Now that the U.S. economy looks like it’s slowly starting to recover, companies are feeling a bit more optimistic about the coming year.
A recent study by GlobalSpec shows that while companies are still worried about 2009, with many expecting revenue to be below 2008 levels, some companies are actually planning to increase spending soon.
“Thirty-six percent of companies indicated that they plan to increase spending in the second half of 2009, which could lead to even more of an improvement in 2010,” said Chris Chariton, Vice President of Marketing Services and Product Management at GlobalSpec. “Moreover, the September ISM report showed strong growth in the manufacturing sector. Clearly, optimism is growing.”
And it just keeps looking better for manufacturers. With the October ISM reading at 55.7, the manufacturing sector grew at the fastest pace since 2006. Moreover, while 50 percent of companies expect 2009 revenue to be below 2008 levels, it also means that 50 percent expect it to be the same or higher.
However, falling revenue isn’t the only problem facing manufacturers. Pricing pressure and capacity utilization are a concern, according to GlobalSpec. And while 2008 saw top concerns of rising energy, transportation, and raw materials costs, the economy put pressure on companies to look for new growth opportunities and to expand into new markets in 2009.
By taking a look at other markets, companies may see opportunities where their products can fit into these new areas. The added flexibility will help the company when individual market sectors falter.
“Expansion is a good thing -- it leads to more spending,” Chariton notes. “Companies are spending more on reengineering, plant investments, etc., which provides a type of stimulus for the economy.”
To take advantage of an economic turnaround, companies need to focus on expanding their operations and their product development, as well as expanding their marketing efforts.
Chariton urges companies not to become lax when it comes to their marketing plans. If a company is having trouble getting new customers or sees its sales dropping, the last thing the company should do is ease up on its marketing initiatives. The company must be tenacious in order to woo the customer away from its competition.
“Demand is increasing as the economy begins to recover,” she said. “Put more emphasis on your marketing now and make sure your products are in front of your target customers.”
Chariton adds that improving the reach of a company’s marketing efforts now can change consumers’ buying behavior later. Companies could become a preferred brand, which is a big plus, regardless of the direction the economy is moving.
“If you keep up with your marketing efforts while your competition falters, consumers will learn to trust your products and switch brands, which will impact future buying decisions after the economy stabilizes.”
Even if the company is still feeling the pain of the recession, there are things that can be done in addition to marketing to keep the company in the black while waiting for the recovery to take hold.
In both good economic times and bad, manufacturers should be striving to cut down on production costs. Chariton says companies can work to achieve production efficiency by taking a look at their equipment, services, and component spending.
The GlobalSpec study found that 47 percent of companies are looking to improve production efficiencies. It also noted 54 percent of companies are looking at expanding into new markets, while 46 percent are focused on new product development, and 44 percent are focused on quality.
“For companies that are struggling with depressed sales, a popular option has been to shorten the work week instead of cutting jobs outright,” Chariton said. “You should also resist pressure to lower prices. Differentiate value services, and try to lower the cost of production.”
Finally, companies need to invest their marketing time, money, and energy where they can get the biggest return for their investment. In today’s world, that means online. Companies can put themselves in front of their target audience and get quality leads that can help keep their operations thriving until the economy stabilizes.
GlobalSpec is a specialized vertical search, information services and e-publishing company serving the engineering, manufacturing and related scientific and technical market segments. For more information, visit http://www.globalspec.com/
