The members of the U.S. Cutting Tool Institute (USCTI) predict a tough year ahead for the industry, according to a spring survey conducted by the organization.
The survey gauged member sentiment in several areas including the outlook for the U.S. economy, forecasted cutting tool industry shipments, changing employment levels, raw material costs, exporting, financing issues and workforce actions.
More than 80 percent of the survey respondents have a very grim outlook for the U.S. economy, predicting a major recession as they plan for 2009. Not surprisingly, this outlook is reflected in their near-term outlook for the cutting tool industry with more than 60 percent of the respondents forecasting a decline in industry shipments of greater than 20 percent, and more than 90 percent of them forecasting a decline of at least 10 percent.
Unfortunately, exports are not making up for lower domestic demand. Roughly half have experienced reduced exports so far in 2009, with average declines of 29 percent.
Most cutting tool manufacturers have already cut payrolls, with more than 85 percent indicating that their employment declined in the first quarter of 2009. Average workforce cuts were 15 percent. Other workforce-related cutbacks include a reduced workweek for 70 percent of the respondents, employee furloughs for 35 percent, reduced shift hours for 49 percent, temporary plant shutdowns for 23 percent, and mandatory vacation time for 16 percent.
On a positive note, more than half of the USCTI members have seen a decline in the costs of raw materials used in manufacturing their tools.
When asked about financing, 12 percent said they are finding it more difficult to finance equipment purchases, 44 percent have experienced more restrictive lines of credit, 19 percent are paying higher interest rates on their lines of credit and 70 percent are having more difficulty collecting accounts receivable.
For information about the USCTI, including membership details and future meeting opportunities, visit www.uscti.com.