Every quarter the
Manufacturing Barometer explores the current and future state of the industrial manufacturing economy based on interviews with 60-70 senior executives from large, multinational manufacturing companies.
Download the entire
Manufacturing Barometer 2Q 2007 report in PDF format (133 kb).
Quarterly highlights:
In 2Q 2007, PricewaterhouseCoopers interviewed 61 US-based industrial manufacturing executives about their current business performance, the state of the economy and their expectations for business growth over the next 12 months. We then compared their responses to the prior quarter's results to see how the 12-month outlook has changed. The final step was to compare their views to a wider panel to help us understand how the industry differs from the broader population.
The second quarter 2007 Manufacturing Barometer results show that industrial manufacturers have once again lowered their 12-month growth projections, citing oil/energy costs and competition from foreign markets among their top concerns. Despite this, they remain optimistic that both the US and World economies will grow and expect international sales to increase to 35 percent of total revenue over the next 12 months. The majority plan to increase capital investments and add new workers, but are also becoming more concerned about the potential for higher interest rates and unfavorable exchange rates in the months to come.
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- Consistent with the last several quarters, revenue projections are continuing to edge downward. Revenue projections now average 5.7 percent for the next 12 months. This is a 16 percent drop from the prior quarter and a 30 percent drop from a high of a year ago. Rising top-of-mind concerns that impact growth include oil/energy costs, competition from foreign markets, the strength of the US dollar and higher interest rates.
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- Lower revenue projections are set against an optimistic economic outlook. Seventy-eight percent of industrial manufacturers are optimistic that the world economy will grow over the next 12 months—well above the 62 percent who expect the US economy to grow.
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- Sixty-seven percent of those marketing abroad reported an increase in international sales this quarter. Looking ahead, this group expects 35 percent of total revenues to come from international sales, up from 27 percent a year ago.
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- Fifty-seven percent of industrial manufacturers are planning new investments of capital over the next 12 months. The mean investment as a percent of revenue is expected to be 9.4 percent, the highest projection for this number in the last five quarters, partly due to strong M&A plans.
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- Although the majority of US-based industrial manufacturers we interviewed plan to increase their workforce, the companies that plan to reduce are doing so in larger numbers. As a result, new workers as a percent of the total workforce is slightly on the downside compared to prior estimates.
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- Costs continue to rise for a large number of industrial manufacturers. Forty-six percent said that costs increased in the second quarter and only 13 percent reported a decrease. Thirty-eight percent said that, in turn, their prices rose. Overall, gross margins appeared to fare well, with 31 percent citing higher gross margins while only 16 percent reported lower gross margins.
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Download the entire Manufacturing Barometer 2Q 2007 report in PDF format (133 kb). |
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Media contact: Jim Clayman, jim.clayman@us.pwc.com, 1 (636) 405 1672 |
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PricewaterhouseCoopers’ Manufacturing Barometer is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
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