Reports Show Improving Manufacturing Outlook

Nearly half of U.S. manufacturers surveyed plan to hire during the next six months, while strength in machine tool sales also bodes well, according to two new reports.

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Machine tool sales remain strong, while manufacturing executives generally are becoming more optimistic. Those were the messages conveyed in two upbeat reports on the manufacturing economy released early this week.

U.S. manufacturing technology consumption totaled $387.13 million in October, according to a report released on Dec. 13 by The Association For Manufacturing Technology (AMT, www.amtonline.org) the American Machine Tool Distributors’ Association (AMTDA, www.amtda.org). This total, which covers U.S. consumption data of domestic and imported machine tools and related equipment, was down by 2.5 percent from September, but up by 154.9 percent when compared with the total of $151.86 million reported for October 2009. With a year-to-date total of $2.477 billion, 2010 is up by 83.2 percent, compared with 2009.

These numbers and all data in the report are based on the totals of actual data reported by companies participating in the United States Manufacturing Technology Consumption (USMTC)  program, the associations said.

Unprecedented

“Never in the history of the USMTC have we seen a post-IMTS October rival September so closely,” noted Douglas K. Woods, President of AMT, in reference to the International Manufacturing Technology Show (IMTS) show held biennially in Chicago. “Increased Section 179 expensing and 50 percent bonus depreciation enacted in late September helped offset the declines we normally see after a show,” Woods said. “Looking ahead, enactment of the pending tax package would give U.S. manufacturers a big boost heading into the New Year.”

In another report released separately on Dec. 13, Grant Thornton LLP (www.GrantThornton.com) said that a survey conducted by the company in November shows that senior management at U.S. manufacturing companies is once again optimistic. Nearly half (49 percent) believe that the U.S. economy will improve in the next six months, and the same number (49 percent) say they plan to increase staff during the same period. Manufacturing leaders are also optimistic about their own businesses, with 81percent feeling optimistic about their companies’ growth over the next six months.

“This is consistent with what manufacturers are telling us as we are out in the marketplace talking with them” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products. “Despite reduced staffing levels and stricter customer mandates, manufacturers have improved their performance over the past three years in areas such as production cycle time, on-time delivery rate, scrap and rework, quality and warranty costs.

Positive signs

“In addition, the uncertainty surrounding some major concerns (tax rates, R&D credit extension, environmental standards, and the like) that paralyzed businesses over the past two years have been partially resolved, which sets the table for stable growth in manufacturing over the next two years,” Gruenes continued. “This, coupled with the highest level of cash on corporate balance sheets in over 50 years, bodes well for increased investment by the industry. In fact, 47 percent of manufacturers expect to increase purchases of capital equipment, 47 percent expect to embark upon process improvement initiatives and 37 percent expect to spend on information technology.”

The Grant Thornton Business Optimism Index is a quarterly survey of U.S. business leaders conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd. The survey was conducted Nov. 3-16, with 63 senior executives from U.S. manufacturing companies.

American Machine Tool Distributors’ Association
www.amtda.org

The Association For Manufacturing Technology
www.amtonline.org

Grant Thornton LLP
www.GrantThornton.com

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