Summer Business Forecast Survey Shows Work Is Steady

Business among AMBA member mold companies isn’t booming, but work is holding steady, according to the Summer 2011 Business Forecast Survey.

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 Business conditions are Good – Excellent for 78% of the respondents, up slightly from the Spring survey. Projections of their company’s business over the next three months have the majority of respondents saying that it will either “Increase Moderately” (38%) or “Remain the Same” (47%), which indicates that work continues to flow in the U.S. mold manufacturing business.

Comparing their company’s different business activities, Quoting is Up (31%) or the Same (49%) for the respondents, indicating a steady flow of RFQs.  Shipments were up considerably for 48% of the respondents to the Summer survey, compared to 37% in the Spring survey. Interestingly, backlog didn’t drop at all, which indicates that while shipments are up, the work in the pipeline is enough to keep a good backlog. Profits are Up or the Same for 85% of the respondents, so companies don’t appear to be losing ground in that area.

Employment ticked Down for 28% of the respondents, but remained the same for 64%, which appears to indicate that hiring has slowed. The number of shop employees dropped to 22 in the Summer survey from 25 in the Spring survey, back to the same number as the Winter survey. Design and engineering employees also dropped by one to four, down from five in the Spring survey.  Work-week hours however, ticked up by one hour from the Spring survey, for both shop employees (49 hours in the Summer survey) and for design and engineering employees, 48 in the Summer survey compared to 47 in the Spring survey.

With business up for the first two quarters of this year, we wanted to know if payment terms have been improving, and asked whether shops were getting paid in 30 days, 60 days or 90+ days. The majority --72% -- get paid in 60 days; 25% get paid in 30 days. A few noted that terms differ for each customer and can range from 10 days for a few to 45 days for some.

We also wanted to check up on that “kinder, gentler” automotive industry we keep hearing about since the recession took so many suppliers out of business, and asked AMBA members if working relationships have improved in that industry. Some respondents reported they are extremely busy. “Automotive is a buzz, and we can’t get the mold built fast enough,” said one respondent. “You get the feeling that they are in a hurry to get product to market without any of the offshore quality issues they have had with these types of molds.”

Another respondent hasn’t seen much change in attitude. “No, things are still the same with automotive paying poorly and abusing their suppliers,” said another respondent. “I have also seen more and more automotive tooling being sourced offshore and not domestically. I would think with the bailouts that the automotive companies received there would be some stipulations on having more work done domestically.”

A third respondent said, “[Nothing has changed] at all. Most companies are stretching terms to 100% at PPAP, which is usually up to a year or longer.”

Speaking of offshore suppliers, we also asked the status of this situation and whether customers are going to or pushing for off-shore suppliers during the last quarter. A majority of respondents (65%) said that customers are “moderately looking for off-shore suppliers” or customers “are open to the idea but not actively looking for off-shore suppliers.” The good news is that 31% reported that “customers are relocating work from off-shore back to U.S. suppliers.

One respondent wrote, “While we’re seeing some coming back, it’s a very mixed bag right now. We’re not totally out of the woods as Purchasing management still has the mindset that offshore is cheaper. Until they get the real cost figured out for the life of the program, we will always be seen as more expensive. If measured over the life of the program, I believe we are the low-cost provider.”

Another respondent noted, “People are starting to understand the importance of keeping business in the U.S.; also with the Euro so much stronger than the dollar it is cheaper for Europe to build in the U.S.”