, and volatility of the dollar came in as the third most frequently listed concern at 37%.