American Mold Builders Showing Signs of Sustained Business Uptick

The Fall 2010 Business Forecast Survey of the American Mold Builders Association reveals that the economic recovery has been sustained over the past three months as business continues getting better for a majority of respondents. The quarterly survey revealed that current business conditions improved significantly over the previous three months, with 15% of the respondents saying that business is “Excellent” – up six percentage points from 9% of the respondents in the Summer 2010 survey. This is the best percentage for this category in several years. A total of 40% of the membership responded to this recent survey.

Current business conditions also improved significantly, moving up another 9% for those reporting “Good” conditions (53%) compared to 44% of the respondents in the Summer survey. That is up a full 18% over the last six months as the outlook continues to move in the right direction. “Fair” business conditions exist for 27% of the respondents compared to 41% of the respondents in the Spring survey. Those reporting “Poor” business conditions dropped again, with only 5% reporting poor conditions, down from 6% in the Summer 2010 survey. That is down a total of 20% over the past six months. For the third consecutive survey, no one reported “Bad” business conditions.

Projections of their company’s business over the next three months revealed that optimism continues to be strong. While only 6% of the respondents expect business to Increase Substantially, compared to 9% in the Spring survey, this remains higher than the Spring survey. Those expecting business to Increase Moderately however, increased to 35% from 31% in the Summer survey, but still below the more hopeful 44% in the Spring survey. Respondents expecting business to Remain the Same came in at 44%, down just four percentage points from Summer survey. Respondents expecting business to Decrease Moderately once again increased by four percentage points to 15% compared to 11% in the Summer 2010 survey. None of the respondents expect business to Decrease Substantially.

When asked to compare their company’s current level of business with that of three months ago, responses indicate some movement in a positive direction:

Quoting activity ticked Up by one percentage point for 33% of the respondents of the Fall survey compared to 32% of the respondents in the previous survey; the Same for 49% of the respondents, up from 44% in the Summer 2010 survey; and Down for only 18% of the respondents, a new low over the past six months, indicating that quoting remains strong. In talking to some moldmakers at the recent Fall Conference in Washington, D.C., many said that while quoting activity is up, turning those quotes into hard orders may be another story. 

However, one respondent noted, “Recent spike in P.O.’s. Not sure if this is result of a couple big customers spending their ‘capex’ by year end or something more sustainable. Hoping it’s the beginning of a better, more consistent demand trend.”

Shipments are jumped Up for 48% of the respondents, compared to 36% in the previous quarter’s survey, and stayed the Same for 37% of respondents (down from 45% in the Summer survey); and Down for 15% of the respondents, fewer than the 19% reporting in the previous quarter. 

Backlog is Up for 41% of the respondents, up once again from the 37% in the Summer survey, confirming the “excellent” and “good” business projections. Backlog is the Same for 33% (down one percentage point from the Summer survey); and Down for 26%, just three percentage points from 29% in the Summer survey. One respondent commented, “Finally picking up business on the tooling side, after a three year retraction!”

Another respondent noted, “Since March business has been very hectic. I can’t seem to catch up.” And another respondent said, “This year is better than 2009!”

Profits in the Fall survey are Up for just 22% of respondents, down significantly from the 29% in the Summer survey. Profits are the Same for 65% of the respondents, a huge jump from the 47% in the Summer survey. Profits are trending Down for only 13% of the respondents to the Fall survey, a significant drop from the 24% in the Summer survey, and a huge drop from the 31% of the respondents in the Spring survey.

Whether or not this is a result of a “kinder, gentler” automotive industry as has been reported, with some of the major OEMs deciding that it’s okay if their suppliers make a profit, or just some looser purse strings among OEM engineers and buyers, is still a guess. But it’s definitely a step in the right direction. According to one respondent, “Business is the strongest since 9/11/2001, but payment terms are the worst four decades.”

Employment levels are also confirming that responding companies are much busier, with employment Up for 28% of the Fall survey respondents, an uptick of two percentage points from the Summer, but double the 14% in the Spring survey. Employment numbers remained the Same for 65%, almost even with the previous survey. Employment is Down for only 7% of the Fall survey respondents, compared to 11% of the respondents in the Summer survey. This is a significant drop from 20% of the respondents reporting reduced employment in the Spring survey.

There is hiring in the wind, and many mold company owners complaining that finding good help is the real problem now. One mold shop co-owner said, “I just hired eight new guys but they’re difficult to find. Many have left the trades and don’t look at the want ads anymore. I got one guy from an ad I put on Craig’s List.”

Another noted: “I need to find quality employees.”

The current average number of shop employees went down by one percentage point to an average of 22. The current average number of design and engineering employees remained steady at five. Work-week hours for shop employees again ticked up by one hour to 47 for the Fall survey. For design and engineering employees the hours also went up by one to 46.

However, one respondent said, “Just because I have my employees here for 32 to 40 hours a week, does not mean they are production for that many hours.

One respondent summed it up quite nicely, reflecting the attitude of many mold company owners: “The economy has many years to go before we see a full recovery. People are getting busy but the problem is we are busy with fewer people employed.”