Revenues, Hiring Remain Strong for Mid-Sized Manufacturers

In its 14^th Annual Purchasing and Manufacturing Survey, buying consortium Prime Advantage reveals continued optimism about revenues and employment among purchasing and manufacturing executives, along with increasing demand for flexibility and responsiveness in their supply chains. The annual survey takes the temperature of the mid-sized manufacturing community, polling more than 750 manufacturing executives about their financial projections and top business concerns.

Key survey findings include:

•  80% of respondents say they expect to be at or above the previous year's revenues, and 83% anticipate maintaining or increasing revenue performance in 2016;
• 84% of the buying group’s members are prioritizing indirect spend to control costs;
• hiring is strong, as 61% of members planned to hire new employees in 2015;
•  a lack of qualified workers remains the top threat to manufacturing growth among members for the second consecutive year, with 46% voicing this concern, down from 53% in 2014;
•  the three most desired traits for potential procurement hires are: analytical skills, negotiation expertise, and a strong acumen for relationship management.

Higher Revenues Expected

Although 80% of the executives surveyed by Prime Advantage say they expect to be at or above 2014 revenues this year, that number is down compared to the 2014 survey and is at its lowest point since 2010, the researchers said. Demand is decreasing for some manufacturers, they said, with 27% saying they are performing below forecast this year. The slowdown may be short lived, however, as 83% of respondents said they expect to either maintain or increase revenue performance in 2016.

Executives also are optimistic about capital expenditure and hiring trends. Survey respondents said they remain optimistic about their investment in operations, with 87% saying that they are either meeting or exceeding capital expenditure plans for this year; 73% said they expect current trends to continue for the remainder of 2015.

Mid-sized manufacturers also continue to hire new employees; 61% said they began 2015 with plans to add new employees, and 79% of them say they have already fulfilled that mission. Prime Advantage says the positive trend is likely to continue, as no respondents reported plans to lay off employees and 47% said they expect to add to their staff. The positive news comes despite ongoing concerns about a lack of qualified candidates for manufacturing jobs; 46% of respondents identified this as a key threat to U.S. manufacturing, though that number is down compared to last year, when 53% of respondents identified it as a key threat.

Procurement Challenges

Cost pressures top the list of concerns for procurement professionals at mid-sized manufacturing organizations, challenging their need for employees with strong negotiating and relationship-building skills. Purchasing executives responding to the Prime Advantage survey pointed to raw materials costs as a leading cost pressure for their department. They also said that indirect materials and supplies, along with component parts pricing, have been significant margin-threatening factors for manufacturers in 2015.

Such pressures may be influencing manufacturers’ demand for procurement department hires that have three important traits: analytical skills, negotiation expertise, and strength in relationship management.

Prime Advantage surveys a cross section of purchasing executives and professionals from its member companies for the Annual Purchasing and Manufacturing Survey. The latest survey data was collected in July 2015 from representatives of Prime Advantage Member companies in durable goods manufacturing with annual revenues ranging between $10 million and $4 billion, of which the majority range between $20 million and $500 million.  For more information, visit www.primeadvantage.com/surveys/.