About a week ago, I dropped a line to MFG.com's Mitch Free to ask how things were going in the marketplace. Specifically, I was looking for observations about how manufacturers are behaving in the current environment. Anecdotally, I've heard from other sources that manufacturing volumes are generally down (in some industries as much as 50%) and there's a trend against global sourcing as companies try to get a better hand on demand before committing to larger volume numbers from overseas suppliers. But these were just anecdotes and suppositions. What MFG.com had to say is far more insightful considering how their marketplace connects with manufacturers of all sizes on a constant basis not to mention the human element behind picking up the phone and chatting with buyers and suppliers to find out what the state of the market really looks like to them.
Here's what Mitch's team had to say:
"There is much more of a concern about suppliers being financially stable. Suppliers seem to be leveraged to the hilt and when they go under their buyers come here. Having been burned once, these suppliers are very careful."
"Definitely concerns on the part of suppliers about getting paid, especially with all the new buyers on the site. We are getting a lot of new suppliers stating that they will not quote jobs for the new buyers due to concerns about getting paid."
"Certainly seeing an increase in domestic sourcing."
"Buyers are looking to make sure their supply sources are financially stable. Price is not the most important thing with those guys anymore. Buyers are bringing jobs back domestically in order to minimize this risk. This creates an opportunity for domestic suppliers at the same time the domestic suppliers have limited financing to take advantage of the opportunity. Most qualified suppliers are adding overtime to keep up with the increase. They are not adding equipment or employees until the future is more certain."
Mitch's summary perspectives are telling as well:
In general, things are "going well. I'm seeing lots of companies placing smaller, more on-demand orders in lock step with consumer demand. No one wants to place big orders only to realize the demand for their product wasn't there as fast as they thought and be stuck with the cash outlay and inventory. People realize it costs them more to source in smaller, more frequent lot's but they rationalize that it is less expensive than placing a larger order and consumer demand doesn't come back as fast as they hoped. This is also helping our North American supplier members as it is doesn't make sense to source smaller more frequent orders overseas. I am also seeing a 'buy American' resurgence as people realize we have to help our own economy."
So there you have it -- observations from the manufacturing sector (with an emphasis on machining, fabrication and stamping). It's amazing to me how much the environment can change in a twelve month period.