Survey Shows Business Improving

MFG.com, a global sourcing marketplace for the manufacturing industry, has announced the results of its latest two-part MFGWatch survey. For the third straight quarter, more than one-third of North American manufacturers responding to the quarterly survey indicated they’ve experienced a significant supply chain disruption in the past three months.As overall business conditions improved significantly, employment at larger North American sourcing plants and original equipment manufacturers (OEMs) also increased. A total of 28 percent of these respondents indicated that they added to employment for the period, compared to 16 percent in the first quarter of 2010 – an improvement of 12 percent.While 10 percent stated they’ve reduced staff at their companies, that number is down from 21 percent in the previous quarter.

News Item From: 5/13/2010 Modern Machine Shop

MFG.com, a global sourcing marketplace for the manufacturing industry, has announced the results of its latest two-part MFGWatch survey. For the third straight quarter, more than one-third of North American manufacturers responding to the quarterly survey indicated they’ve experienced a significant supply chain disruption in the past three months.

As overall business conditions improved significantly, employment at larger North American sourcing plants and original equipment manufacturers (OEMs) also increased. A total of 28 percent of these respondents indicated that they added to employment for the period, compared to 16 percent in the first quarter of 2010 – an improvement of 12 percent.While 10 percent stated they’ve reduced staff at their companies, that number is down from 21 percent in the previous quarter. For the second straight quarter, well over half (62 percent) said they maintained employment levels.
 
Even though North American small and medium-sized manufacturers (SMMs) also pointed to significantly improving business conditions, employment in these shops and plants reported a slower rate of growth than OEMs. SMMs added to their employment roles in the latest quarter -- 23 percent compared to 11 percent in the previous quarter. However, a full 21 percent say they’ve eliminated jobs at their shops and plants.
 
Large manufacturers expressed optimism and pointed to gains in most major business conditions. Expectations to increase the number of Suppliers they engage for production rose to 43 percent from 32 percent in the previous quarter. Nearly a third expect to add to employment in the upcoming quarter – 32 percent, up from 21 percent in the last quarter of ’09 – while only 4 percent expect to decrease employees in the coming months.
 
Noteworthy among large North American manufacturers are their responses around supply chain risk and backshoring. For the third straight quarter, more OEMs indicated they had experienced significant supply chain disruptions. A remarkable 44 percent say they’ve experienced a significant disruption, compared to 35 percent in the previous quarter. Product Quality/Consistency topped the list of supply chain risks (42 percent), followed by rising shipping/logistics costs (40 percent). Supplier stability was third (29 percent) and intellectual property protection was listed as the fourth most important concern at 22 percent.
 
The responses to backshoring activity from large North American sourcing manufacturers suggest good news for SMMs in the coming months. 13 percent of OEMs said they’ve returned some production to North America from low-cost countries in the first quarter of 2010. Nearly one-third (31 percent) said they will be researching bringing production into or closer to North America in the second quarter of 2010.
 
While employment conditions at North American SMMs showed slower growth, they indicated improving business conditions. 40 percent said their businesses have grown in the first quarter of 2010 (22 percent say their businesses have contracted). A significant number of SMMs said they will add or maintain capacity (equipment, technology) in their shops and plants (29 percent will add capacity; 54 percent say they will maintain capacity). Only 8 percent indicated that they will reduce capacity.
 
Also, for the third straight quarter, over one-third of SMMs said they’ve received inquiries or work from companies suffering from supply chain disruptions. In terms of specific supply chain risks, Supply-side manufacturers identified customer stability as the most important issue for the second straight quarter (72 percent).
 
“The most recent MFGWatch survey shows conclusively that manufacturing is surging in North America during the first of 2010,” said Mitch Free, founder and CEO of MFG.com. “The positive activity we see in business growth, employment and the potential for backshoring some production to the U.S. is encouraging. But while optimism and business growth is strong among small- and mid-sized manufacturers (SMMs), they have not seen the same rate of job growth as larger manufacturing OEMs. If we see significant improvement in SMM employment from “trickle down” in the coming months, then we may be in the road to a solid, full-blown recovery. But it will take many more jobs in this sector to replace the jobs lost.”
 
The latest MFGWatch survey targeted nearly 500 Supply-side manufacturers, as well as Buy-side OEMs and sourcing professionals throughout North America. Respondents represent an array of industries, including automotive, aerospace, medical, industrial equipment, consumer products and textiles.
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