Latest MFGWatch Survey: North American Manufacturing Cooling Down?

ajsweatt's picture
Submitted by ajsweatt on Wed, 05/25/2011 - 7:08am

In the latest MFGWatch Survey of North American Manufacturers, both buyers and suppliers say they are seeing moderate increases in activity - like inquiries for new work and business conditions - the overall response shows a cooling off from the dramatic growth seen in the last quarter of 2010. A combination of rising costs & inflation, economic uncertainty and the Japanese tragedy seemed to be slowing growth. Highlights from the most recent survey (Q1 '11) include:

Japanese Tragedy Impact: Supply Chain Disruptions Increase Significantly In North America - Buy-side manufacturers that report experiencing a significant supply chain disruption jumped to 42% from a relatively low 37% in the last quarter of 2011.

Top Supply Chain Concerns Among Buyers: Logistics & Shipping Costs; Volatile Fuel/Oil Prices; Finding Competent Suppliers - Not surprisingly, Fuel Prices (25%) and Logistics Costs (21%) ranked highest by far among buy-side supply chain managers as their top concerns. Availability of Competent Suppliers (15%) and Product Quality Compliance (12%) were locked in a group for 3rd and 4th greatest concerns. Supplier Financial Health (7%), Intellectual Property Protection (6%), Unstable Labor Costs (4%), Separation of Production from R&D (3%) and Civil Instability (1%) completed their list of concerns.

Small Manufacturers See Business Improve, But Are Hiring Less - While small and medium sized manufacturers reported improved business conditions (46% say they're seeing improvement, continuing an upward trend from the previous quarter's 44%), they failed to manifest those improvements into jobs. As a matter of fact, the strong employment growth in the space in the last quarter of '10 was virtually wiped, as only 26% report they added to their employment roles in Q1 '11. That 26% represents a fall back to the same levels reported in Q3 '10.

Reshoring or Smartshoring? While fewer buy-side manufacturers say they've returned production into or closer to North America in Q1 '11 (17%, down from 25% in the previous quarter), a whopping 37% say they are currently investigating a strategy of moving production closer to markets of consumption.

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Comments

David Bueford (not verified)

Wed, 07/27/2011 - 11:14pm

I’ve noticed quite the contrary. Small and medium manufacturers lead times have been increasing due to heavy backlogs. They possibly just haven’t ramped up fully from the last recession, but I’m optimistic regarding the industry as a whole.
ajsweatt's picture

ajsweatt

Thu, 07/28/2011 - 6:52am

Thanks for the visit and note, Dave. Certainly, there are many examples of orders and activity in many shops and plants, and the wheels have to keep turnin', right? And certainly, some sectors are performing better than others. But the responses we've seen this year around manufacturing in North America as a whole indicate one thing that's nearly universal - between the disasters in Japan, economic uncertainty and massive regulatory reform, businesses are taking a wait-and-see approach, sitting on massive sums of cash, and postponing or limiting investment. We're in the process of accumulating the most recent MFGWatch survey. Like you, we're awfully curious to see the results. Stay tuned, and thanks again for the update. Cheers.

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