story by Wesley Brown, courtesy of Talk Business & Politics
wesbrocomm@gmail.com
A lack of qualified workers remains the top threat to manufacturing growth among members for the second consecutive year, with 46% voicing this concern, down from 53% in 2014, according to the Prime Advantage’s recent annual Purchasing and Manufacturing Survey.
Prime Advantage represents U.S.-based manufacturers in more than 25 different industries, including commercial food service equipment, packaging, truck and trailer, material handling, food processing, and construction equipment.
This is the 14th edition of their annual manual survey, which reveals financial projections and top procurement insights of more than 750 U.S. manufacturing companies. Despite current workforce concerns, the survey findings also show that manufacturers expressed continued optimism about revenues and increasing demand for flexibility and responsiveness in supply chains. Confidence in growing revenues extends into 2016, the study finds.
For example, 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 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 enjoying revenue upswings largely credit new product lines and new customers for the growth.
In the area of capital spending, 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.
According to the findings, raw materials top the list of leading cost pressures for procurement professionals once again. Indirect materials and supplies, as well as component parts pricing, have also been significant margin-threatening factors for manufacturers this year.
Still, 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. This positive trend looks to continue for the remainder of the year, as no respondents are expecting layoffs and 47% expect to bring on additional employees. This result is consistent with the PwC Manufacturing Barometer’s findings in April, as reported by Talk Business & Politics.
“The survey results are extremely encouraging. The majority of our members continue to achieve strong revenues and growth, even after concluding a string of very prosperous years,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage. “Our members are developing new products to increase demand like never before and the power of our group intensifies every single year.”
The latest survey data was collected in July 2015 from representatives of Prime Advantage member companies in durable goods manufacturing, with annual revenues ranging between $10 million and $4 billion, of which the majority range between $20 million and $500 million. The survey also had 77 supply chain professionals participate.
Prime Advantage, the leading buying consortium for midsized manufacturers, has polled its membership for their impressions of economic conditions since February 2008. To request a copy of the complete report, go here.
Arkansas’ manufacturing sector has struggled in recent decades. Manufacturing jobs in Arkansas during August totaled 152,700, below the 153,400 in July and below the 154,400 in August 2014. Employment in the manufacturing sector fell in 2014 to levels not seen since early 1968. Peak employment in the sector was 247,300 in February 1995.