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Tales of a struggling economy can be heard just about anywhere you turn, but Quality Magazine’s 9th Annual Capital Spending Survey proves that the manufacturing industry is standing strong. Spending is projected to hit $4.46 billion in 2009-rivaling numbers not seen since 2006. Of the $4.46 billion projected, 76% of that total, or approximately $3.4 billion, is slated for test, measurement and inspection equipment. Seventeen percent, or $744.97 million, will be spent on quality services and 7%, or $313.86 million, is slated for software spending.
Higher equipment costs have no doubt contributed to the expected increase in spending. The state of the U.S. dollar also has allowed many manufacturers to increase revenue by exporting-equaling more available capital to invest in software, equipment and related quality services. In addition, government assistance such as tax breaks and loan guarantees specifically for recapitalization of equipment help account for the total spending projection, which is an increase from last year’s total spending expectations of $3.2 billion.
Quality on the FrontlineAs manufacturers brace to spend more money, quality remains an important priority. Forty percent of those surveyed said their company’s approach to quality has increased importance compared to three years ago. Twenty-four percent said that they are aggressively pursuing top quality performance and that it is of highest importance. Forty-nine percent of respondents point to improvement in productivity as one of their largest motives for investments in products and services.
Equipment Reaches RecordPurchases of test, measurement and inspection equipment are expected to reach $3.4 billion next year. Contributing factors to the increase could include higher equipments costs, increased revenues and higher importance placed on productivity as mentioned earlier. Coordinate measurement equipment is by far the leading category in equipment expenditures at $1 billion, followed by product testing equipment at $553.5 million. The product testing category includes environmental test, leak test and torque test equipment.
Other categories of note include nondestructive testing equipment, which is expected to reach $441.5 million, gages and gaging systems projected at $388.18 million, and optical inspection and measurement equipment estimated at $323.35 million.
Of the $388.18 million projected spending on gages and gaging systems, approximately 32.8%, or $127.3 million, of that will be spent on handheld measuring tools including calipers, micrometers and indicators. Another $68.3 million is expected to be spent on fixture and special tooling gages.
Spending on optical inspection and measurement equipment will be dominated by machine vision systems and video measurement systems, which together will account for $160.7 million. Microscopes will account for $64 million.
Rounding out equipment expenses for 2009, manufacturers plan to spend $122.1 million on calibration equipment and $79.86 million on data collection devices.
Software Stays HealthyTwenty-six percent of survey respondents said they plan to purchase software applications in 2009. Quality software spending is expected to reach $313.86 million in 2009, an increase from $249.6 million spent in 2008.
Leading the category is data collection software; manufacturers plan to spend $42 million in 2009 on the software. Calibration software and document control/management software each top off at more than $37 million.
Seventy-two percent of manufacturers plan to spend $10,000 or more on software applications in 2009, and of that percentage, 21% plan to spend $50,000 or more on their software investments for the year.
Service Expenses to IncreaseSpending on services is expected to remain strong. Quality services include consulting and training services, as well as test, measurement and inspection services. Overall spending will increase by more than $88 million-reaching $744.97 million. Sixty-two percent of that amount, or $461.8 million, will go toward test, measurement and inspection services-an increase over 2008 projected spending, which was $410.86 million.
Calibration services lead the way in this category, making $279.39 million. Manufacturers expect to spend more than $100 million on lab testing and materials testing services combined.
And with an emphasis on productivity and scrap reduction as principal motives for investments, it is no surprise that spending on Six Sigma and lean manufacturing consulting and training services will reach $56 million combined.
Regionally SoundThe Midwest still maintains the largest piece of the regional spending pie and is expected to spend $1.8 billion in 2009. Forty-nine percent of the Midwest survey respondents said they plan on investing in gages and gaging systems for the upcoming year-and almost 45% of those will invest between $5,000 and $19,999 in gages and gaging systems.
Both the Northeast and South expect increases in spending for the coming year-$944.5 million and $1 billion, respectively. The West will see a decrease in spending compared with last year’s projections of $683 million. This year, manufacturers in the West plan to spend a more conservative $640.26 million.
Survey MethodologyQuality Magazine would like to thank all the respondents who participated in the 9th Annual Quality Capital Spending Survey. Questionnaires were mailed from July through August 2008 to managers and other professionals who have responsibility for quality and who hold the highest degree of equipment purchasing influence in a representative sample of 5,000 plants. Survey respondents were asked to share their spending plans for 2009. The deadline for responses was August 19, 2008.
Surveys were returned by 763 professionals for a response rate of 15%. Respondents were given a $1 coin as an incentive to complete the survey. To estimate 2009 spending data, responses were weighted to the number of plants in each industry served. This survey has a ±3.53% margin of error. Q