The
Winter 2010 Business Forecast of the American Mold Builders
Association shows continued improvement, but companies overall are
expressing guarded optimism about any significant recovery to bring on
large mold programs from their customers. The quarterly survey
revealed that current business conditions improved slightly over the
previous three months, with 6% of the respondents saying that business
is “Excellent” – down just 1% from 7% in the Fall 2009 survey.
However,
current business conditions improved by 10% for those reporting “Good”
conditions (33%) compared to 23% of the respondents in the Fall
survey. “Fair” business conditions exist for 44% of the
respondents compared to 38% of the respondents in the Fall survey. But
business conditions have improved considerably for some with only
15% reporting “Poor” conditions compared to 27% in the Fall
survey. “Bad” conditions exist for only 2% of respondents, another
improvement from the 5% of the respondents in the Fall survey, and a
continued improvement from the 12% reporting “Bad” conditions in the
Summer survey and 11% in the Spring survey.
Projections for business over the next three months are fairly flat
with respect to the outlook of future business among respondents. Once
again, 8% reported that they expect business to Increase
Substantially, the same as the Fall survey. 40% of the
respondents expect business to Increase Moderately, down slightly from
44% of the respondents in the Fall survey, but still up considerably
from the 28% in the Summer survey when things were really in the
doldrums.
There is
a substantial increase in those expecting business to Remain the Same
– 41% -- compared to 25% in the Fall survey. Respondents expecting
business to Decrease Moderately again dropped slightly to 9%
compared to 11% in the Fall survey. Respondents that expect business
to Decrease Substantially remains at 2%, the same as in the
Fall survey.
When
asked to compare their company’s current level of business with that
of three months ago, responses indicate some movement in a positive
direction:
Quoting
activity is Up for 40% of the respondents, compared to 38% of
respondents in the previous survey; the Same for 59% of the
respondents compared to 42% in the Fall 2009 survey; and Down for only
21%, just one percentage point more than 20%, in the Fall survey. Some
mold manufacturers reporting an increase in quoting activity believe
that there are signs of new molds being cut loose in 2010 due to so
little activity in 2009. “Business activity is improving and hopefully
pricing and profitability will follow,” commented one respondent.
“We are
seeing an uptick across the board in our quoting and are seeing some
increase in orders,” said another respondent.
Shipments
are Up for 33% of the respondents compared to 29% last quarter, a
continued upward trend from 25% in the Summer survey. Shipments stayed
about the Same for 49% of respondents; and Down for 18% of the
respondents compared 28% in the Fall survey and a big drop from the
43% of the respondents in the Summer survey and 59% in Spring survey,
which could be an indication that shipments – and thus work -- are
remaining steady.
Backlog
is Up for 38% of the respondents, another nice jump from the 31% in
the Fall survey, and from the 24% in the Summer survey and up
significantly from 11.3% in the Spring survey. This is one trend that
moldmakers like to see on the increase, as most of them live and die
by their backlog. “Seems like things are improving,” commented one
respondent. “We are not swamped but looking at the industry
improving.”
Backlog
remained the Same for 30% of the respondents, down from the 33% in the
Fall survey; and Down for 32% of the respondents, an improvement from
the 38% in the Fall survey, a nice improvement from the 52% in the
Summer survey, and a big improvement over the 66.1% in the Spring 2009
survey. This indicates that a business is trending upward for a nice
percentage of the AMBA shops, along with a healthy dose of cautious
optimism. “We are extremely busy, but we’re always aware that a
downturn could be just around the corner,” commented another
respondent.
Profits
in the Winter survey ticked upward once again, with 17% reporting that
profits are Up, compared with 15% reporting an increase in profits in
the Fall 2009 survey. This category has also trended up from a low in
the Spring of 2009. Profits are the Same for 49% of the respondents,
again a nice uptick compared with 47% in the Fall survey, 31.6% in the
Summer survey and 30.4% in the Spring survey. However, profits are
trending down with 34% of the respondents in the Winter survey, but an
improvement compared to 38% of the respondents in the Fall survey, 58%
of the respondents in the Summer survey and 63% in the Spring survey.
This is
perhaps an indication that moldmakers are holding the line on their
price and terms, or that many Tier One suppliers, seeing the fall-out
in the supplier base, are becoming more cooperative. “We are noticing
a real decrease in pricing, and have to quote at break-even prices to
land jobs,” said a respondent. “We are seeing many projects continue
to be so under-priced that we have to let them go.”
Employment
seems to have leveled off, and is Up for only 16% of the respondents,
compared to 22% in the Fall survey. Still that is better than the 12%
of the Summer survey respondents and 7.0% of the respondents to the
Spring survey. It the Same for 74%, which indicates most shops are
hanging tight with the employees they have. Employment is Down for
only 10% of the respondents compared to 31% of the respondents in the
Fall survey. However, the current average number of shop employees
ticked up by one, to an average of 22. The current average number of
design and engineering employees also moved up by one in the Winter
survey, to six. Work-week hours for shop employees are up for the
third consecutive quarter to an average of 45 hours for the Winter
survey compared to 42 in the Fall survey. For design and engineering
employees the hours also increased for the third consecutive quarter
to 45 hours, also up two hours.
Responses to the Winter survey question, “With recent economic
changes, has your company altered its payment terms?” were mixed. Many
maintain the 1/3, 1/3 and 1/3 model. However many more seem to have
upped the down payment. “With new tool builds, I am requiring 50% down
with the P.O., 25% prior to delivery and the remaining 25% 30 days
after delivery,” said one respondent.
Several
said they alter their terms based on the customer. Generally,
long-term good customers get better terms than new customers. “Depends
on the company,” said another respondent. “Some pay well and no
up-front money is required. With newer customer, up-front payment is
required.”
Another
respondent said, “We require a 50% down payment and 40% prior to
shipment on all new customers, with 10% net 30 days after mold
approval. Most of the new customers have been fine with this. With our
current/established customers we are still using the standard 1/3,
1/3, 1/3 terms.”
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