Manufacturing companies continue to show optimism for this year and next, according to a new survey by Prime Advantage, a buying consortium for mid-sized manufacturers.
After several consecutive years of climbing revenues, some manufacturing companies are starting to temper expectations. Eighty percent of respondents expect to be at or above the previous year's revenues. Although this remains a significant portion, it is the lowest percentage of optimists in this category since 2010.
With demand decreasing for some members, 27% reported that they are currently performing below forecast for 2015. This slowdown may be temporary, as 83% of members expect to either maintain or increase revenue performance in 2016. Respondents currently enjoying revenue upswings largely credit new product lines and new customers for the growth.
“The survey results are extremely encouraging,” said Louise O’Sullivan CEO of Prime Advantage. “The majority of our members continue to achieve strong revenues and growth, even after concluding a string of very prosperous years. Our members are developing new products to increase demand like never before and the power of our group intensifies every single year."
With regard to capital expenditures manufacturers remain optimistic about investment in their operations as 87% of respondents are either meeting or exceeding capital expenditure plans for 2015, with 73% expecting current trends to continue throughout the remainder of the year.
However, raw materials top the list of leading cost pressures for procurement professionals. Indirect materials and supplies, as well as component parts pricing, have also been significant margin-threatening factors for manufacturers this year.
Th employment outlook is promising. Manufacturers continue to hire as 61% of members went into 2015 planning to add new employees; with 79% of those having already fulfilled this mission. One reason preventing new hires is a lack of qualified workers. This remains the top threat to manufacturing growth among members for the second consecutive year, with 46% voicing this concern, down from 53% in 2014. The three most desired traits for potential procurement hires are: analytical skills, negotiation expertise and a strong acumen for relationship management.
Overall the positive hiring trend should continue for the remainder of the year, as no respondents are expecting layoffs and 47% expect to bring on additional employees.