October 11, 2010
New Survey Shows Industrial Sector Moving Forward
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Jeff Rowe - Managing Editor

by Jeff Rowe - Contributing Editor
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NEW YORK, NY – October 4, 2010
–ThomasNet’s newest Industry Market Barometer (IMB) shows North America’s industrial/manufacturing sector surging forward, accelerating the momentum of its recovery with the promise of further expansion to come. Several key indicators all demonstrate a sector that’s “caught on fire”—taking into account more company growth, fewer business declines, a resumption of hiring, a winding down of layoffs, and new investments.

“Looking at three Industry Market Barometers over the last 18 months, we’ve seen a winning formula unfold. Those companies that reported deploying new strategies, such as new product development and online marketing, have propelled to growth mode. Buoyed by the results of their initiatives, these successful companies are moving to the next level, fueling industry’s recovery,” said Eileen Markowitz, President, ThomasNet.

ThomasNet’s IMB is a semi-annual survey of the buyers (engineers and purchasing agents) and sellers (owners, managers, sales and marketing executives) in the manufacturers, distributors and service companies that comprise the industrial sector. It measures company growth, decline, strategies used to succeed, and the segment outlook. This is the third consecutive IMB, tracking industrial companies since January 2009. Its data is unique as the majority of respondents are from small and midsized companies, mirroring the makeup of the industrial/manufacturing sector. More than 3,243 industry professionals participated in the latest IMB.

Quickening Growth; Fewer Declines

One key indicator is the dramatic increase in companies reporting growth over the past 18 months: For the period January through June 2009, during the heart of the national recession, only 17 percent of respondents reported growth.

The figures began to steadily improve, with 27 percent reporting growth for July through December 2009, building to the latest figures, where 45 percent of respondents say their business grew during the first half of 2010. Those reporting a decline in business performance is just as telling. Only 19 percent of respondents report decline over the first half of 2010, down significantly from 41 percent six months ago and 54 percent when the IMB was first fielded.

The respondents also report a sense of optimism. Indeed, 60 percent of respondents forecast growth for the remainder of 2010, and 83 percent of those that are already growing expect that expansion to continue.

New Job Creation; Layoffs Nearly Over

The growth of industrial companies is leading to the creation of new jobs, with 34 percent of respondents saying they plan to hire again this year. The kinds of jobs companies are adding also indicate more growth ahead. For example, 25 percent of firms with new openings are adding line workers, an indication of increased product demand. Twenty-three percent are adding sales and marketing staff, showing confidence in customer buying power. Nineteen percent are recruiting engineers, supporting stepped up product development.

While many companies are adding new jobs, the IMB also shows layoffs winding down. Nearly 60 percent of respondents plan to keep headcount level this year, and only eight percent plan to downsize.

New Investments

In previous Industry Market Barometers, ThomasNet found that companies were investing in areas such as product development in order to seed growth. Putting the recession behind them, they are ramping up for new growth, with investments in technology (40%), facilities/renovations (37%) and capital equipment (36%) for the second half of 2010. And, in the first half of 2011, technology is projected to be the dominant area of investment.

Strategies for Continued Success

Respondents also share their top four strategies for continued success: developing business in new US geographies, developing innovative products and services, pursuing business in new industries, and increasing online marketing.

“Our sales are up 37 percent over the same period last year, and we’ve set four successive months of sales records,” said Richard Rubin, President of Maxi Container, Detroit, a distributor of eco-friendly containers for industrial and commercial use.

“More attention to online marketing and sales has allowed us to penetrate new markets and seed demand for new products. I am optimistic that this approach will lead to our best year ever.”

Small Businesses Ignite Industry Growth

In addition to examining the industrial sector, the IMB also paints a picture of a growing small and midsize business (SMB) sector. The largest increase in business comes from these smaller companies.

“The success of smaller suppliers is revving up the industrial supply chain, and igniting industry as a whole,” said Eileen Markowitz. “Their growth is fueling the expansion of the companies that buy from them—leading to increased innovation, decreased time to market, and additional hiring.”

Much of that hiring will continue to remain in North America, where respondents’ operations are located. Only 27 percent report that they have manufacturing operations overseas—and of those, 47 percent plan to make no changes, and 18 percent are making a concerted effort to move manufacturing back to the US.

To view and download the full results of the Industry Market Barometer, go to:

About ThomasNet

ThomasNet helps companies in the industrial marketplace to increase sales, and serve their customers more efficiently.

