Sage business survey reflects surge of optimism for 2014

By Norbert Sparrow
Published: February 7th, 2014

What a difference a year makes. Manufacturers and distributors surveyed by Sage, a supplier of business management software, are decidedly more optimistic about the U.S. economy than they were in 2013.

"We saw a significant jump in positives from 27% to 36% in our 2014 survey," Joe Langner, Executive Vice President, Mid-Market Solutions, told PlasticsToday. "Business is looking much stronger. Forty-two percent of respondents said that they expected production to increase over the next six months, and 46 percent said that they would invest in technology." The fact that almost half of the respondents are planning to plow some of their profits back into the company and invest in growth is an especially heartening sign for Langner.

Image courtesy graur codrin/freedigitalphotos.net

New to the 2014 survey is a question related to reshoring, which has been the subject of much debate on the PlasticsToday site as elsewhere. About one in five respondents said that they expected to gain new business as a result of domestic companies bringing manufacturing back to the United States. This was not even on the radar when Sage did its survey for 2013. Especially noteworthy, says Langner, is that the reshoring dividend is spread across the supply chain. "This is having an impact on manufacturers doing business with other manufacturers," Langner says.

When the companies were asked how they would capture reshored business, the top three incentives were flexibility in responding to market demand, the ability to produce smaller lots, and accelerating time to market.

None of the manufacturers answering the survey planned to off-shore production, and five percent said that they planned to bring some of their production back to the United States.

When asked about trends that would have a positive or negative impact on business, domestic demand, or the lack of it, overwhelmingly took the top spot: 68% said stronger demand would have a positive impact on their business and 53% said a domestic slowdown would have a negative impact. Stronger regulations landed dead last on the positive scale and came in second as a drag on business. Thirty-seven percent of respondents felt that the global economic recovery is a boon for business; if the recovery goes south, 29% said that it would have a negative impact.

The new year began with some disappointing results, notably a 5.2% dip in the January 2014 Purchasing Managers Index and a stock market tumble, but Langner doesn't feel that these numbers would have had much of an impact on the survey results if it were done today. "We deal with small and medium sized companies, and I wonder if the PMI doesn't have a bias toward larger companies. Interest rates are holding steady, housing is up, domestic energy production is up, and unemployment is dropping. The economy is just looking stronger from our perspective," says Langner.

The web-based survey of U.S. manufacturers and distributors received 215 responses by Dec. 2, 2013. Two out of five respondents were manufacturers and one out of five both distributed and manufactured their products.

Norbert Sparrow

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