Metal Information Center

Cost of materials drags down manufacturing confidence

September 20, 2007 – 12:03 pm

Manufacturing respondents say that the rising cost of materials is their greatest concern. Finding quality employees, rising health-care costs, taxes, and government regulations are the other leading issues concerning manufacturers.

When completing the survey, respondents were asked about the direction of the economy, revenue predictions, and hiring plans.

Manufacturers expect increasing revenues over the next 12 months. Sixty percent of respondents indicate sales will be higher. Forty-three percent believe revenues will be 10 percent higher than the current levels in 2007.

In August, 38 percent of respondents indicated they would add employees. The recent survey shows only 30 percent of respondents plan to hire. Fifty percent of respondents said staff levels will remain the same, and seven percent expect staff cuts.

Respondents also indicated concern about the economy. Less than 41 percent thought the economy was improving, compared to almost 50 percent during the last poll.

When answering the question “What do you think the outlook for the general economy is for the next twelve months,” 39 percent of respondents for all small businesses said they expected a better outlook. Among manufacturers, 40.7 percent expected a better outlook.

Manufacturing respondents ranked the following issues from most important to least: cost of materials, healthcare costs, taxes, government regulation, and energy/fuel costs.

Small-business respondents listed energy/fuel costs as their biggest concern, followed by health-care costs, economic conditions, and taxes/cost of materials.

Both manufacturers and small-business owners agreed that the most important priorities for 2007 were increasing revenues, reducing expenses, improving productivity, and upgrading facilities.

The IPA provides management consulting and professional services to small- and medium-sized businesses in the northeastern United States. The IPA employs more than 1,800 consultants and serves the transportation, food-service, construction, contracting, and manufacturing industries.

Surveys are voluntary and conducted by telephone or email.

Central New York focus

Some Central New York manufacturers and distributors remain optimistic entering 2007.

Philip Jakes-Johnson, vice president of Salina-based Solvents & Petroleum Services, Inc., anticipates the market will be status quo.

“We manufacture antifreeze so the market is fixed, established, and predictable,” he says. “I feel confident as we go into 2007 because Central New York is a great place to do business.”

Ross Stefano, president of JB Brady, Inc. d/b/a Brady Systems, says his company’s position as a distributor of scale systems and commercial food equipment allows him to closely observe the manufacturing industry.

“We sell primarily to manufacturers, and we have seen a very robust demand in 2005 and 2006,” Stefano says. “It [demand] doesn’t show signs of abating.”

Stefano is cautiously optimistic and moving forward at the same pace as in 2006.

“We are in the market, and we talk to manufacturers.

They are confident. They wouldn’t be buying from us if they didn’t feel confident,” he says.