For more than 110 years, ThomasNet (previously Thomas Register) has connected buyers and suppliers of industrial products and services to do business with one another. The company’s flagship offerings are
Web Solutions™ both designed to provide industrial buyers with all the tools and functionality they need to make intelligent buying decisions online. With more than two million visits per month, ThomasNet.com is the preferred resource for buyers and engineers from Fortune 500 companies, government agencies, the military, institutions and more looking to specify and purchase parts, materials, components, equipment and more.
Web Solutions helps industrial companies leverage Internet technology(ies) to improve the performance of their websites and achieve their business goals. At the core of each Web Solution is the Navigator Platform, Thomas Industrial Network’s proprietary technology.

Commentary By Jeffrey Rowe, Editor

As opposed to the constant and ongoing “doom and gloom” most media gives the manufacturing/industrial sector, this survey unveils some encouragement for the future.

The fact that the survey had over 3,000 respondents is impressive, as is the fact that a large percentage of them were in areas highly populated with manufacturers – the Midwest and Mid-Atlantic. Makes sense, as well as the fact that the majority of respondents were manufacturers and from small businesses, the latter being a good indicator on what’s really happening in the manufacturing sector.

The survey shows that there are some preliminary signs and momentum of a domestic manufacturing recovery trending toward further expansion to come. Almost half of the respondents said their businesses grew in the first half of 2010, over half forecast growth for the remainder of 2010, and just over 1% expected a decline.

Developing innovative, new products was one of the major factors and strategies for companies moving in a positive direction, and more than half considered this critical. Not too surprising, but the offshoot is that new product development will require an increase in designers, engineers, and line workers. The requirement for additional designers and engineers is, of course, welcome news for MCAD, other technical software, hardware, and associated service vendors.

Finally, in addition to showing that the manufacturing/industrial sector as a whole is growing, the fact that small- and mid-size businesses show the largest increases in business is very encouraging.

I encourage you to check out the full results of the survey so you can judge for yourself the current and possible future state of manufacturing. Based on the survey results, better days are possibly ahead, and that’s
really good news. Based on the survey, is a recovery in manufacturing guaranteed, absolute, or unbridled? Of course not, but there are definitely some encouraging signs.

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-- Jeff Rowe, MCADCafe.com Contributing Editor.

Review Article
  • Trade Barrier Exchange is a better indicator October 12, 2010
    Reviewed by 'Stephen J. Schoonmaker'
    Although the information on the manufacturing sector of the economy is welcome news, it is important that your readers understand that international trade barriers are, by far, the most important factor in whether the US will have any industrial/manufacturing capacity. And, trade barriers are traded on a Trade Barrier Exchange every day. This is called the currency market.
    The currency market is not realy a market. It is not "policed" in any way. Who would do it? The UN? Ha-ha. Currency trading is the playground of those with a hankering for cornering and manipulating markets. You buy a bunch of Brazilian money because you know somebody in the Brazilian government that knows that a good crop report is coming; the next day your buddy announces the good news, your Brazi-money goes up, and bingo, money for nothing. This happens every day. And whether GM builds a factory in Brazil, China, or Mexico is manipulated in the exact same way. GM's future choices are vastly influenced by their perception of the currency "market".
    Right now you can go to Yahoo Finance and plot the US Dollar against other currencies. You can do this against the Yen and the Euro and see what is happening with a somewhat-market-forces-based trade barrier (the values go up and down - but Japan in particular has admitting to manipulating it). Then you can plot against the Communist Chinese currency (Yuan/Remimbi). Here you will see a constant/controlled value within ranges that are "pegged". The US and Chinese government collude to make this so (US lends to China via Treasury Bills). The Chinese signed World Trade Organization papers to not peg their currency, but the plot does not lie (like they apparently do).
    Changes in these trade barriers completely dictate the future. They are trade barriers because they act precisely the same as tarriffs. When you exchange the money from one currency to the other; the value of one versus the other can give you different values (just like a tax). If you are China (like Japan and Korea before it), you make sure your currency is "weak". This means the dollar is "strong" (sounds good but its bad). Your dollars buy more if you travel to Asia (CEO's say yippee here since they love to travel over there and act important). But it makes their stuff cheap here, as expected (Investors say yippee here since closing factories and opening strip malls is what they really like).
    Why not show the plots of currency values on your web site? This is the real indicator for our industrial future. Interestingly, if every factory in America were to do a wildcat strike all at once, it would probably sink the dollar by 25% on the Trade Barrier Exchange. This would make imports 25% more expensive here, and ironically the GM executives would probably move production back to the US.
    Stephen J. Schoonmaker

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