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MFGWatch Survey: Supply Chain Risks, Backshoring Rise; Small Manufacturers Add Jobs, Large Manufacturers Cut

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MFG.com has conducted the latest MFGWatch survey of North American manufacturers (select this link for the complete survey results and a downloadable PDF). The survey focused on their activities in the second quarter of 2010, and on their expectations for the third quarter.

Highlights of this most recent survey include a significant rise in the number of large North American manufacturers that have seen significant supply chain risks in the second quarter and a rise in the number of buyer manufacturers that are planning to investigate backshoring of production back from low-cost countries. Also of note, while larger manufacturers in the region have indicated they've shed jobs since April small supplier manufacturers say they've added jobs during the same period.

Asked of BUYERS (Large North American Manufacturers)

How has/will your company adjust staff?

Buy_jobs

Analysis: North American Buyers in Q2 '10, appear to have reverted to the employment activity numbers of Q3 '09, with 23% indicating they've decreased staff at their companies (compared to just 10% in Q1). The number of these companies that increased staff in Q2 fell to 20% from 27% in Q1.

In the past 3 months, has your company experienced a significant supply chain disruption that caused you to investigate or select new suppliers?

Buy_SCD

Analysis: For the third quarter in a row, many more Large Manufacturers in North America have experienced a significant supply chain disruption and sought relief from new suppliers. In Q2 '10, over half (51%) stated they've experience significant disruptions, up from 44% in Q1 '10.

Buyer_Did_BackIn the past 3 months, has your company returned any portion of its production into or closer to North America from a low-cost country?

Analysis: A significantly larger number of Large Manufacturers in North America have either repatriated production, or moved production closer to North America. For Q2 '10, 21% indicated a contraction of their supply chain, nearly double the number (12%) from Q1 '10. While this may appear to bode well for many American manufacturing suppliers and small manufacturers, much more activity must take place for meaningful economic or employment improvements to be seen.

Buyer_Will_BackIn the next 3 months, will your company be researching bringing any portion of its production into or closer to North America from a low-cost country?

Analysis: North American OEMs & Large Manufacturers say that they expect to research bringing production closer to North America in the coming months. A formidable 38% of those surveyed say they will begin investigating near-shore options for production currently placed in low-cost countries (up from 31% in Q1 '10).

 

Asked of SUPPLIERS (Small/Medium North American Manufacturers)

How has/will your company adjust staff?

Supply_Jobs

Analysis: While large manufacturers appear to be shedding jobs, Small/Medium Manufacturers show improvement in employment with 29% indicating they've hired for their businesses. For the third quarter in a row, this number has trended up (from 10% in Q4 '09 and 23% in Q1 '10). One likely explanation for suppliers' upward trend (compared to more job losses with larger manufacturers) is outsourcing of production to smaller manufacturers.

In the past 3 months has your company received queries or actual work from companies suffering from supply chain disruptions and in need of immediate assistance?

Supply_SCD

Analysis: North American Suppliers have seen increased activity from buyers that are suffering from supply chain disruptions. A full 42% responded that they've received queries/work from buyers under duress, compared to 36% in Q1 '10.

MFGWatch is a quarterly, recurring survey conducted by MFG.com of nearly 500 North American Suppliers and OEMs/Buyers of manufacturing goods and services. The survey is conducted via e-mail from a sampling of MFG.com member companies, and is intended to reflect projected (intent) and reported (actual) behaviors of companies in the North American manufacturing sector. MFGWatch data and its analysis are provided to share openly – however, MFG.com does ask for responsible acknowledgement as the source of MFGWatch data. Industries represented include aerospace/aeronautics, automotive, medical, defense and consumer products manufacturers.

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