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The mixed results of the 2009 Member Forecast Survey of the Power Transmission Distributors Association underscore the uncertainty in the economy, revealing a healthy dose of optimism mixed in with a cautious outlook for the coming year.
While two-thirds of this year's respondents confirm that the economy is declining, nearly the same proportion project that their sales will increase or remain flat in 2009.
The 79 manufacturer respondents are slightly more optimistic about 2009 sales than their 58 distributor counterparts. Nearly half of manufacturers project an increase in sales, compared to 36.2% of distributors.
Overall 42.8% of all firms project their companies' sales will increase in 2009, down roughly 15% from 2008. Meanwhile, 28.3% of companies expect a sales decrease in the coming year.
Although both distributors and manufacturers have significantly lowered their expectation for 2009 in comparison to 2008, PTDA member firms aren't putting all their focus on the risks. Across the board, PTDA member companies are predominantly looking to broaden and deepen their existing sales relationships, although many are hoping to acquire new customers as well.
Michael Kenney, vice president of RBI Bearing, Inc., succinctly summed up the opinion of many members, The recession and downtimes are also opportunities.
Gross and Profit Margins
Tempering the optimism of many firms are concerns about margin erosion in 2009. For the third consecutive year, half of the survey respondents expect gross margins to remain flat. Among manufacturers, 61% expect gross margins to remain constant and 20.8% predict increases, compared to the 50% of distributors projecting flat gross margins and 22.4% expecting increases.
Pre-tax profit margins are similarly strained. Among distributor respondents, projections of their companies' profit margins are evenly split between increasing, remaining constant and decreasing. Half of manufacturers expect their pre-tax margins to remain constant, while 27% project an increase.
To access the full results of the PTDA 2009 Member Forecast Survey, visit http://www.ptda.org/ForecastSurvey.
The Power Transmission Distributors Association (PTDA) is the association for the industrial power transmission/motion control (PT/MC) distribution channel.
Source: Power Transmission Distributors Association