It’s time to invest.
According to our 21st Annual Quality Spending Survey, respondents are interested in purchasing new equipment, software and services now.
Last year at this time, respondents were worried about family members contracting COVID-19 as well as about the current economy. Those fears have declined this year.
While respondents plan to invest similar amounts across the categories of quality equipment, software and services, their concerns have changed. This survey’s respondents were less concerned about contracting COVID-19 and more concerned about the supply chain disruptions, for example.
Clear Seas Research, in conjunction with Quality, conducted the 21st Annual Spending Study to provide information on the spending for capital equipment, software and services. The survey was done to examine actual spending vs. projected for quality assurance equipment, systems, software and services. We also wanted to determine the change in quality professionals’ approach to quality today as compared to a year ago as well as the change in allocation of budget within specific categories of quality equipment and services. As with so many things, timing is everything. The survey was fielded September 30 to October 7, 2021.
Let’s take a look at what your peers are purchasing and planning to purchase, when they will do so, and why.
The top products produced at respondents’ companies include aerospace products/parts manufacturing, plastics and rubber products manufacturing, fabricated metal product manufacturing, miscellaneous manufacturing, and medical equipment and supplies manufacturing.
Before we get into the spending plans, let’s take a look at who responded.
The top manufacturing operation performed at respondents’ location is assembly, done at 70% of locations. Machining comes in next, performed at 56% of locations, followed with drilling, milling, welding, grinding and finishing. Additive manufacturing was performed at 20% of locations.
In terms of company size, three-quarters of company locations employ fewer than 250 employees at that location. The mean was 402 employees.
Half of respondents work in the Midwest, with the rest in the South (19%), the Northeast (16%), and West (15%).
What are they manufacturing? Aerospace products/parts manufacturing tops the list (15%) followed by plastics and rubber products manufacturing, fabricated metal product manufacturing, miscellaneous manufacturing, and medical equipment and supplies manufacturing.
Quality management, quality engineering, and manufacturing management/operations are the primary job functions for respondents. The list also includes manufacturing engineering, corporate management, research & development, technical engineering, and purchasing.
In looking at the fiscal year 2022 budget, as of the survey dates (September 30-October 7, 2021), over half of respondents report their 2022 budget had already been started. At that time, only 11% had finalized the 2022 budget—and 23% hadn’t started discussing it yet. Sixty-seven percent said it would be finalized in 2021.
The top concerns for about half or more of respondents are supply chain interruptions and skilled labor shortages.
The business outlook has changed from last year’s survey. Supply chain interruptions are now the top concern, with 59% citing this, up from 43% last year. Next is skilled labor shortages, cited by 47% this year and 43% last year. The current economy is still a concern, but not as much. Thirty-six percent were concerned this year, down from last year’s 50%. Things are looking up.
In addition to the economy, concerns about COVID have also lessened. In each of the following categories, respondents in 2021 were less concerned than the year before:
another wave of COVID-19 impacting business; friends/family becoming infected by COVID-19; business stability for next 12 months; employees not showing up for work; achieving business goals over next three months; achieving business goals over next six months; becoming personally infected by COVID-19; and IT cybersecurity with remote employees.
Among respondents who indicated an increase in their 2022 quality assurance/equipment/service budget, their primary motives behind investments include improving productivity, increasing production capacity, reducing scrap and rework, and replacing equipment.
The Importance Of Quality
It’s always important, but 45% of respondents state the importance of quality has increased at their company in the past year. Meanwhile 53% say it has remained the same.
Budget projections can be difficult, even more so with so many unknown factors.
Less than one-in-five respondents report that their 2020 actual spending was over budget, on average by 21%. Just over one-quarter of respondents state that their spending was under budget, on average by 28%.
Seventy-five percent of respondents said that they project their 2021 budget to be on track with last year. The over and under projected budgets were similar. For those who anticipated being over budget (12%), this was by a mean of 29%. For those anticipating being under budget (13%), they thought it would be a mean of 28% under.
This year seems to be the time to spend. Forty-one percent believe their spending will increase, on average by 19%. Just over half of respondents believe their 2022 spending will remain the same as their 2021 spending. Only 7% anticipate a decrease in spending. The wallets are opening, it seems.
