More than 700 such companies were canvassed for the 13th edition of the Purchasing and Manufacturing Survey conducted by Prime Advantage, a buying consortium for mid-sized manufacturers.
Other findings include:
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 greater this year than last year, 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 12 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.
Forty-nine percent of small and mid-sized 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 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.
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.
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.
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).
“Our members are making some of the highest projections for the next six months that we’ve ever seen,” said Louise O’Sullivan, founder, president and 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.”
Source: Prime Advantage
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