CHICAGO- Prime Advantage, the leading buying consortium for midsized manufacturers, announced the findings of its tenth semi-annual Group Outlook Survey, revealing financial projections and top concerns of its member companies for the second half of 2012. The majority of surveyed manufacturers report healthy revenue projections, strong hiring and capital spending plans. However, for a small portion of respondents these plans may see delays due to uncertainty about the results of the federal elections.

Study Highlights

• 48% of respondents expect to see their revenues increase from the first half of 2012
• Overall increase in customer demand was named the primary reason for the revenue growth in 58% of responses
• The cost pressures from raw materials continue to lessen
• Midsized manufacturing companies expect to increase new hires at a greater rate in the second half of 2012, as compared to the same period in 2011
• Healthcare costs have become the second highest cost pressure concern for manufacturers

Companies are showing more optimism about revenues for the second half of 2012 as compared to several past periods: 48% of respondents expect their revenues to increase in the second half of 2012 as compared to 40% in 2H 2011, and 36% in 2H 2010. An overall increase in customer demand was named the primary reason for the revenue growth in 58% of cases, followed by the introduction of new product lines (32%).

Capital spending is also set to increase for one-third of polled companies in the 2H 2012, an upward trend from a year ago, when only one-quarter of respondents budgeted an increase in capital spending.

Employment

Overall, 90 % of polled companies plan to keep or increase the number of domestic employees, and 39 % expect to fill open positions in 2012, which are higher rates when compared to the same period a year ago (35%). On average, more medium-sized manufacturing companies expect to hire in the second half of 2012 (39%) as compared to the same period in 2011 (36 %).

Cost Pressures: Raw Materials Decline, Healthcare Rises
When asked to indicate the top three cost pressures causing the most concern, respondents most frequently cited the cost of raw materials. However, for the past three surveys, manufacturers have expressed lessening concern about raw material costs, relative to other cost pressures, with only 76 % of respondents including raw materials in their top three choices this time (down from 81% in the 1H'12 Group Outlook survey study and 96 % in the 1H’11 study).

Yet over the past year, respondents have expressed more intense concern about cost pressure from healthcare benefits. The cost of medical care was voted the second greatest cost concern for manufacturers by nearly 60 % of respondents. Only a year ago, concerns about healthcare costs were in fourth place.

Federal Elections

Of those who hold an opinion about whether the uncertainty with federal elections will cause a delay to business processes, 29% and 33% are seeing delays in employment and capital spending respectively. Similar to AP-GfK polling, we asked respondents about the level of impact the outcome of the Presidential election could have on the economy and unemployment. A majority, 55% of respondents, and almost on par with a recent AP-GfK survey (48%), believed the impact on the economy would be felt greatly and 43% (40% in GfK) predicted an impact on unemployment.

“We are looking at a stronger 2012 year-end for midsize manufacturers than a year ago,” said Louise O’Sullivan, founder, president and CEO of Prime Advantage. “Today, while there are clearly mixed sentiments about the economy, more surveyed midsize manufacturers expect increases in revenues, capital investments, and hiring than a year ago - all great indicators of a continued recovery for the manufacturing economy.”

Methodology: In August 2012, Prime Advantage surveyed executives and purchasing professionals that represent durable goods manufacturing firms, with annual revenues ranging between $10 million and $4 billion, of which the majority ranges between $20 million and $500 million. The survey received a 16% response rate from 518 top professionals representing U.S.-based manufacturers in more than 25 different industries, including commercial foodservice, packaging, truck and trailer, material handling, food processing and construction. Prime Advantage has polled its membership for their impressions of current economic conditions on a semi-annual basis since February 2008.

To request a copy of the Prime Advantage 2012 2H Group Outlook Survey visit: www.primeadvantage.com/groupoutlook/.

*Graphics of survey data available upon request.