Subscriber Login

MDM Premium Content  What's this?
Close
Subscribe today to access MDM's premium content with two issues a month of timely and to-the-point content for the busy wholesale distribution executive. Here's what you get:
  • Analysis of distribution trends
  • Interviews with industry leaders
  • Quarterly Public Distributor Report
  • Quarterly Inflation by Commodity Group Report
  • Market and economic data analysis
  • Access to the best online research tool in distribution

And much more! Learn more

login close
Forgot Your Password?
For more precise results try using quotation marks ("") around your search terms. See more search tips.

 

Home » Industrial Manufacturers Show Cautious Optimism in Latest Manufacturing Barometer

Industrial Manufacturers Show Cautious Optimism in Latest Manufacturing Barometer

By    MDM  Staff 
January 29, 2010
More about:  Economy,  Industrial
Nearly half of respondents to PricewaterhouseCoopers' quarterly survey showed optimism in the fourth quarter, compared to just 5% last year.
Text Size
Email Print
The latest edition of the PricewaterhouseCoopers LLP Manufacturing Barometer reports cautious optimism about the U.S. and global economies among U.S.-based industrial manufacturers.
 
In the fourth-quarter survey, nearly half (47%) of respondents are optimistic about the U.S. economy's prospects, whereas only 5% were optimistic a year ago.  Similarly, 41% of panelists who sell internationally are optimistic about the prospects for the world economy, compared to only 4% a year ago.
 
Indicating a continued hint of optimism, 35% of panelists believed the U.S. economy grew in Q4 2009, up 22 points from the prior quarter. Only 15% believed it declined (down 8 points from the previous quarter), while the prevailing opinion (50%) was that the U.S. economy remained unchanged. In regards to the world economy, the most typical view was that it remained unchanged (46%) for the second straight quarter. However, 34% viewed the world economy as growing, a 5 point increase, while 20% believed it was declining.
 
Thirty-eight percent of industrial manufacturers that sell abroad reported an increase in international sales, up 16 points over last quarter. The number reporting a decrease in international sales fell to 22% from 39% in the prior quarter and is down significantly from the 60% reported in the first quarter of 2009.
 
Industrial manufacturers’ average revenue growth for calendar year 2009 ended with a double-digit loss (minus 11%), with only 20% reporting positive growth.  However, in sharp contrast, the majority (57%) forecast positive revenue growth for their own companies in 2010 – with 19% forecasting double-digit growth, and 38% forecasting single-digit growth. Only 13% forecast negative growth.
 
Looking ahead, 47% of respondents are optimistic about the 12-month outlook for the U.S. economy, similar to the prior quarter. Only 10% remain pessimistic, and 43% are uncertain. This level of cautious optimism is in sharp contrast to a year ago, when 70% were pessimistic. Similarly, 41% of those surveyed who market abroad are optimistic about prospects for the world economy, 50% are uncertain and only 9% are pessimistic. A year ago, only 4% of the international segment was optimistic about the global economy, while 69% were pessimistic.
 
“We are beginning to see cautious optimism about the economy in the industrial manufacturing sector,” said Barry Misthal, U.S. industrial manufacturing leader for PricewaterhouseCoopers.  “There is a sense that the worst is over, but recovery will be slow.  These manufacturing executives are still facing a significant challenge to their growth targets from a lack of demand.  The industry needs improved momentum in the overall business climate and a reduction in regulatory and legislative pressures."
 
Concern about lack of demand remains the chief barrier to growth over the next 12 months for 75% of industrial manufacturers interviewed, however this represents a drop of 20 points from the high of 95% recorded in the first quarter of 2009.  Other areas of great concern include taxation policies at 53%, legislative/regulatory pressures at 52%, and decreasing profitability at 42%.  Anxiety about oil/energy prices rose 8 points to 33% but remained well below the 2008 highs, while concerns over capital constraints remained low at 22%.
 
Thirty percent of those surveyed plan to add employees to their workforce over the next 12 months (up 5 points from last quarter), and only 12% plan to reduce the number of full-time equivalent employees (down 16 points from last quarter). Of the 30% of respondents planning to hire within the next 12 months, the most sought-after employees will be professionals/technicians (23%). Only 8% of those surveyed report that their companies have begun to rehire workers who were laid off during the economic downturn.
 
Inventory remained down for 49% of U.S.-based industrial manufacturers and up for only 12%, for a net minus 37%. This indicates that the anticipated inventory buildup has not begun as of Q4 2009.
 
While many U.S.-based industrial manufacturers are planning new capital investments, the report’s findings indicate a moderate investment rate. Looking at the next 12 months, 35% plan major new investments of capital, compared with 37% last quarter and 33% last year.
 
In the next 12 months, 65% of industrial manufacturers plan to increase operational spending, similar to last quarter’s 68%. Among increased expenditures, new product or service introductions and research and development lead the way (37% each). Geographic expansion rose five points to 27% but business acquisitions dropped 10 points this quarter to 23%.
 
In the fourth quarter of 2009, 28% of panelists reported higher gross margins while 22% reported lower gross margins – a net of plus 6% with higher margins but below the prior quarter’s plus 15%. Twenty percent of U.S.-based industrial manufacturers reported higher costs during the fourth quarter while 22% reported lower costs – for a net minus 2%. On the pricing side, In Q4, 23% of respondents reported raising prices (up 6 points from the prior quarter) and only 15% lowered them (down 12 points from prior quarter).
 
