Shops Are Still Buying

Despite the negative economic news, many metalworking shops are actively pursuing their purchasing plans.

Columns From: 3/10/2009 Modern Machine Shop, ,

Editor's Commentary

Mark: My Word (a monthly column of comments and opinions)"Companies making investments are likely to be well prepared when business improves."

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A recent survey conducted by Modern Machine Shop took a look at the buying intentions of manufacturing companies and metalworking job shops. Clearly, the current business downturn is having some influence on these plans, results show, but not to the extent that some industry observers might expect. It seems that a lot of companies are going ahead with plans to add more machine tools or to upgrade their software, workholding and inspection equipment. For example, more than 14 percent of respondents have already purchased this year. Of those planning to purchase, nearly a quarter expect to do so in the next 3 months.

The companies that are making these investments are likely to be well positioned to respond as business conditions improve. Meanwhile, companies that are pulling back may find themselves in an unfavorable spot when that time comes. Sellers of machine tools and other metalworking equipment should take note, too. Maintaining a strong presence in the marketplace will help them capture their share (or a growing share) of this current and future buying activity.

The survey was conducted last month by making a questionnaire available to subscribers of our MMS Extra e-mail newsletter and to visitors of www.mmsonline.com. More than 180 questionnaires were entered. The respondents came from a mixture of job shops, tool and die shops and other metalworking manufacturers.

Overall, it appears that business for these companies is holding up better than might be expected. About a third of the respondents say that business is stable or growing; another third say that business is only "slightly declining;" while the final third say that it was significantly declining.

The key finding about buying is how active many shops are right now. Twenty percent are currently in the process of purchasing capital equipment or software, or are actively researching for later purchases. Another 23 percent are considering future purchases and, as mentioned, more than 14 percent have already purchased. In addition to those planning purchases in the short term (about 25 percent in the next 3 months), 26 percent expect to purchase in 4 to 6 months and 55 percent expect to purchase in 7 to 12 months.

While 28 percent of companies say the downturn has NOT affected their equipment purchasing plans, 52 percent say they delayed plans because of it. Only 15.6 percent say they have cancelled purchasing plans. Of those delaying plans, nearly 54 percent say they will go ahead with plans as soon as business improves. Surprisingly, only 1.6 percent say they are cancelling or delaying purchases because financing is difficult to find.

The survey also indicates that shops are being very careful with their spending. Nearly 50 percent of respondents say they are reducing spending because of business declines. The interpretation here is that frills, niceties and expendable purchasing have wisely gone by the wayside.

The survey also provides a breakdown of what shops are planning to buy. For this and other information about survey results, go to www.mmsonline.com/09survey

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