Special Report: Gaining Ground
After a tumultuous couple of years, the quality industry is headed in the right direction and starting to gain ground, albeit slowly.
Respondents to Quality Magazine’s 11th Annual Spending Study estimate the quality marketplace to be $2.57 billion in the upcoming year. This equates to an average of $66,487 per plant, nearly a 19% increase per plant vs. a year ago.
When asked how their plants’ projected spending for quality assurance and control equipment, systems, software and services in 2011 compares to 2010, 52% claim that they’re holding the line on budgets, while another 36% will increase quality budgets in the upcoming year. Only 12% of respondents expect a decrease in budgets in the upcoming year, and those decreases will be significant with 36% of respondents saying that cuts will be more than 25% of the previous year’s budgets.
Faced with the new normal, manufacturers will continue to do more work with less in 2011. The number one motive behind quality investments is improving productivity, according to 60% of respondents. This is followed by reducing scrap and rework, 55%; reducing costs, 50%; increasing production capacity and tighter part quality standards, both at 42%.
In the past nearly one of the principal motives behind quality investments-to ramp-up for new products-hovered near 50%, but this year it dropped 8%, a sign that getting new product to market is no longer at the top of the priority list.
While spending grows slowly, quality remains a priority for today’s manufacturers. When compared to three years ago, 29% said quality is of highest importance and they are aggressively pursuing top quality performance. Another 44% said quality has increased importance, and 23% indicated it has the same level of importance. Only 4% said quality is less important today than it was three years ago.
For those companies that were under budget, a quarter of the companies were under budget by 5% or less, while one-third of companies were under budget by more than 25%.
The next two CMM categories, portable CMMs and manual CMMs, expect to generate $112.1 million and $96.5 million, respectively.
Product testing equipment also looks to be an area of substantial interest with spending in the upcoming year to top out at $403.5 million.
Every shop has them-gages and gaging systems. This area looks to increase 13.1% from last year for a total of $331.5 million. Handheld measuring tools, the workhorses of the industry, are projected to be at $81.2 million, a 3.3% increase over the previous year’s spending. Fixture and special tooling gages spending is projected to be $51.1 million.
Estimates for optical inspection and measurement equipment are $210.9 million for the upcoming year. The top expenditure in this category, machine vision systems, expects to garner $55.7 million, a 28.3% jump from 2010 numbers. This is followed by video measurement systems, $47.2 million, and optical comparators, $44.9 million, a 3.5% increase from a year ago.
As in years past, data collection tops the list of software expenditures at $23.1 million. This is followed by enterprisewide quality software, $15.5 million; CMM programming and simulation software, $13.6 million; statistical process control (SPC) software, $10.3 million; and document control/management, $10.1 million.
In three of the four regions of the country-the Midwest, West and South-CMM programming and simulation is the number one projected software expenditure. This makes sense given that all regions are heavily investing in CMMs in the upcoming year.
In the Northeast, CMM programming comes in third place, behind enterprisewide quality software and calibration software.
When compared to three years ago, nearly 30% of respondents at these companies say that quality today is of the highest importance; 45.8% say that it has increased importance; 20.9% indicate quality is at about the same level of importance and 3.9% indicate it is of decreased importance.
When asked to compare their 2011 budgets vs. their 2010 budgets for quality assurance and control equipment, systems, software and services, 35.1% indicated budgets will increase in the coming year, 52% indicated budgets will remain the same and 12.8% indicated spending will decrease.
For those looking at an increase, 41.7% of respondents said the increase will be in the 6% to 10% range.
The principal motives behind the budget increase are to improve productivity (65.3%), reduce scrap and rework (57.1%), tighter part quality standards (55.1%) and increase production capacity (51%). All of these numbers are slightly higher than the industry average.
When it comes to test, measurement and inspection equipment, this group is looking to spend $534.8 million with the largest amount of dollars ($166 million) being devoted to CMMs. The single largest expenditure in this category is CNC CMMs at an average of $67.7 million.
Like most companies in this year’s survey, manufacturers with 100 to 249 employees are looking to invest a good amount of resources into gages and gaging systems. Overall, $86.9 million will go toward gages and gaging systems, and 22.4% of that will be spent on handheld measuring tools.
