Contract Manufacturers Weigh In On Economy

MFG.com recently announced the results of its January 2009 MFGWatch Survey. The survey, which drew participation from 570 North American contract manufacturers, covered topics such as the state of the global economy, current business conditions and survival plans to combat the economic downturn.

Here are some notable results:

• Forty-five percent of surveyed shops projected growth in 2009, while 28 percent expected business to remain at last year’s level.
• When asked if they were optimistic about the global industry rebounding in 2009, 37 percent of participants stated they were optimistic, 28 percent were neutral and 34 percent believed a rebound was unlikely.
• Fifty-one percent indicated that their businesses were declining, while 49 percent said business was improving or excellent.
• When asked about demand during the six months prior to the survey, 50 percent noted a decrease, 18 percent reported an increase and 28 percent reported no change, while 3 percent were unsure.

Actions taken to respond to the economic situation varied. While a portion had continued with business as usual, the majority of the respondents have made changes, including laying off employees, closing facilities, implementing automation to reduce payroll and more. Others had stopped hiring new employees; postponed or cancelled capital equipment purchases; curtailed business travel to customer locations and trade shows; and cancelled membership in professional or industry associations. Fifty-three percent said they had to reduce profitability margins to increase customer demand and new customer acquisition.

When asked about expanding their businesses, 75 percent of respondents said they were looking to move into other industries, while the rest had no plans for cross-industry growth. Those seeking to expand saw promise in industries such as energy, alternative energy, medical, marine, aerospace, and biotechnology and pharmaceuticals, among others.

To acquire new customers in 2009, 24 percent of respondents indicated that they plan to increase Web presence and 19 percent intended to enter new markets. Other responses included attending more trade shows, retaining a sales representative or broker, and expanding outside or inside sales teams.