2007 Year-End Sales Results Show Positive Growth for Power Transmission/Motion Control Industry

 February 11, 2008-Chicago, IL: In releasing 2007 year-end sales data for distributors and manufacturers of power transmission/motion control (PT/MC) products, the Power Transmission Distributors Association (PTDA) reported that distributors and manufacturers in North America experienced overall growth in sales in 2007. Confidence in the market (as measured on a scale of 1 to 10 with 10 being most optimistic) has eroded slightly, holding a current neutral position between 5 and 5.8 versus a range of 5.1 to 6.6 at year-end 2006. 

While still in the positive, growth in sales of PT/MC products is definitely slowing. Following three years of double-digit growth, U.S. distributors’ saw a 6.8% increase in PT/MC product sales in 2007. The annualized sales-to-inventory ratio for 2007 was up to 7.6, compared to 7.3 in 2006. 

Canadian distributors also continued to experience growth in PT/MC sales, again at a slower rate than in the previous three years. Distributors of PT/MC product in Canada ended 2007 with an increase in sales of 1.7%. The annualized sales-to-inventory ratio for Canadian distributors showed a slight decline from 7.1 in 2006 to 6.4 in 2007.

U.S. manufacturers of PT/MC products experienced year-to-date sales growth of 3.7% versus a more robust growth rate of 7.1% in 2006. The same trend holds true for year-to-date orders of PT/MC products for U.S. manufacturers, gaining 1.1 percent in 2007 as compared to 3.8% in 2006. The annualized sales-to-inventory ratio increased to 10 at year-end 2007 from 9 in 2006.

Canadian manufacturers’ sales remained relatively flat in 2007, with a change in sales of under one percent. Year-to-date sales of PT/MC products by Canadian manufacturers in 2007 increased 0.2% versus a 0.5 decline in 2006. The annualized sales-to-inventory ratio decreased to 6.9 for Canadian manufacturers compared to 7.4 at the end of 2006.    

In considering sales growth on a product-by-product basis for 2007, product categories for U.S. manufacturers showed an overall growth in sales with only two product categories experiencing sales declines – variable speed drives and positioning systems/linear motion products. Canadian manufacturers, on the other hand, showed an overall reduction in sales with only three product categories showing sales growth – unmounted bearings, clutches & brakes and standard industrial motors.

U.S. Manufacturer Percent Change in Product Sales (2006 vs. 2007)

Canadian Manufacturer Percent Change in Product Sales (2006 vs. 2007) 

Channel Partners Experience Decline in Sales in December 2007 

U.S. distributors’ sales in PT/MC products have fluctuated all year with six months of growth and six months of decline. Sales in December 2007 dropped for the second month in a row, decreasing 5.2% when compared to November 2007. When matched up against December 2006 sales, sales in December 2007 jumped 9.5%. With no clear trend in accounts receivable collection days, this ratio experienced a gain of 1.2% in December 2007 as compared to November 2007 and dropped 6.4% as compared to the same month last year. For December, the confidence index of U.S. distributors reached its lowest point this year, falling 0.4 points (to 5.8) on a 10-point scale from November to December 2007. 

Canadian distributors’ sales in PT/MC products also fluctuated throughout the year with equal months of growth and decline in sales. After slight growth over the past two months, sales dropped 11.3% in December 2007 as compared to November 2007. Compared to December 2006, sales in December 2007 were down by 0.4%. Days sales in account receivables were up 1.7% as compared to the same month last year and escalated 10% over November 2007. For December, the confidence index of Canadian distributors dropped 0.3 points (to 5) on a 10-point scale from November to December 2007.

U.S. manufacturers’ sales dropped in two consecutive months, decreasing 1.9% between November and December 2007. Sales growth over the same period last year was up 5.3%. The confidence level of U.S. manufacturers remained flat at 5.5 on a 10-point scale for the sixth month in a row.

Canadian manufacturers’ sales posted its second month of declining sales as well, plummeting 13.6% over the previous month.  When matched up against December 2006 sales, sales in December 2007 were down 5%. For December, the confidence level of Canadian manufacturers was at its lowest in 2007, falling 0.1 points (to 5.1) on a 10-point scale.

Product-by-product sales between November and December 2007 reflect the overall decline in sales experienced by both U.S. and Canadian manufacturers. For U.S. manufacturers, only two product categories experienced an increase in sales – standard industrial motors and mounted bearings. For Canadian manufacturers, only standard industrial showed positive month-to-month sales growth.

U.S. Manufacturer Percent Change in Product Sales (November 2007 vs. December 2007) 

Canadian Manufacturer Percent Change in Product Sales (November 2007 vs. December 2007) 

The Market Outlook Report is published monthly by the Power Transmission Distributors Association. The full report includes month-to-month and year-to-year changes for the current and the previous year in sales, inventory and accounts receivables for U.S. and Canadian distributors as well as a general confidence index. U.S. and Canadian manufacturer data includes a confidence index, as well as sales and order trends for mounted bearings, unmounted bearings, standard industrial motors, variable speed drives, positioning systems/linear motion products, gear products, clutches and brakes, shaft couplings and mechanical drive systems and other PT products. 

Year-end data for 2006 and 2007 is available in a complete report. The monthly data is available by subscription via e-mail or mail. To purchase the year-end data or to begin a subscription to the monthly data, order online or call PTDA at (312) 516-2100. PTDA members may download the report at no charge through the PTDA website.