More than 50% of MDM readers in a recent MDM survey are concerned” about the state of the economy, and 27% say they are “very concerned.”

About 45% expect the economy to grow worse over the next six months. About the same number expect the economy to stay the same.
 
These results are part of the MDM Reader Survey on the Economy, conducted online in the last two weeks of February.
 
Overall, results were mixed and, it seems, dependent on customer segment. The two most cited segments in which respondents are seeing slowdowns, unsurprisingly, were building materials/construction and automotive.

Others mentioned slowdowns in any market tied to residential construction, including electrical, HVAC, appliances, plumbing, flooring, and machinery rentals. Outside of the housing market, respondents named metal working, material handling, semiconductors, electronics, over-the-road/heavy trucking, paper &pulp and other wood products, and foodservice equipment. Slowdowns in some of these segments may vary according to region.
 
Self-Fulfilling?
Many respondents asked if a recession is a self-fulfilling prophecy. “Talk like this feeds on itself,” says one. “Most of our customers are reporting no slowdown or projected slowdown to our salesmen,” says another.
 
“We have not yet felt the impact from the current economic uncertainty,” one distributor wrote. “… The manufacturing sectors we support appear to be steady without noticeable declines.” However, this respondent is concerned about if and when this trend reverses.
 
A manufacturer respondent reported that in surveys with its distributors, most predict no sales growth in 2008 and nearly 40% of distributors say they plan to reduce inventory.
 
Some respondents reported they are seeing changes in customer behavior, such as layoffs, especially among those that serve the building materials industry. Others say that the industrial base continues to erode in the regions they serve.
 
At least one respondent said he is delaying making big purchases until the economy turns around.
 
Changes in Workforce
When asked if they expected the size of their workforce to change over the next six months, a fifth of respondents said they are considering layoffs as a cost-reduction strategy, but had no plans for significant cuts yet.
 
Most respondents – 53% – have no plans for either increasing or decreasing the size of their workforce in the next six months. Just 3.2% expect to make significant cuts.
 
Interestingly, more than 23% expect to add jobs. These respondents cited increased business due to expansion into new markets, closing new contracts, the addition of new product lines, commercial and institutional balancing out residential market slowdown. Many said that their overall level of business remains strong.
 
Other results:

• More than 23% plan to make an acquisition in the next six months. About 5% plan to sell their business, part of the business or change its ownership structure.
• Nearly 35% expect to have “more power” to increase prices in the next six months than they do now.
• Just 6% plan to outsource any function in the next six months now done in-house.

MDM Reader Survey on the Economy results were calculated from 288 responses to an online survey form. Nearly 65% of respondents were distributors, 24% manufacturers, and the remaining 10% split among consultant, software provider, manufacturer rep and other. Nearly 75% of respondents identified themselves as serving industrial markets. Many named more than one segment.