With signs of recovery on the horizon, this quarter the Manufacturing Barometer probed executives regarding their focus on rehiring and restarting projects that were stopped due to the recession.
 
The projects that were put on hold during the recession that will most likely get the go ahead are in the areas of information technology (42%); new product/service introduction (38%); and geographic expansion (35%).
 
In terms of rehiring, 60% of those surveyed have no immediate plans to rehire workers laid off during the economic downturn. Eight percent have started the process of rehiring, while 24% have plans to do so in the near-term.
 
Overall, signs of recovery in terms of project restarts and rehiring are beginning to appear, but companies will proceed cautiously and conservatively in 2010, with an eye to the future.
 
PricewaterhouseCoopers’ Manufacturing Barometer is a quarterly survey based on interviews with 60 senior executives of large, multinational U.S. industrial manufacturing companies about their current business performance, the state of the economy and their expectations for growth over the next 12 months. This survey summarizes the results for Q4 2009 and was conducted from Oct. 13, 2009 through Jan.  12, 2010. 

 
Print Email
Use the form below to leave a comment

MDM Digital

Executive Briefing: January 2012The Case for Mobile
in Distribution Marketing
John Sonnhalter explains why distributors should include mobile in their marketing plans and how to start. Watch now.
iPad users: click here to view.		 Economic Update January 2012 Economic Update:
The Festering Euro-Crisis
MAPI Economist Kris Bledowski analyzes the outcome of recent meetings about the European banking and debt crisis. Watch now.
Bob DeStefano's #1 Mistake on Company WebsitesOnline Marketing Tips
from Bob DeStefano
Many companies make the same mistake on their company websites. Do you? Find out.		 More Audio and Video Features from MDM:

  • MDM Podcast

Think About It:
When They Google,
Will You Be There?

In this digital age, the first stop a potential customer makes is the internet. If you're not there, you're not part of the decision-making process.

Listen now.

Learn more or subscribe to the Think About It podcast.

  • Training

Upcoming Programs

Feb. 9: Operating for Profit: The Coming Revolution in Supply Chain Finance with Jonathan Byrnes. This program is part of the quarterly Islands of Profit Webcast Series.

Did you miss MDM's recent webcasts? Order the DVDs and share with your team today:

* Leading for Profit: How to Lead a Profitability Turnaround

* Inventory Management Best Practices in 2012

  • Featured

USAbrasives-100-for-trifecta

U.S. Abrasives Market Demand Report

This report provides a three-dimensional view into estimated market size, customer segment potential and customer size demographics for the U.S. Abrasives Market.

These three data slices give you deep insight into total market potential and your market share by both customer type and size.

Learn more about the U.S. Abrasives Market Demand Report

Training Resources

Current Issue   Management Tips 2011   Inventory Management   Benchmarks and Best Practices

Featured Article - MDM-Baird Benchmarking Survey: Distributor Optimism Returns

$34.95

Buy now >>

Management Tips from Modern Distribution Management

$49.95

Buy now >>

Inventory Management Best Practices with Jon Schreibfeder: DVD + Book

$119.00

Buy now >>

Benchmarks & Best Practices: The Answer Book for Growth-Minded CFOs & Controllers

$249.00

Buy now >>
Job Board
Title Company Location
Marketing/Sales - Advanced Supply Chain Business Intelligence Systems - Big Data Analytics Scientel Information Technology, Inc. Southeast Michigan
Marketing/Sales - Advanced Supply Chain Business Intelligence Systems - Big Data Analytics Scientel Information Technology, Inc. Southeast Michigan
Marketing/Sales of Advanced Supply Chain Business Intelligence Systems & Big Data Analytics Scientel Information Technology, Inc. Southeast Michigan
Credit/Collections Manager APR Supply Co. Lebanon, PA
Management Trainee APR Supply Co. Lebanon, PA
INDUSTRY SPECIALIST - Rubber Products KAMAN Industrial Technologies North East Area - CT, MA, ME, NY, RI, VT
Sales Account Manager - Energy Market Segment TESSCO Baltimore, MD
View ALL Wholesale Distribution Job Listings

MDM Premium

January 25, 2012  

4202 cover image

MDM/Baird Survey: Optimism Returns

Rexel's U.S. CEO on Service & Alternative Energy

Global Markets Not Just for Large Companies

December 2011 Industrial Inflation Index

subscribe now View Table of Contents >>
Subscribers: Log-in
View Previous Issues


Featured Products

answer book for CFOs and Controllers

Benchmarks & Best Practices: The Answer Book for Growth-Minded CFOs & Controllers

Reviews (0)
 
Price: $249.00
An ultra practical idea-guide that gives an inside look at how leading companies are dealing with some of today's toughest financial and business management challenges.
Distribution Landscape Report - 2011

2011 MDM Market Leaders and Distribution Landscape Report

Reviews (0)
 
Price: $295.00
The ideal resource for anyone that wants to get a quick overview of the distribution landscape and the top players in major sectors! Includes the 2011 Distribution M&A Special Report.
B-to-B Online Marketing Toolkit Cover

The B-to-B Online Marketing Toolkit:
A Step-by-Step Plan for Distributors and Manufacturers to Leverage Online Marketing for Bottom Line Results

Reviews (0)
 
Price: $249.00
The 2011 Edition of this valuable marketing tool provides a step-by-step plan for leveraging Online Marketing to produce Bottom-Line Results. Bulk pricing available.


tech directory: start your search here



Sponsored Links