More than 46% of respondents agreed that raw materials (including stainless steel, nickel, copper and other metals and plastics) were a major concern in 2008. Energy costs were the second biggest concern, with 17.5% and logistics and supply chain costs followed closely at 16.4% in agreement.
Inflation (8%), labor (4%), foreign competition (3.4%), overhead costs (2.8%) and healthcare costs (1.7%) were among the other concerns identified.
“More than rising energy costs or inflation, the uncertainty around pricing pressures for raw materials continues to be an obstacle to success for many small and mid-sized manufacturers,” said O’Sullivan. “As a buying consortium, we’ve been successful in addressing that exact concern. Since its inception, Prime Advantage has returned more than $60 million in rebates and discounts to its members; these are real savings that are helping U.S. manufacturers gain a powerful competitive advantage in the face of growing international competition.”
Purchasing and Sourcing Priorities
The survey also found that 66% of Prime Advantage members plan significant capital improvements in 2008, including equipment upgrades such as press brakes, turret punch presses, plus equipment for laser cutting, robotic welding and stamping.
This is supported by findings from the Business Roundtable’s CEO Economic Outlook survey for the fourth quarter of 2007, in which CEOs were predicting a 35% increase in capital spending over the first six months of 2008.
Also, 88% of respondents to the Prime Advantage Group Outlook Survey indicate planned efforts to improve at least one of the following in 2008: cost savings, efficiency measurements or supplier diversity goals. Another 11 percent plan to address IT systems improvements, including investments in new applications, data visibility and data accuracy, while just 2% are planning investments in industry certifications or education.
Job Growth on Horizon
The Prime Advantage Group Outlook Survey identified a positive outlook for revenue expectations and hiring, with 59% indicating a revenue boost in 2008. Meanwhile, just 1% indicated that job cuts in 2008 could occur, while 23% are planning new hires and 76% are planning to keep their current employee base at the same level as 2007.
“Even though indicators like the JPMorgan Global Manufacturing PMI, which finished 2007 at a two-year low of 51.6, hint that manufacturing may be facing some trouble, it is clear that our members are confident and hopeful about 2008,” O’Sullivan said. “They realize that while high oil prices may continue contributing to higher energy, transportation and materials costs, the collective buying power offered through Prime Advantage becomes an even more powerful asset to their bottom lines.”
