Chicago, Illinois – Prime Advantage, the leading buying consortium for midsized manufacturers, announced the findings of the 15th edition of its annual Purchasing and Manufacturing Survey, revealing financial projections and top procurement insights of more than 750 U.S. manufacturing companies. The results show continued optimism about revenues and employment as well as increasing demand for flexibility and responsiveness in supply chains. Confidence in growing revenues extends into 2017, according to the study.
Summary of findings
- 97% report that revenues will increase from or stay the same in the next 12 months compared to the previous 12 months.
- 81% expect that capital expenditures will increase or remain the same from the first half of this year.
- 40% of respondents expect to hire in the next 6 months.
- Concern about raw materials pricing has increased, with 95% of respondents citing it as the top cost pressure concern.
- The biggest external barrier to business growth is the lack of qualified workers (cited by 48%), followed by uncertainty of federal elections (42%).
Revenues look to stay strong for the balance of 2016
Our survey shows that 2017 will start out strong for manufacturing, with 97% of Prime Advantage member companies expecting revenue to either increase or stay the same in the next 12 months. Overall revenue expectations for the remainder of 2016 find 84% of Prime Advantage members expect to improve upon or match 2015. Among the 16% of members expecting this year’s revenues to come in under the previous year, the overwhelming reason is decreased customer demand. Among the respondents predicting growth, 58% indicated that new products are driving the increase. Bringing on new customers is the second most significant reason for increasing revenues, at 23%.
Capital expenditures are sturdy
Investing in business operations has been a priority for 2016, as 86% of manufacturers are at or above plan for capital expenditures. Most respondents expect to continue spending; as 81% believe capital spending will increase or remain at current levels for the balance of the year.
Possible growth barriers
For the third year in a row, respondents selected a lack of qualified workers as the biggest external barrier to business growth, listed by 48%.
An unusual political environment is creating anxiety, as 42% of manufacturers responded that uncertainty in the federal elections could stymie growth. Concern over legislative and regulatory pressures continues to crack the top three barriers at 35%, although it has become less acute each of the last three years.
Employment outlook is encouraging
Fifty-seven percent of member companies embarked on 2016 with plans to hire. Almost all of these have already followed through on those intentions, as 51% have increased headcounts. More good employment news is to come as 40% of participants said they plan to hire before year’s end.
“The results of this survey are incredibly exciting, with the overwhelming majority of our members declaring that revenue will increase or sustain in the coming year,” said Louise O’Sullivan, founder and CEO of Prime Advantage. “Our group continues to show that we are, without a doubt, better together every single step of the way.”
Methodology
Each year, using an online survey platform, Prime Advantage surveys a cross section of purchasing executives and professionals from its Member companies. The latest survey data was collected in July 2016 from representatives of Prime Advantage Member companies in durable goods manufacturing, with annual revenues ranging between $10 million and $10 billion, of which the majority range between $20 million and $500 million. The survey had 77 supply chain professionals participate. They represent 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. Prime Advantage has polled its membership for their impressions of current economic conditions since February 2008. To request a copy of the complete report, go to www.primeadvantage.com/surveys/.
About Prime Advantage
Founded in 1997, Prime Advantage is a buying consortium for manufacturers with more than 750 member companies and more than 125 endorsed suppliers. Since inception, Prime Advantage has paid more than $181,000,000 in rebates and discounts to its manufacturing industry members.
Source: Prime Advantage