Concerns the U.S. may be sliding into an economic recession are not immediately evident among distributors and manufacturers in the recent 2008 Member Forecast Survey of Power Transmission Distributors Association.
Among the 46 distributor respondents, 63 percent anticipate sales growth in 2008, just over a quarter project flat sales and about 11 percent expect a drop.
The 57 manufacturer respondents tend to be a bit more optimistic — 83.6 percent see sales gains and 16.4 percent predict flat sales. Manufacturer respondents don’t predict a decrease in sales.
But many economists and some PTDA members fear a potential perfect storm”could slam the U.S. economy sometime in 2008 then fully impact industrial distribution and many manufacturing sectors in 2009 and 2010, according to the survey.
“We’re doing much better than anticipated for 2007,”said Helen Yost, president of The Rowland Company, Philadelphia, PA. “I think 2008 will flatten out a little, and then we’ll need to be more creative in 2009 and 2010.”
Gross and Profit Margins
For the second straight year, half of the survey respondents expect gross margins to remain flat. An almost equal percentage of distributors versus manufacturer are in this camp. Meanwhile, 43.5 percent of distributors and 41.5 percent of manufacturers expect growth in gross margins, mostly at under five percent.
The expectations about profit margins closely mirror the gross margin data. Among distributors, 45.7 percent say profitability will remain flat and 50.0 percent anticipate profit gains. Among manufacturers, 41.5 percent expect profits to remain steady and 50.9 percent see increases.
Among all distributor respondents, 37 percent said they expect to add supplier lines, 47.8 percent said the number would remain constant and 15.2 percent expect to trim lines. Meanwhile, almost three-fifths of distributors said they expect end-user customer demand for local inventory to rise.
More than half of manufacturer respondents expected their distributor rosters to increase and almost the same number thought their sales through distribution would climb. Only 7.8 percent of manufacturers projected the number of their distributor partners or distribution sales would slip.
To access the full results of the PTDA 2008 Member Forecast Survey, visit 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