Survey of end product manufacturers reveals renewed interest in buying equipment.
By Jill C. Lafferty
A majority of end product manufacturers (EPMs) in the specialty fabrics industry who responded to an equipment purchasing survey in April 2011 expect their own sales to increase this year and are looking—albeit carefully— at purchasing equipment again. Motivated by anticipated sales growth and an interest in expanding into new markets, the time has arrived for EPMs to consider their equipment needs and investigate making improvements and additions to their shops.
When comparing 2011 to 2010, 62 percent of respondents to Specialty Fabric Review’s 2011 Equipment Purchasing Survey reported that they expect sales from their primary business to increase in 2011; in fact, 35 percent predicted an increase of more than 5 percent. Another 27 percent expected sales to be about the same, with only 12 percent expecting a decrease in sales from 2010.
IFAI market research manager Jeff Rasmussen, who assisted the editors in developing the survey, predicts that many specialty fabric market segments will see improved growth in sales in 2011. “But growth is expected to be very gradual as the economy continues its journey toward a recovery,” he says.
Survey respondents skewed toward medium-sized to small businesses: 75 percent of respondents reported that their organization’s sales for 2010 were less than $1,000,000, with 43 percent reporting sales of less than $250,000. On the other end of the spectrum, 15 percent reported sales of more than $2,000,000 for 2010.
The industry markets most represented among respondents were marine products, covers and enclosures, awnings and canopies, upholstery, and fabric structures (lightweight, shade, tensile and shelters).
For many survey respondents, optimistic sales forecasts are encouraging, but they will be careful about new equipment decisions. Even so, 70 percent of respondents predicted that equipment purchases for their businesses in 2011–2012 would total as much as $25,000. A small but meaningful number of respondents (8 percent) said they’d spend more than $100,000—a major purchase in any shop.
The most likely categories of equipment that end product manufacturers reported they’d purchase in 2011–2012 were accessories and tools, and sewing equipment. In fact, over half of the respondents said they are likely or extremely likely to buy sewing equipment; almost three-fourths of them said the same about accessories and tools.
Half of the respondents said they do not currently use software to make their products, but still 27 percent expected to make software purchases this year.
Positive indicators in the survey broke down this way:
- 89 percent of respondents reported using accessories and tools frequently or very frequently in their businesses, and 73 percent reported that their businesses are likely or extremely likely to purchase accessories and tools in 2011–2012.
- 85 percent of respondents reported using sewing equipment frequently or very frequently in their businesses, and 53 percent reported that their businesses are likely or extremely likely to purchase sewing equipment in 2011–2012.
- 55 percent of respondents reported using cutting and patterning equipment frequently or very frequently in their businesses, and 32 percent reported that their businesses are likely or extremely likely to purchase cutting and patterning equipment in 2011–2012.
One approach to recession survival is diversification, and entering new markets often requires new equipment. When asked what new markets their organization was considering in 2011–2012, respondents named products that spanned the specialty fabrics industry, from backyard décor to awnings to musical instrument accessories; however, two markets repeatedly identified were military and government, and portable shelters and tents. Welding equipment and sewing equipment were the most frequently named equipment categories that organizations would need to enter new markets.
Another factor that may motivate end product manufacturers to invest in equipment is a desire for efficiency. Products that boost production and quality without boosting labor costs may be attractive to manufacturers who are even more wary of hiring than they are of equipment investments. “We have seen better equipment [and] processes equals greater output, better and more consistent quality with the same number of people,” one respondent noted.
When asked about what kinds of software their organization planned on purchasing in 2011-2012, respondents most often named CAD or design/patterning software.
Respondents were invited to comment on their plans and expectations, which ranged from plans to buy new grommeting machines, sewing machines, welders and cutters to others who were looking at leasing options or used equipment. Some are not ready to buy because they don’t feel confident that their sales can support new purchases—yet. But as the economy improves, it seems realistic to expect equipment buying to improve, too.