Although the holiday rush is over, this month is still the height of shopping season for quality professionals. Thirty-one percent of respondents plan to make their first equipment purchase for this year in January, according to our 15th Annual Spending Survey.
The survey is conducted annually to determine what readers will be spending on capital equipment, software and services. The goals are to determine how the projected budget compares to actual spending, how the spending patterns change from year to year, spending on equipment overall, and the breakdown of spending for each category of equipment.
The top three spending categories were general test, measurement and inspection equipment (69%); gages and gaging systems (65%); and test and inspection services (53%).
Why invest in new equipment? A top reason, cited by 69%, was reducing scrap and rework.
Half of respondents also said they would invest in new equipment to ramp up for a new product, up from 42% last year.
As with years past, the importance of quality seems to be recognized. About half (49%) said the importance of quality has increased compared to a year ago. Though this is down from the 57% of respondents in 2013 who said it was more important, it seems people are already acknowledging the importance so it wouldn’t necessarily increase each year.
In addition, most respondents said they have been spending approximately what they budgeted for this fiscal year and the previous one. About half expect their spending to remain the same, while 37% expect an increase. Of those, they expect an average increase of 21%.
About three-quarters of respondents worked in a facility that did assembly, followed by other manufacturing operations such as drilling, milling, forming and fabrication, welding, grinding, finishing, turning, stamping, injection molding and gear cutting.
Respondents on average had almost 500 employees at their facility, up from last year’s mean of 428. They are based around the country, with the Midwest topping the list of locations, with 37%, followed by the South at 27%, the Northeast at 19%, and the West at 17%.
These facilities manufacture a variety of parts, with aerospace products at the top at 17%. This was followed by fabricated metal product manufacturing, motor vehicle parts, plastics and rubber, medical equipment, electrical equipment, computer and electronic parts, primary metal, machinery, energy equipment, other transportation equipment, and navigation and control instruments.
As for the respondents themselves, 42% work in quality management and 22% in quality engineering, followed by 13% in engineering/technical job functions, 8% in manufacturing engineering, 6% in manufacturing management/operations, 4% in corporate management, and 1% in research and development.
Projected vs. actual spending last year was the same for 65% of respondents. For the 18% that spent more than projected, they were over budget by an average of about 19%. For the 17% that were under budget, they were under by an average of 26%.
For this year’s spending, 67% are spending as projected. Those who spent more and less were about evenly split. Sixteen percent are spending more than anticipated, by an average of about 12%, while 17% are spending less, by an average of 26%.
And looking ahead to this year’s spending, about half plan to spend about the same. A little more than a third (37%) plan to spend more, by an average of about 21%. And only 14% plan to spend less, by an average of 22%.
So when will all this spending take place? Although 10% say they started spending for this year in 2014, the bulk of the spending will occur in the early part of the year, with 31% planning to make their first fiscal year 2015 purchase this month, followed by 16% in February, 15% in March, and 22% in April to June. By then, people will mainly have started spending, as the percent that make their first purchase in July to September drops to just 4%.
Why invest in new equipment? One of the top reasons, cited by 69%, was reducing scrap and rework. This was a jump from 61% last year. Half of respondents also said they would invest in new equipment to ramp up for a new product, up from 42% last year.
Improving productivity was cited by 61%, and reducing costs was also a top reason, cited by 56%. Increasing production capacity, improving cycle time, and tighter part quality standards were the other top reasons for investment. Tighter part quality standards were listed by 36% as a reason for investment, down from 42% last year. Perhaps respondents know that quality part standards are already high.
Equipment Spending Explained
The big question is: What will respondents be spending money on? The top three categories were general test, measurement and inspection equipment (69%); gages and gaging systems (65%); and test and inspection services (53%). These have remained consistent with last year’s responses. Product testing equipment jumped to 49%, up from 36% last year.
Other categories, though smaller, continue to steadily grow, including software and optical inspection. Software spending was anticipated by 41%, up from 35% last year.
About one-third (33%) plan to purchase consulting services this year, following a jump in 2013 when it doubled to 33% from 2012’s 17%. Nondestructive testing equipment continues to grow, with 29% planning to purchase this year, following a big increase in 2013 as well. Materials test equipment paralleled this same rise, with 27% planning to purchase this type of equipment this year, up from 24% the previous year, and 13% the year before.
Planned Product Budgets
As for the planned budget for each product category, many seem to be cyclical, rising every other year, with the exception of product testing equipment that continues to steadily grow. The average budget allocated for gages and gaging systems was also on the rise this year.
CMMs are obviously not an every-year type of purchase, but the budget for this line of equipment was higher in 2014 than it has been in years past, and it is expected to remain high. The same holds true for form and surface measurement: the 2014 budget was higher than it has been and is expected to remain the same this year. Of that category, surface measurement is the bulk of the spending, although expected spending on cylindricity and roundness testing is rising, to 38% of the form and surface measurement category.
As for the ever-popular category of gages, the average expected budget for next year is about $46,000 and the majority of respondents expect it to remain at this level this year. Of that gaging budget, a third plan to purchase handheld measuring tools and 18% on fixtures and special tooling gages. The remainder of the gaging budget is split between the other categories, with each garnering less than 10% of the budget.
The average current fiscal year budget for optical inspection is just under $37,000, and expected to remain stable this year. Breaking down this category further, optical comparators and machine vision systems are expected to receive 28% of this optical inspection budget.
As for product testing equipment, the average current fiscal year budget is almost $63,000, with two-thirds of respondents anticipating the same this year. The 2015 budget for product testing equipment will be split between environmental test and torque test equipment, with leak testing taking in the remaining 23%.
Materials testing equipment spending was almost $43,000 in 2014, and three-quarters of respondents expect this to remain the same for this year. This category showed a lot of cyclical spending, with this year’s spending projected to be 20% for both hardness testing and chemical analysis and spectroscopy.
For nondestructive testing, the average current fiscal year budget is just over $30,000, with almost half projecting an increase in the next fiscal year. The NDT categories are also cyclical, with ultrasonic testing consistently the largest or one of the largest areas. Next year ultrasonic testing is projected to be about 25% of this category.
The budget for general-use test, measurement and inspection equipment is just over $17,000, and two-thirds of respondents predict this to remain the same this year. Of this category, 61% of the budget is expected to go towards calibration equipment. The budget for this category has remained stable.
The software category is almost $13,000, and about half expect this to increase or remain the same for 2015. Of the software budget, the largest proportion is expected to go towards calibration, data collection and document control/management.
The average fiscal year budget for consulting and training services is just over $22,000, and the majority expects this to remain the same this year. Of this category, a quarter of the budget will be spending on certification and registration, and about 12 to 15% is expected to be spent on GD&T and lean manufacturing.
The average fiscal year budget for test, measurement and inspection services is $19,521, and a large majority (86%) expects this to remain the same this year. Almost half of this budget will go towards calibration services, with the remaining categories each expected to receive about 10% of this budget.
BNP Media’s Market Research division conducted the survey in conjunction with Quality. The web-based survey was sent to a systematic random sample of Quality’ssubscribers and fielded October 13 to November 3, 2014. The response rate was 2.11%, with 321 useable returns. Thank you to all those who participated in this year’s survey.