Breaking down the $109.8 million allocated for quality services, companies of this size will spend $71.5 million on test, measurement and inspection services, while another $38.3 million will go toward consulting and training services.
Calibration services is the largest category under the test, measurement and inspection services umbrella at $42.1 million. The second largest category-lab testing-lags well behind calibration services at $10.9 million.
The largest category under the consulting and training services umbrella is certification and registration ($13.1 million) for standards such as ISO 9000 and TS 16949. This is followed by quality management ($5.4 million) and lean manufacturing ($5.2 million).
When it comes to software, there is no runaway expenditure for companies with 100 to 249 employees. Of the $39.1 million budgeted for software, $6.2 million will go toward data collection, $5.3 million will go toward enterprisewide quality software and $4.1 million will go toward CMM programming and simulation software.
On the heels of a shaky 2010, all indications are that 2011 will be a better year. Conversations with many in the industry already point to increased demand for products, software and services in the second half of this year, which will carry over into 2011 and-barring any unforeseen circumstances-well into the future.
Surveys were returned by 742 professionals for a response rate of 5%. Respondents had the opportunity to win one of three $100 American Express gift cards as an incentive to complete the survey. To estimate 2011 spending data, responses were weighted to the number of plants in each industry served. This survey has a ±3.57% margin or error.
Quality’s 2011 Forecast: $2.57 billion
Respondents to Quality Magazine’s 11th Annual Spending Study estimate the quality marketplace to be $2.57 billion in the upcoming year. This equates to an average of $66,487 per plant, nearly a 19% increase per plant vs. a year ago.
When asked how their plants’ projected spending for quality assurance and control equipment, systems, software and services in 2011 compares to 2010, 52% claim that they’re holding the line on budgets, while another 36% will increase quality budgets in the upcoming year. Only 12% of respondents expect a decrease in budgets in the upcoming year, and those decreases will be significant with 36% of respondents saying that cuts will be more than 25% of the previous year’s budgets.
Faced with the new normal, manufacturers will continue to do more work with less in 2011. The number one motive behind quality investments is improving productivity, according to 60% of respondents. This is followed by reducing scrap and rework, 55%; reducing costs, 50%; increasing production capacity and tighter part quality standards, both at 42%.
In the past nearly one of the principal motives behind quality investments-to ramp-up for new products-hovered near 50%, but this year it dropped 8%, a sign that getting new product to market is no longer at the top of the priority list.
While spending grows slowly, quality remains a priority for today’s manufacturers. When compared to three years ago, 29% said quality is of highest importance and they are aggressively pursuing top quality performance. Another 44% said quality has increased importance, and 23% indicated it has the same level of importance. Only 4% said quality is less important today than it was three years ago.
Spending by Size
Projected vs. reality
Taking a look back at 2009 projections of 2010 budgets vs. 2010 actual spending for quality assurance and control equipment, systems software and services, 69% of respondents’ projected budgets were on par with what was actually spent. Fifteen percent were over budget, which was up 7% from the previous year. And 16% were under budget, which is down 14% from the previous year, indicating that budgets drastically cut because of the economic conditions have loosened up a bit.For those companies that were under budget, a quarter of the companies were under budget by 5% or less, while one-third of companies were under budget by more than 25%.
Compared to three years ago, how would you describe
your company’s approach to quality today?
Equipment Expenditures
The majority of budgets are being spent on test, measurement and inspection equipment, to the tune of $2.1 billion. Coordinate measuring machines (CMMs) look to be the largest capital equipment expenditure next year at $622.7 million, a 66% increase from 2010 spending. Computer numerical control (CNC) CMMs are projected to increase an amazing 87% to $249 million in 2011. The majority of these machines will be purchased in the Midwest at a rate of $165.2 million.The next two CMM categories, portable CMMs and manual CMMs, expect to generate $112.1 million and $96.5 million, respectively.
Product testing equipment also looks to be an area of substantial interest with spending in the upcoming year to top out at $403.5 million.
Every shop has them-gages and gaging systems. This area looks to increase 13.1% from last year for a total of $331.5 million. Handheld measuring tools, the workhorses of the industry, are projected to be at $81.2 million, a 3.3% increase over the previous year’s spending. Fixture and special tooling gages spending is projected to be $51.1 million.
