Industrial Firms Say Spending Increases May Ease in Second Half of Year

But '05 results likely to top '04 revenues, GlobalSpec surveys find; buyers hit suppliers for slow responses to RFIs

But results likely to exceed '04 revenues, GlobalSpec surveys find; buyers hit suppliers for slow responses to RFIs

Troy, NY  August 11, 2005  The U.S. industrial sector is less optimistic about seeing increases in component and services spending during the second half of 2005 than it was at this time in 2004, according to a new survey of industrial organizations on U.S. economic conditions.

Nevertheless, the survey, conducted by GlobalSpec, a specialized search engine for the engineering community, found that 92 percent of respondents anticipate overall 2005 revenue of their firms will be ahead of or the same as year-end 2004 revenue. At mid-year, 83 percent say their revenue is running ahead of or on target for 2005.

These results indicate a steady improvement in the industrial sector over the past few years; GlobalSpec's comparable mid-year 2002 survey found just 64 percent saying revenues were ahead of or on target for that year.

Companies reporting they have made headcount reductions at mid-year 2005 are far fewer than previous years as well. Eighteen percent of respondents report headcount reductions this year, compared to 42 percent at the same point in 2002.

GlobalSpec said that other results from the studies of industrial sector opinions revealed a certain slowness and overall inadequacies in the way many suppliers respond to product- and service-related request for information (RFIs) sought from prospective buyers, particularly involving information requested via e-mail. Only 20 percent of respondents said they consistently (more than 95 percent of the time) receive the information requested from suppliers, and 43 percent report they must wait between three and seven days to receive a response to e-mail inquiries.

Additional findings from GlobalSpec's mid-year 2005 surveys include:

  • 22 percent say their companies have increased prices in 2005 compared to 16 percent in 2004

  • 55 percent believe improving production efficiencies is the top operating issue facing their company, followed closely by improving quality (52 percent), lowering raw material costs (51 percent) and speeding new product development (49 percent). Only 34 percent cite rising energy costs as a source of worry; just 20 percent say offshore competition is a key concern.

  • 47 percent say they expect to see a shortage of newly licensed engineers entering the field over the next five years.

  • 91 percent say they have used the Internet to find components and suppliers.

  • 41 percent report spending six or more hours each week on the Internet for work-related purposes
Results from the surveys can be accessed at

Additional Articles of Interest

 For more information on the current state of the sourcing and procurement markets, see the articles "The Analyst Corner: Sourcing" in the June/July 2004 issue of Supply & Demand Chain Executive, and "The Analyst Corner: Procurement" in the August/September 2004 issue of the magazine.

 By deploying an automated point-of-use dispensing solution at its New Bedford plant, this medical devices company is driving down the cost of MRO. Read "Uncribbing the Tools at DePuy Orthopaedics" in the June/July 2005 issue of Supply & Demand Chain Executive.

 Maverick spenders making off-contract purchases and ignoring preferred suppliers lists are still causing many companies to bleed green. For tips on how to bring rogue spenders back from the underground, read "Maverick Spend Redux" in the June/July 2005 issue of Supply & Demand Chain Executive.