Manufacturing professionals expect their companies’ revenues to keep rising through the remainder of the year, and half expect to increase hiring in the year ahead, according to the most recent annual Purchasing and Manufacturing Survey from Chicago-based Prime Advantage Inc., a buying consortium of midsize manufacturing firms.
Prime Advantage surveyed more than 700 U.S. industrial manufacturing companies, revealing continued optimism about revenues and employment, despite concerns about rising costs and a lack of qualified workers. Some key findings of the report include:
- 49% of respondents said they expect revenues to increase in the second half of 2014 compared to the first half. Of these, 22% anticipate revenue growth will be more than 10% greater this year than last year, while 28% expect revenue growth of up to 10%.
- Capital expenditures are expected to increase in the second half of 2014 for 42% of the midsize manufacturing companies in the group, an increase of 12% from 2013’s survey projections, the firm said.
- 50% of companies expect to hire in the next six months and only 1% are predicting layoffs.
- The cost of raw materials continues to be the main purchasing concern for members; the survey indicates an increased focus on process cost savings and efficiency.
- The top prediction for potential barriers to continued business growth is a lack of qualified workers, 53%.
“Our members are making some of the highest projections for the next six months that we’ve ever seen,” said Louise O’Sullivan, founder, president, and CEO of Prime Advantage. “Revenue forecasts, capital expenditure plans, and labor force expectations are all at record levels. Our members are becoming more energy-efficient, more sustainable, and more technologically advanced. This is all a true testament to the invaluable supply-chain partnerships and resources created through our group’s collaboration as we march in unison to make an everlasting impact in the world of manufacturing that will be built upon for generations to come.”
The report is in line with other positive industry outlooks. The Global Purchasing Index, for instance, has remained above the 100-point mark indicating economic optimism among electronic component buyers since its launch in January of this year. The index has been on the upswing since July, when growth slowed, and hit its highest level since January in October, at a reading of 123.
Online Purchasing on the Rise
In a separate study, manufacturing professionals were among those reporting a shift in buying behavior toward online purchasing recently—even when making big-ticket purchases, according to a late 2014 B2B purchasing study from the Acquity Group.
B2B purchasing is increasingly mirroring the consumer world, as more business purchasers rely on e-commerce programs to research and complete their B2B purchases. The study reveals a steadily growing interest among procurement officers to purchase company supplies online—from manufacturers, their distributors, and from third parties such as Amazon Supply.
“Business-to-business commerce increasingly resembles the consumer e-commerce space, with users across industries now expecting similar ease-of-use in the online B2B shopping experience,” according to the State of B2B Procurement Study released by Acuity this fall. “Now, it’s up to suppliers and distributors to help shift the procurement landscape to meet expectations.”
The study found that 41% of B2B buyers—including those in manufacturing, retail, health care, and pharmaceutical industries—are willing to purchase any type of business product online. What’s more, 68% report participating in some form of electronic purchasing in 2014, up from 57% last year. The behavior extends to major purchases, as 66% say they are comfortable making a purchase of $5,000 or more online, up from 40% in 2013.
“This demonstrates room for continued growth, as nearly 14 percent report making those large purchases at least once per month,” the study suggests.
There is also room for business suppliers to improve the online buying experience. More than 80% of buyers report going to suppliers’ websites to research business purchases, yet less than half report actually purchasing through those suppliers’ sites (48%). Though this represents an increase from the 34% of sales buyers reported making through their suppliers’ sites in 2013, it also indicates that alternative sources, such as third-party suppliers, still represent a competitive threat, study leaders said.
“B2B buyers are inclined to shop around for the right deal, or at least the right purchasing experience,” according to Acuity. “This gap in online purchasing suggests that, while suppliers are doing a better job keeping up with user demands, improvements must be made to boost their ability to attract and convert buyers on their own sites.”
Acquity Group’s State of B2B Procurement Study surveyed 500 buyers with annual purchasing budgets of $100,000 or more about their online purchasing habits and preferences.