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Q2 '11 MFGWatch Survey

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In the latest MFGWatch Quarterly Survey of North American Manufacturers, conducted by MFG.com, encouraging activity in the second quarter of 2011 was mixed with trepidation for the last half of the year, as economic concerns have all manufacturers in a collective 'wait and see' mode.

The  latest MFGWatch survey was conducted in mid-July among North American Buy-side and Supply-side manufacturers across various industrial supply and demand chains.

The highlights include:

  • Job Shops and Contract Manufacturers See Improving Business Conditions - North American job shops and contact manufacturers have reported significant improvements in business conditions. While the latest responses show a slight drop (-3%) from the previous quarter, the 43% reporting positive business improvements maintains levels over 40% for the fifth straight quarter.
  • And Activity Is Healthy - While the number of suppliers reporting overall increased inquiries for business dropped to 43% (from 52% in the last quarter), nearly 80% in total say that inquiries rose or stayed the same in Q2 ’11 – indicating a welcome level of stability in sector that needs just that to continue its recovery.
 

North American Manufacturing Supplier Business Conditions Q2 '11 (Click to Enlarge)

  • Hiring Among Job Shops and Contract Manufacturers Rises Significantly, Too - In the most encouraging and surprising response in this MFGWatch survey, job shops and contract manufacturers report a level of hiring not seen since the survey was launched in Q3 ’09. The 36% reporting they had increased staff also rebounds from the drop shown in the last quarter, when that number slipped from the previous high of 31% in Q4 ’10.
 

North American Manufacturing Product Manufacturer Hiring Conditions Q2 '11 (click to enlarge)

  • Reshoring Among Product Manufacturers Drops - Fewer product manufacturing companies report repatriating production into or closer to North America than at any time since Q1 ’10, significantly off from the 27% that reported examining reshoring in the last quarter. If any response this quarter remains most affected by the crises in Japan in early 2011, it may be this one – to shore up supply chains impacted by the Japanese disasters, it is likely that these companies focused attention on recovery based on familiar logistics channels in lieu of any reshoring plans. Still, this downward trend over the last 3 quarters presents a clear cooling down in the reshoring phenomenon entering into the last half of 2011.
  • But Reshoring Isn't Dead Yet - Despite the cooling off of actual reshoring in Q2, the number of North American product manufacturing companies planning to reshore production in the coming months rose back to the average maintained since Q1 ’10 and offsetting the downward trend established by buyers that had actually repatriated work in the past 3 months. These consistent expectations present a startling ‘churn’ in supply chain management and stability, and present real opportunity for US and North American supplier manufacturers. However, as the percentage of manufacturers actually reshoring production to North America continues to fall each quarter it is still uncertain whether returning production is a trend gaining momentum or something less.
Product Manufacturers Report High Levels of Reshoring Expected in Q3

Product Manufacturers Projected Reshoring Activity For Q3 '11 (Click to Enlarge)

  • Manufacturing Closest To 'Markets Of Consumption' The New Reshoring?- Regardless of market location, a substantial number of North American sourcing professionals are adopting strategies to produce within or closer to the markets in which they sell. With over a third of manufacturers pursuing this strategy (35%), this represents an important acceptance of a shifting global manufacturing environment based on a lower carbon footprint, reduced logistics costs, improved market response, and more manageable production and supply chains.
  • Job Shops and Contract Manufacturers Are Reluctant To Export Into Emerging Markets - By large margins, job shops and contract manufacturing companies have expressed a reluctance to export or enter the global manufacturing ecosystem. Over half (52%) say they are not considering exporting products to other markets. And of those remaining, few are looking to expansion or growth into foreign markets. This lack of activity underlines the need to promote and encourage the opportunities exporting offers to smaller North American manufacturers, particularly in the face of record trade deficits.

For the complete results and more information on North American Manufacturing, see the MFGWatch Survey Results Page atMFG.com.

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