While purchasing executives see growth in several key areas of the industrial market by year-end, capital expenditures on new construction and retrofit of facilities will continue to be soft, according to the Institute for Supply Management (ISM), Tempe, Ariz.
In its 63rd Semiannual Forecast, ISM, formerly the National Association of Purchasing Managers, said purchasing and supply executives expect their 2002 revenues to grow modestly from 2001. Overall, respondents anticipate 2.8% growth in revenues.
Manufacturing industries expecting the greatest improvement over 2001 are (listed in order) wood and wood products; textiles; glass, stone and aggregate; transportation and equipment; petroleum; chemicals; printing and publishing; primary metals; instruments and photographic equipment; food; and rubber and plastic products.
However, capital expeditures, a key driver in the demand for electrical products, are expected to drop in both the manufacturing and non-manufacturing segments. Respondents at manufacturing firms expect an 8.7% decrease in capital expenditures in 2002 from 2001 levels, while purchasing executives at non-manufacturing companies are expecting to decrease their capital expenditures in 2002 by 1.5 percent compared to 2001.
“Manufacturing purchasing and supply executives are more optimistic than at anytime in the past year and see significant improvement in their organizations’ prospects for 2002,” said Norbert Ore., group director, strategic sourcing and procurement, Georgia-Pacific Corp., and chair of the ISM Manufacturing Business Survey Committee. “While the manufacturing sector is definitely improving, they now find themselves facing a recovering economy that still generates concerns about the weakness in segments of the economy; labor and benefits costs, including healthcare costs; energy costs; inflation; and import restraints. Capacity utilization below 80% discourages capital investment and is reflected in revised spending plans that now predict a decline in year-over-year capital spending.”