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Small and Midsize Manufacturers Project Strong Revenues for 2013

Prime Advantage recently announced the findings from its eleventh semi-annual Group Outlook Survey, revealing financial projections and top concerns of its member companies for 2013. The Group Outlook Survey results find manufacturers optimistic about revenues and planning to retain or grow their workforce.

Most small and midsize manufacturers expect to beat strong revenues of 2012, with 68% of respondents anticipating an increase in sales in 2013. New product launches are the main reason for expected revenue increases, cited by 61%, followed by an expected increase in overall customer demand, cited by 57%.

The spring 2012 survey  saw a similar strong revenue projection of 72%, while the fall 2012 survey, conducted last August, was less optimistic with 48% of respondents predicting revenue growth over the last half of 2012.

 Capital expenditure planning remains healthy, as in the previous two years, with 39% of respondents planning an increase from 2012 levels. The spring survey saw 88% projecting spending increases over the previous year, and the fall survey saw 48% projecting spending increases over the previous 12-month period.

 Manufacturers’ hiring plans remain in expansion mode, with 43% planning to hire more workers this year. Although this number is slightly down compared with 2012, when 56% of respondents planned hiring, it remains significantly above expectations in 2010, when only 24% of companies were hiring.

The top concern of 2013, the cost of raw materials, is also a leading cost pressure concern. More than 90% of respondents included raw materials in their top three cost pressure concerns and 42% cited this concern in the leading position. However, it is encouraging that this seems to be declining, relative to recent surveys. The spring 2012 saw 55% indicate that raw materials was the top cost pressure concern, and it was cited as the top cost pressure concern by 76% in the fall 2012 survey.

 Health care costs moved back into second place among top cost pressure concerns, with 57% of respondents including it in the top three. The spring 2012 had health care costs as the third-greatest cost concern (49%). And in 2011, health care costs were cited as the fourth-greatest concern among small and midsize manufacturers.

 The cost of base materials for components, although still in third place, was cited by fewer respondents as a concern than in prior years. Procurement processes, such as cost savings and efficiency measurements, remained the second biggest concern.

Companies are seeking the benefits of nearshoring. In the past 12 months, more than one-in-five respondents have brought international sourcing closer to United States. These results are similar to the Grant Thornton Study on Nearshoring, where 25% of respondents indicated they brought sourcing closer to the United States. 

More than 70% of respondents have increased material and service purchases from American suppliers and service providers. Mexico is the second choice for sourcing, with nearly 28% of respondents moving sourcing to that region. The most frequently cited benefits that manufacturers hope to see in nearshoring are shorter lead times, as indicated by 67% of respondents, and lower inventories (49%). Among other benefits, companies cited better supply chain control (40%) and better overall communication (39%).

“We are encouraged to see that our members expect to see growth in 2013, after a very strong 2012 for most,” said Louise O'Sullivan, founder, president, and CEO of Prime Advantage. “As they focus on profitability and margins, we look forward to partnering with both members and endorsed suppliers to fuel the bottom line, reflecting total cost of ownership, along with the top line, greater sales, and market share."


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