Stock-Market-Trends

Midsized Industrial U.S. Manufacturers Confident in Economy

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% anticipate revenue growth will be more than 10% greater this year than last year, while 28% expect revenue growth of up to 10%.

The second half of 2014 is looking good for the 700. industrial manufacturing companies surveyed by Prime Advantage, a buying consortium for midsized manufacturers 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% anticipate revenue growth will be more than 10% greater this year than last year, while 28% expect revenue growth of up to 10%.

Capital expenditures are expected to increase in the second half of 2014 for 42% of the midsized manufacturing companies in the group, an increase of  12% from 2013’s survey.

Fifty percent of companies expect to hire in the next six months and only 1% 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%.

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% that predicted a revenue increase in the last half of 2013. Just 2% believe they may be looking at a decrease in revenue up to 10%. Survey respondents indicate that improved customer demand (63%) 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 midsized U.S. manufacturers, with 42% predicting an increase from 1H 2014 spending (a significant increase over the 30% of companies that planned to increase in capital expenditures over the final six months of 2013).

Employment up in manufacturing

Half of all survey respondents are predicting new hires for their small and midsized manufacturing operations in the next six months (an increase of 3% 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 aggravate

Procurement professionals continue to cite the cost of raw materials as their top purchasing concernfor 2H 2014, at 41%. Processes and efficiencies within purchasing were the second greatest purchasing concern (38%), followed by the cost of baseline materials for components, such as oil and gas (17%).

When asked to identify the top three cost pressures for the last half of 2014, respondents cited raw materials (45%), up 13% from last year and on par to the 42% cited in February 2013). Healthcare cost pressures remain the second greatest concern (21%), though down from a year ago, followed by labor costs (18%), 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%), legislative and regulatory pressures (45%), and foreign competition (30 %).

“Our Members are making some of the highest projections for the next six months that we’ve ever seen,” said Louise O’Sullivan CEO of Prime Advantage. "Revenue forecasts, capital expenditure plans and labor force expectations are all at record levels. Our Members are becoming more energy efficient, more sustainable and more technologically advanced. This is all a true testament to the invaluable supply chain partnerships and resources created through our group’s collaboration as we march in unison to make an everlasting impact in the world of manufacturing that will be built upon for generations to come.”

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