Job Shop Consumption Report Mixed

Source: From the ControlDesign.com News Desk

Sep 09, 2013

The most accurate and instructive assessment of the economy might be one based on data gathered as close to the final consumer as possible. The Fabricators & Manufacturers Assn., International (FMA) thinks the best place to find out what's happening in the heart of the American manufacturing sector is the job shop. "These small-to-mid-sized companies depend on demand from the consumer that translates into larger manufacturing orders, and the pace of their business is a profoundly instructive way to understand the state of the economy." The FMA recognizes that challenge always has been that these companies are very hard to survey as they are small and management is busy with daily operations.

In its most recent quarterly survey (Q2 2013), the Forming & Fabricating Job Shop Consumption Reports states that respondent companies are operating at about 64% of capacity. The report says most analysts peg the overall national average at 79% of capacity with normal utilization considered to be 85%.

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The good news, says the report, is that new order activity is stable or growing for the majority of the respondents.

What might be the most interesting piece of data concerns the demand for capital equipment. The FMA reports that about six months ago, capital expenditure surveys were almost all upbeat. Its data indicated that almost every category of manufacturer or fabricator intended to invest more in machinery and technology in 2013. However, thus far in 2013, the survey respondents are taking a "wait and see" attitude with 58% reporting they've delayed purchases of new capital equipment and 34% have elected to delay indefinitely.

The respondents overall assessment of future business growth remains positive, with "the overwhelming percentage of respondents expecting either growth or stability, but few are willing to declare that the year is going to finish much more robustly than it started."

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