If you’re buying new equipment now, you’re in good company. According to respondents, the first quarter of 2022 is the time to spend. Sixty-four percent anticipate making their first fiscal year 2022 purchase then, and thirty percent anticipate making it in January.
The principal motives for investment remain the same year after year. For those anticipating an increase in investments, the reasons are improving productivity, increasing production capacity, reducing scrap and rework, and replacing equipment.
While lot sampling is the most common approach to incoming and in-process testing/inspecting (performed by two-in-five respondents’ companies), over two-in-five companies test/inspect every part or product during final inspections.
What To Buy
The shopping list is long. It trends the same, as every year around two-thirds of respondents plan to purchase general-use test, measurement and inspection equipment. Gages and gaging systems come in next at 62%, followed by test, measurement and inspection services at 55%.
Product testing equipment is also a top category, cited by 47%, followed by software applications (43%), consulting and training services (37%), and optical inspection and measurement equipment (36%).
Nondestructive test and materials test equipment both came in at 32% planning to purchase. Form and surface measurement was at 21%, and color and coating thickness equipment was at 15%.
Rounding out the product categories, coordinate measuring machines (CMMs) are on the list for 13% of respondents.
Only 5% of respondents do not plan to purchase any of the above categories in 2022.
Of those planning to buy a CMM, respondents said one-third of CMM budgets will be spent on CNC/DNC machines in 2022. More than one-quarter of the CMM budget will be spent on portable machines.
The gaging budget remains similar to previous years. Budgets for gages and gaging systems for 2021 and 2022 are expected to be under $40,000, according to 76% of respondents. Handheld gages are the top category, with 29% of gages/gaging systems budgets to be spent on them.
Thirty-nine percent budgeted less than $10,000 for optical inspection and measurement equipment in 2021. More than two-thirds of respondents predict that their plant’s budget for this equipment will remain the same as budgeted in 2021. About 24% of the 2022 optical inspection and measurement equipment budgets will be spent on machine vision systems, followed by one-fifth being spent on optical comparators.
The nondestructive test budget looks to continue its trajectory from 2021 to 2022. Spending for 2022 is predicted to be similar, with one-third budgeting less than $10,000 for this equipment in 2021. Ultrasonic testing, X-ray equipment, and dye penetrant are the primary types of equipment for 2022 budget allocations for nondestructive test equipment.
For the 2022 materials testing equipment budget, the top categories are chemical analysis, tensile testing, and hardness testing.
For general-use test, measurement and inspection equipment, calibration equipment receives the highest share (50%) of the 2022 budget.
Nearly three quarters of respondents budgeted less than $60,000 on software for 2021 and 58% project to do the same in the next fiscal year. Thirty-three percent expect this to increase. Only nine percent expect to spend less on software in the next fiscal year. The software budget is divided among a range of categories, topped by document control/management (11%), data collection software (10%), and calibration (10%).
Speaking of calibration, calibration service budgets in 2022 have stayed relatively the same since 2020, accounting for an average of 36% of test, measurement and inspection services.
An average of nearly one-quarter of the budget for consulting and training services will be spent on certification/registration in 2022.
Over half of respondents’ companies plan to purchase general-use test/measurement/inspection equipment, gages/gaging systems, and/or test/measurement/inspection services in fiscal 2022.
Time For New Technology?
In terms of new technology adoption, the top categories already in use are cloud services/computing, automation, 3D printing/additive manufacturing, and/or robots. This is followed by digitization, wireless sensors, internet of things (IoT), integration of smart, connected machines and manufacturing assets with the wider enterprise, APIs (application programming interface), and on-the-job required mobile devices/wearables or the connected worker. Artificial intelligence/predictive data analytics came in next, followed by augmented/virtual reality, drones, and blockchain technology. How many of these are you using at your company today?
The online survey was sent to domestic active qualified subscribers of Quality. We received 304 useable responses for a response rate of 1.11%. Each respondent received a $10 gift card. Thank you to all those who responded. We appreciate your help and couldn’t do it without you.