SMALL AND MEDIUM-SIZED MANUFACTURERS PROJECT STRONG SECOND HALF 2012 CHICAGO—Prime Advantage, the leading buying consortium for mid sized manufacturers, announced the findings of its tenth semi-annual Group Outlook Survey, revealing financial projections and top concerns of its member companies for the second half of 2012. The majority of surveyed manufacturers report healthy revenue projections, strong hiring and capital spending plans. However, for a small portion of respondents these plans may see delays due to uncertainty about the results of the federal elections. Study Highlights: • 48% of respondents expect to see their revenues increase from the first half of 2012 • Overall increase in customer demand was named the primary reason for the revenue growth in 58% of responses • The cost pressures from raw materials continue to lessen • Mid sized manufacturing companies expect to increase new hires at a greater rate in the second half of 2012, as compared to the same period in 2011 • Healthcare costs have become the second highest cost pressure concern for manufacturers Companies are showing more optimism about revenues for the second half of 2012 as compared to several past periods: 48% of respondents expect their revenues to increase in the second half of 2012 as compared to 40% in 2H 2011, and 36% in 2H 2010. An overall increase in customer demand was named the primary reason for the revenue growth in 58% of cases, followed by the introduction of new product lines (32%). Capital spending is also set to increase for one-third of polled companies in the 2H 2012, an upward trend from a year ago, when only one-quarter of respondents budgeted an increase in capital spending. Employment Overall, 90 % of polled companies plan to keep or increase the number of domestic employees, and 39% expect to fill open positions in 2012, which are higher rates when compared to the same period a year ago (35%). On average, more medium-sized manufacturing companies expect to hire in the second half of 2012 (39%) as compared to the same period in 2011 (36 %). Cost Pressures: Raw Materials Decline, Healthcare Rises When asked to indicate the top three cost pressures causing the most concern, respondents most frequently cited the cost of raw materials. However, for the past three surveys, manufacturers have expressed lessening concern about raw material costs, relative to other cost pressures, with only 76 % of respondents including raw materials in their top three choices this time (down from 81% in the 1H’12 Group Outlook survey study and 96 % in the 1H’11 study). Yet over the past year, respondents have expressed more intense concern about cost pressure from healthcare benefits.The cost of medical care was voted the second greatest cost concern for manufacturers by nearly 60 % of respondents.Only a year ago, concerns about healthcare costs were in fourth place. Federal Elections Of those who hold an opinion about whether the uncertainty with federal elections will cause a delay to business processes, 29% and 33% are seeing delays in employment and capital spending respectively. Similar to AP-GfK polling, we asked respondents about the level of impact the outcome of the Presidential election could have on the economy and unemployment. A majority, 55% of respondents, and almost on par with a recent AP-GfK survey (48%), believed the impact on the economy would be felt greatly and 43% (40% in GfK) predicted an impact on unemployment. “We are looking at a stronger 2012 year-end for midsize manufacturers than a year ago,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage. “Today, while there are clearly mixed sentiments about the economy, more surveyed midsize manufacturers expect increases in revenues, capital investments, and hiring than a year ago - all great indicators of a continued recovery for the manufacturing economy.” Methodology In August 2012, Prime Advantage surveyed executives and purchasing professionals that represent durable goods manufacturing firms, with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million.The survey received a 16% response rate from 518 top professionals representing U. S.-based manufacturers in more than 25 different industries, including commercial food service, packaging, truck and trailer, material handling, food processing and construction.Prime Advantage has polled its membership for their impressions of current economic conditions on a semiannual basis since February 2008. RISING U.S. EXPORTS—PLUS RE SHORING—COULD HELP CREATE UP TO 5 MILLION JOBS BY 2020 CHICAGO, IL—Manufactured exports—a bright spot of the U.S. economy in recent years—are set to surge. Combined with jobs created as a result of re shoring, higher U.S. exports could add 2.5 million to 5 million jobs by the end of the decade, as manufacturers shift production from leading European countries and Japan to take advantage of substantially lower costs in the U.S., according to new research by The Boston Consulting Group (BCG). BCG projects that by around 2015, the United States will have an export cost advantage of 5 to 25% over Germany, Italy, France, the United Kingdom, and Japan in a range of industries. Among the biggest drivers of this advantage will be the costs of labor, natural gas, and electricity.As a result, the United States could capture 2 to 4% of exports from the four European countries and 3 to 7% from Japan by the end of the current decade. This would translate into as much as $90 billion in additional U. S. exports per year, according to BCG’s analysis. When the increase in U.S. exports to the rest of the world is included, annual gains could reach $130 billion. BCG forecasts that the biggest U.S. export gains will be in machinery, transportation equipment, electrical equipment and appliances, and chemicals. “The export manufacturing sector has been the unsung hero of the U. S. economy for the past few years.But this is only the beginning,” says Harold L. Sirkin, a BCG senior partner and coauthor of the research. “The U. S. is becoming one of the lowest-cost producers of the developed world, and companies in Europe and Japan are taking notice.” The analysis is part of BCG’s ongoing “Made in America, Again” series on the changing global economics that are starting to favor manufacturing in the United States. Previous reports in this series have focused on production and jobs that are likely to be brought back to the United States as China’s once-formidable cost advantage erodes, but the new research delves more deeply into the competitive position of the United States, relative to other developed economies. Together, the developed economies account for about 60% of global manufactured exports. PEOPLE NEWS MILWAUKEE, WI—ASQ has awarded its Richard A. Freund International Scholarship to SALAH AHMAD, a University of Houston student earning a master’s degree in mechanical engineering technology and technology project management. Ahmad, a dual citizen of the United States and Pakistan, was awarded the $5,000 scholarship, which is named after a past ASQ president and supports a quality professional’s graduate studies. “The committee was impressed with his undergraduate and graduate study and work combining mechanical technology and continuous improvement,” says Chuck Aubrey, Freund Scholarship chair and ASQ past chair. “In addition, Ahmad exemplified a commitment and action toward social responsibility and volunteer work.” Aside from his studies, Ahmad is working to implement total quality management and Lean Six Sigma methodologies at a Houstonarea oil and gas equipment manufacturer. He also helped establish the University of Houston ASQ student chapter. BUSINESS NEWS EAST HARTFORD, CT—PRATT & WHITNEY, a unit of UNITED TECHNOLOGIES CORP., has been selected for funding by the Air Force Research Laboratory (AFRL) for the Adaptive Engine Technology Development (AETD) program. The AETD program is an initiative by the AFRL Propulsion Directorate to mature critical fuel-burn reduction technologies and engine design features that could transition into legacy and next generation military fighter aircraft. CARLSTADT, NJ—HYUNDAI WIA recently hosted a ceremony during IMTS to mark the donation of their latest generation VMC, a F400 Value Master - Vertical Machining Center, to the Humboldt Park Vocational Education Center (HPVEC) of City Colleges of Chicago. The donation took place Tuesday, September 11th, in the South Hall, Booth #S-8948, of McCormick Place, Chicago, IL. View the latest in quality industry news by visiting our headlines at qualitymag.com —updated daily. Just click the tag now and see what you’re missing. If you don’t have the mobile app on your smart phone, visit http://gettag.mobi to get started.
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