Manufacturers Charting New Business Roadmaps, Holding Steady in 2009 According to January MFGWatch Survey

Atlanta, GA  - February 16, 2009 – MFG.com, the largest global online marketplace the manufacturing community, today announced the results of their latest MFGWatch Survey conducted in January 2009. 570 North American Suppliers, also known as contract manufacturers, participated in the survey covering topics such as the state of the global economy, current business conditions, and survival plans to combat the economic downturn. Surprisingly, 45% of respondents are projecting growth in 2009, while 28% project their business to remain at last year's level. Overall, manufacturers are making tough choices to steady the bottom line and boost operational efficiencies.

Impact of Current Economic Conditions
As manufacturing continues at a 26-year low in the United States, the MFGWatch survey asked if participants were optimistic about the global industry rebounding in 2009. 37% of respondents stated they were optimistic, 28% were neutral on the possibility, and 34% thought a 2009 rebound was unlikely.

Queried about overall business conditions, 51% replied that their businesses were experiencing declining conditions, while 49% stating improving or excellent business conditions. Those respondents were also asked if they noticed an increase or decrease in new demand over the past six months. 50% responded there has been a decrease in demand, while 28% report there has been no change in customer demand. 18% experienced an increase in business from their current customers. 3% were not sure.

Participants were asked if they had noticed an influx of work coming back to the United States from overseas:
• 54% said they had not seen work coming back to the US
• 16% said they had noticed an influx of work coming back to the US
• 30% were unsure

Questioned about the potential of company growth in 2009, the majority is holding steady:
• 36% project they will grow between 1 – 24% in 2009
• 9% project they will grow between 25 - 50% in 2009
• 28% are planning no growth
• 17% plan to downsize between 1 – 24%
• 3% plan to downsize between 25 – 50%
• 1% don’t plan to be in business by the end of 2009

Suppliers were also asked if their customers had increased or decreased the volume (both value and quantity) of their orders in the past six months. 61% responded their orders had decreased, 22% had no change in business, while 15% were experiencing an increase in orders from their client base. 2% were not sure. Survey participants were asked a follow-on question: If their customers have decreased the volume, have they increased the frequency of their orders? 89% responded no, 7% had an increase in frequency of order, and 3% were not sure.

Tightening Business Belts
Surveyees were asked if their companies had to reduce their profitability margins to increase customer demand and new customer acquisition. 53% responded affirmatively, while 39% said they had not decreased their profit margins. 7% were not sure. The survey also inquired if these manufacturers had implemented changes during the current economic downturn. The replies were:
• 28% shortened shifts or work hours
• 26% replied, None – it is business as usual
• 23% had layoffs at their company
• 9% canceled shifts
• 6% implemented automation to reduce payroll
• 3% added overtime
• 2% added shifts
• 2% opened new facilities
• 1% closed facilities

Suppliers were also asked if they had postponed or canceled any major purchases due to the current state of the economy. The responses were:
• 18% stopped hiring new employees
• 15% postponed or cancelled capital equipment purchases
• 12% have not stopped any purchases to date
• 11% stopped hiring replacement employees
• 11% curtailed business travel to customers and trade shows
• 8% cancelled their memberships in professional or industry associations
• 7% halted facility expansion
• 7% will not purchase software
• 4% will not pursue business expansion

Expanding Business
In reference to expanding their business, 75% of suppliers stated they were looking to expand their offerings into other industries. 25% had no plans for cross-industry growth.  The respondents saw promise for additional contract manufacturing business in a variety of industries including: wind power, solar, power, generation, alternative energy, medical, marine, biotechnology and pharmaceuticals, mechanical assembly, subassembly and test, automotive accessories, agriculture, aerospace, apparel and textiles and more.

Respondents are looking at a variety of strategies to acquire new customers in 2009:
24% of respondents plan to increase their web presence, 19% intend to enter new markets, 16% will attend more trade shows, 12% are retaining a sales representative or broker, 8% are expanding their outside sales staff, and another 5% stated they were expanding their inside sales team. 17% were not employing any of the tactics above.

MFGWatch is a service provided by MFG.com, the largest global online marketplace for the manufacturing industry. For more information about MFGWatch or this survey, please contact Lindsay Bradshaw at lbradshaw@mfg.com.

About MFG.com
MFG.com is the Internet based platform upon which the global manufacturing industry conducts business. MFG.com’s open platform enables companies of all sizes from around the globe to intelligently connect, source, collaborate and perform due diligence with transparency and intellectual property protection.  The MFG.com platform supports virtually all manufacturing process and industrial components, is in 10 languages, 12 currencies and has over 100,000 users on five continents. MFG.com has offices in North America, Europe and Asia.  For more information about MFG.com, please visit, www.MFG.com.

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