The general outlook by US purchasing professionals has turned the tide, according to a recent survey, and optimism should prevail for the remainder of 2012.
Prime Advantage, a buying consortium for small and midsized manufacturers based in the US, said 88 percent of members plan to make the same or higher capital investments in 2012 than in 2011. More than half (56 percent) plan to increase staffing, and 72 expect their revenue to increase.
“The results at first glance are very similar to 2011 in that hiring and revenue are expected to go up,” Mike McDonald, vice president of new business relationships for Prime Advantage, told us in a phone interview. “But we've seen a shift in what our members view as concerns.”
The cost of raw materials was the top overall concern for 51 percent of respondents, the survey found. By comparison, 66 percent called this their top overall concern in 2011. In previous years, the cost of components ran second to the cost of raw materials as a top concern, but in 2012, the second most commonly cited top concern was purchasing processes, such as efficiency, measurements, and cost savings.
“What this tells us is when members see less pricing pressure, they are turning to other avenues for efficiencies in their procurement operations, such as data analysis, tools, and better aggregating of spend,” McDonald said. “When pricing pressure is high, issues such as improving business processes get a lot less attention.”
Here is a summary of the survey's findings:
- The positive hiring trend continues into 2012, with 56 percent of companies planning to add employees in 2012 (up from 48 percent measured in February 2011)…
- Overall, 97 percent of companies plan to keep or increase the number of domestic employees, with 56 percent expecting to hire in 2012 (up from 48 percent in February 2011 and 24 percent in February 2010)…
- When asked to indicate the top three cost pressures causing the most concern, respondents most frequently cited the cost of raw materials… The number of respondents citing it as the top cost pressure concern declined from 76 percent in 2011 to 55 percent in 2012.
The expectation that Prime Advantage members will invest in IT equipment bodes well for the electronics supply chain.
“We've been seeing a gradual increase in IT spending,” McDonald said, “but 2012 seems to the turning point in terms of members' willingness to invest.”
He also said members are looking to establish stronger relationships in the Americas. Though the consortium sources globally, members are seeing cost advantages from companies based in Mexico and many southern US states. “We are seeing, in the past couple of years, an influx back into Mexico. The infrastructure there is well equipped for commerce. I think what we are seeing is a rebalancing of sorts: Members are deciding makes sense to source globally and locally.”