Raw Materials, Energy Costs Top Concerns in Survey

Raw material and energy costs topped the list of cost pressure concerns in 2008, according to a recent survey by Prime Advantage, a buying consortium for small and mid-sized manufacturers, focused on the top economic concerns in 2008. Respondents to the Group Outlook Survey included business owners, vice presidents of procurement and purchasing directors.
 
More than 46 percent of respondents agreed that raw materials (including stainless steel, nickel, copper and other metals and plastics) were a major concern in 2008. Energy costs were the second biggest concern, with 17.5 percent and logistics and supply chain costs followed closely at 16.4 percent in agreement.
 
Inflation (8 percent), labor (4 percent), foreign competition (3.4 percent), overhead costs (2.8 percent) and healthcare costs (1.7 percent) were among the other concerns identified.

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The survey also found that 66 percent of Prime Advantage members plan significant capital improvements in 2008, including equipment upgrades such as press brakes, turret punch presses, plus equipment for laser cutting, robotic welding and stamping.
 
This is supported by findings from the Business Roundtable's CEO Economic Outlook survey for the fourth quarter of 2007, in which CEOs were predicting a 35 percent increase in capital spending over the first six months of 2008.
 
Also, 88 percent of respondents indicate planned efforts to improve at least one of the following in 2008: cost savings, efficiency measurements or supplier diversity goals. Another 11 percent plan to address IT systems improvements, including investments in new applications, data visibility and data accuracy, while just two percent are planning investments in industry certifications or education.
 
The Prime Advantage Group Outlook Survey identified a positive outlook for revenue expectations and hiring, with 59 percent indicating a revenue boost in 2008. Meanwhile, just one percent indicated that job cuts in 2008 could occur, while 23 percent are planning new hires and 76 percent are planning to keep their current employee base at the same level as 2007.
 
Founded in 1997, Prime Advantage is a buying consortium for industrial manufacturers with more than 450 members and more than 110 endorsed suppliers.