Estimates for optical inspection and measurement equipment are $210.9 million for the upcoming year. The top expenditure in this category, machine vision systems, expects to garner $55.7 million, a 28.3% jump from 2010 numbers. This is followed by video measurement systems, $47.2 million, and optical comparators, $44.9 million, a 3.5% increase from a year ago.
Where the Dollars will be Spent
Software Sales
When it comes to software, 23% of survey respondents said they plan to make a purchase in 2011, approximately an 11% increase from the previous year’s numbers. While more people plan on purchasing software, this area expects to see a $26.4 million decrease in spending from the previous year for a total of $131 million.As in years past, data collection tops the list of software expenditures at $23.1 million. This is followed by enterprisewide quality software, $15.5 million; CMM programming and simulation software, $13.6 million; statistical process control (SPC) software, $10.3 million; and document control/management, $10.1 million.
In three of the four regions of the country-the Midwest, West and South-CMM programming and simulation is the number one projected software expenditure. This makes sense given that all regions are heavily investing in CMMs in the upcoming year.
In the Northeast, CMM programming comes in third place, behind enterprisewide quality software and calibration software.
Top 10 Planned Equipment Purchases*
The Typical Company
The largest concentration of respondents (26%) to this year’s survey are in companies with 100 to 249 employees. The estimated quality market size for these companies in 2011 is $683.6 million. Let’s take a closer look at the spending habits of companies of this size.When compared to three years ago, nearly 30% of respondents at these companies say that quality today is of the highest importance; 45.8% say that it has increased importance; 20.9% indicate quality is at about the same level of importance and 3.9% indicate it is of decreased importance.
When asked to compare their 2011 budgets vs. their 2010 budgets for quality assurance and control equipment, systems, software and services, 35.1% indicated budgets will increase in the coming year, 52% indicated budgets will remain the same and 12.8% indicated spending will decrease.
For those looking at an increase, 41.7% of respondents said the increase will be in the 6% to 10% range.
The principal motives behind the budget increase are to improve productivity (65.3%), reduce scrap and rework (57.1%), tighter part quality standards (55.1%) and increase production capacity (51%). All of these numbers are slightly higher than the industry average.
When it comes to test, measurement and inspection equipment, this group is looking to spend $534.8 million with the largest amount of dollars ($166 million) being devoted to CMMs. The single largest expenditure in this category is CNC CMMs at an average of $67.7 million.
Like most companies in this year’s survey, manufacturers with 100 to 249 employees are looking to invest a good amount of resources into gages and gaging systems. Overall, $86.9 million will go toward gages and gaging systems, and 22.4% of that will be spent on handheld measuring tools.
Breaking down the $109.8 million allocated for quality services, companies of this size will spend $71.5 million on test, measurement and inspection services, while another $38.3 million will go toward consulting and training services.
Calibration services is the largest category under the test, measurement and inspection services umbrella at $42.1 million. The second largest category-lab testing-lags well behind calibration services at $10.9 million.
The largest category under the consulting and training services umbrella is certification and registration ($13.1 million) for standards such as ISO 9000 and TS 16949. This is followed by quality management ($5.4 million) and lean manufacturing ($5.2 million).
When it comes to software, there is no runaway expenditure for companies with 100 to 249 employees. Of the $39.1 million budgeted for software, $6.2 million will go toward data collection, $5.3 million will go toward enterprisewide quality software and $4.1 million will go toward CMM programming and simulation software.
On the heels of a shaky 2010, all indications are that 2011 will be a better year. Conversations with many in the industry already point to increased demand for products, software and services in the second half of this year, which will carry over into 2011 and-barring any unforeseen circumstances-well into the future.
Manufacturing Operations Performed (Percent of Respondents)
Survey Methodology
Quality Magazine would like to thank all of the respondents who participated in the 11th Annual Quality Spending Study. Questionnaires were e-mailed in late July 2010 to managers and other professionals who have responsibility for quality and hold the higher degree of equipment purchasing influence in a representative sample of plants. Survey respondents were asked to share their spending plans for 2011. The deadline for responses was August 9, 2010.Surveys were returned by 742 professionals for a response rate of 5%. Respondents had the opportunity to win one of three $100 American Express gift cards as an incentive to complete the survey. To estimate 2011 spending data, responses were weighted to the number of plants in each industry served. This survey has a ±3.57% margin or error.
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