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Survey Shows Effect of Economy on Manufacturers

Companies are still looking to grow while putting big initiatives on hold, streamlining operations, and scrutinizing buying decisions.

Published: Wednesday, June 10, 2009 - 09:21

(MFGWatch: Atlanta) -- Results of a survey recently conducted by MFGWatch give a snapshot on the state of sourcing, sourcing preferences, company growth projections, and reactions to economic conditions. More than 200 purchasing professionals and engineers from the manufacturing industry participated in the survey from MFGWatch, the largest global online marketplace for the manufacturing community.

The majority of survey participants (55 percent) described their company as a product designer/OEM, 18 percent worked for outsourced manufacturers, 11 percent specified their company as a mixture of product design and manufacturer, and the remaining 16 percent described their companies as suppliers, research and development companies, and engineering support. Respondents hailed from all corners of the manufacturing industry: medical, energy, government/military, oil and gas, power generation, aerospace, agricultural, automotive, food processing, mining, textiles, woodworking, sports equipment, electronics, consumer products, and more.

Current Landscape of Sourcing

The MFGWatch survey asked the community if their sourcing needs had changed in the past year, 69 percent said they had maintained or increased their sourcing needs, while 31 percent stated their sourcing needs had decreased during this period. Nearly half of the buyers said they were currently in the process of looking for new suppliers, while the other half stated they were not augmenting their supply chain.

Questioned about geographical sourcing preferences, 64 percent preferred to source with North American manufacturers, 19 percent favored China for their sourcing needs, and 7 percent conducted their sourcing business in Europe. The remaining 10 percent were sourcing in South America, Africa, and other countries.

Respondents were asked if the volume (both value and quantity) of their orders for sourcing had changed in the past year. 60 percent of respondents stated their volume had increased or remained the same. Forty percent reported a decrease in sourcing volume. Those responding affirmatively to the question were asked why there was an increase in sourcing activity. Forty-five percent of the respondents stated the increase was due to natural company growth, while another 27 percent found better opportunities for savings. Two percent replied their underlying costs have decreased.

Asked why their sourcing needs had decreased, 58 percent responded that overall demand had declined, and 18 percent had experienced budget cuts. Another 13 percent were re-strategizing their sourcing needs, and six percent have halted new product development. Surveyees were also asked, if their sourcing volume had decreased, did they increase the frequency of order? Sixty-seven percent responded "No," five percent replied "Yes," and 28 percent were not sure.

Fine Tuning for Tomorrow

Survey participants were asked to forecast company growth in 2009, 82 percent expected to maintain or grow their business, while 13 percent expected a decrease and five percent were unsure.

Surveyees were asked if they had postponed or canceled any major purchases due to the current state of the economy. Eleven percent have not canceled nor postponed any purchases, while:

  • 35 percent stopped hiring new or replacement employees
  • 15 percent canceled software or upgrade purchases
  • 12 percent suspended facility expansion in 2009
  • 15 percent cut business travel
  • 8 percent did not renew memberships in professional societies or industry associations

 

Respondents were also asked what actions their companies had taken to weather current economic conditions:

  • 22 percent resorted to layoffs
  • 21 percent initiated a hiring freeze
  • 18 percent shortened shifts and work hours
  • 10 percent reduced the amount sourced at one time
  • 9 percent reduced the frequency of items sourced
  • 6 percent reported no changes - business as usual
  • 5 percent closed facilities
  • 4 percent added automation to reduce payroll

 

MFGWatch is a service provided by MFG.com, the largest global online marketplace for the manufacturing industry. For more information about MFGWatch, please contact Lindsay Bradshaw at lbradshaw@mfg.com.

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MFG.com

MFG.com is the Internet-based platform upon which the global manufacturing industry conducts business. MFG.com’s open platform enables companies of all sizes from around the globe to intelligently connect, source, collaborate, and perform due diligence with transparency and intellectual property protection. The MFG.com platform supports virtually all manufacturing process and industrial components, is in 10 languages, 12 currencies and has more than 100,000 users on five continents. MFG.com has offices in North America, Europe and Asia. For more information about MFG.com, please visit www.mfg.com.

Comments

Balanced Economy

It is said that within this year our economy will recover. I just hope that it will because a lot of people are really having trouble with their finances. That is why it is not a surprise if a lot of people clamor for a balanced economy, and that isn't a bad idea. A balanced economy would dictate that what is spent is only what is earned, and borrowing is only done to pay emergency bills. It was an overleveraging of credit that got us into this mess, and a lot of Americans are looking into payday loans instead of credit cards, the traditional avenue. Federal Reserve Chairman Ben Bernanke continues to assure us that the economy will stop contracting by the end of this year and begin recovery, but one wonders if the cash advance we gave to all the biggest firms will result in a better, balanced economy.