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Home » Small and Medium-Sized Manufacturers Project Strong Second Half in 2012

Small and Medium-Sized Manufacturers Project Strong Second Half in 2012

September 13, 2012
Prime Advantage

Study highlights include:

• Forty-eight percent of respondents expect to see their revenues increase from the first half of 2012

• Overall increase in customer demand was named the primary reason for the revenue growth in 58 percent of responses

• The cost pressures from raw materials continue to lessen

• Mid-sized manufacturing companies expect to increase new hires at a greater rate in the second half of 2012, as compared to the same period in 2011

• Healthcare costs have become the second-highest cost pressure concern for manufacturers

Strong Second Half Projected for Revenues and Capital Spending

Companies are showing more optimism about revenues for the second half of 2012 as compared to several past periods:  48 percent of respondents expect their revenues to increase in the second half of 2012 as compared to 40 percent in second half 2011, and 36 percent in second half 2010. An overall increase in customer demand was named the primary reason for the revenue growth in 58 percent of cases, followed by the introduction of new product lines (32 percent).

Capital spending is also set to increase for one-third of polled companies in the second half of this year, an upward trend from a year ago, when only one-quarter of respondents budgeted an increase in capital spending.

Employment

Overall, 90 percent of polled companies plan to keep or increase the number of domestic employees, and 39 percent expect to fill open positions in 2012, which are higher rates when compared to the same period a year ago (35 percent). On average, more medium-sized manufacturing companies expect to hire in the second half of 2012 (39 percent) as compared to the same period in 2011 (36 percent).

Cost Pressures: Raw Materials Decline, Healthcare Rises

When asked to indicate the top three cost pressures causing the most concern, respondents most frequently cited the cost of raw materials. However, for the past three surveys, manufacturers have expressed lessening concern about raw material costs, relative to other cost pressures, with only 76 percent of respondents including raw materials in their top three choices this time (down from 81 percent in the first half 2012 Group Outlook survey study and 96 percent in the first half 2011 study).

Yet over the past year, respondents have expressed more intense concern about cost pressure from healthcare benefits. The cost of medical care was voted the second-greatest cost concern for manufacturers by nearly 60 percent of respondents. Only a year ago, concerns about healthcare costs were in fourth place.

Federal Elections

Of those who hold an opinion about whether the uncertainty with federal elections will cause a delay to business processes, 29 percent and 33 percent are seeing delays in employment and capital spending respectively. Similar to AP-GfK polling, we asked respondents about the level of impact the outcome of the presidential election could have on the economy and unemployment. A majority, 55 percent of respondents, and almost on par with a recent AP-GfK survey (48 percent), believed the impact on the economy would be felt greatly and 43 percent (40 percent in GfK) predicted an impact on unemployment.

"We are looking at a stronger 2012 year-end for mid-sized manufacturers than a year ago," said Louise O'Sullivan, founder, president and CEO of Prime Advantage. "Today, while there are clearly mixed sentiments about the economy, more surveyed mid-sized manufacturers expect increases in revenues, capital investments, and hiring than a year ago -- all great indicators of a continued recovery for the manufacturing economy."

Click here to request a copy of the Prime Advantage 2012 Second Half Group Outlook Survey.

Source: Prime Advantage

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Business Strategy Alignment Global Supply Chain Management Food & Beverage Industrial Manufacturing North America
KEYWORDS Business Strategy Alignment Food and Beverage Global Supply Chain Management Industrial Manufacturing North America outlook for mid-sized U.S. manufacturers Supply Chain Analysis & Consulting Supply Chain Management U.S. manufacturers’ views on economy
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