Supply Chain employment picture brightens
April 24, 2012 - SCMR Editorial
Prime Advantage, a leading buying consortium for midsized manufacturers, announced the findings of its ninth semi-annual Group Outlook Survey, revealing financial projections and top concerns of its member companies for 2012. The findings show the majority of its members are forecasting revenue increases and plan to hire more employees.
Most procurement professionals expect growth in 2012, with 72 percent of respondents expecting revenues to increase over last year. These findings are similar to the ISM Semiannual Economic Outlook where 69 percent of respondents expected revenue increases for 2012. The main reasons cited for expecting higher revenues are an increase in overall customer demand (63 percent) and the introduction of new product lines (46 percent). These results show that the U.S. manufacturing economy continues to gain strength, as only 56 percent of respondents cited an increase in overall customer demand in 2011.
Eighty-eight percent of respondents plan to increase or maintain the current level of their capital expenditures in 2012, with 41 percent expecting increases (this percentage is on par with 2011). Similar results were published by the ISM, with 42 percent of companies predicting an increase in capital expenditures for 2012.
The positive hiring trend of 2011 continues into 2012. 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).
The cost of raw materials remains the top overall concern for 51 percent of respondents, although fewer respondents selected this concern in the top spot than in 2011 (66 percent). In prior years, the cost of components closely followed the cost of raw materials as a top concern, but in 2012 respondents cited purchasing processes, such as efficiency, measurements and cost savings, as their second biggest concern.
According to Prime Advantage vice president, Sheila McDonald, this has to be taken in context, however.
“Compared to past years, it really represents an improvement,” she said in an interview.
When asked to indicate the top three cost pressures causing the most concern, respondents most frequently cited the cost of raw materials (indicated by 55 percent of respondents in the top position). While cost pressures on raw materials also caused the most concern in 2011, the number of respondents citing it as the top cost pressure concern declined from 76 percent in 2011 to 55 percent in 2012.
Ninety-six percent of respondents included this concern in 2011’s top three, but only 81 percent included it in the top three in 2012. Respondents indicated that cost pressures on base materials for components is their second highest concern, with 52 percent including it in the top three. Healthcare costs were the third most frequently chosen, with 49 percent including it in the top three, up from 37 percent in 2011.
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