American manufacturing companies are scaling down their plans for investment amidst the current economics recession, but a new study being released by the Italian Trade Commission shows that companies already using Italian equipment are less likely to cut capital spending. The complete Executive Summary of Findings will be available in September of 2009.
About the Sample
The Machines Italia Awareness Survey is a study of purchasing trends and issues in the US manufacturing machinery market. In 2009, a total of 270 companies have been interviewed in just the first seven months. This is compared to totals of 200 in all of 2008 and 238 in all of 2007. The percentage of companies using Italian equipment is 48 percent in 2009, with average corporate revenue of $4.12 billion, compared to $4.69 billion in corporate revenue for non-users of Italian machinery. Interviews are conducted over the phone and via Internet with top management executives in their respective companies. All fourteen leading Italian machinery manufacturers’ associations are represented in the sample, with major focus on seven particular sectors. Wood and Lumber, Metalworking, and Textile are heavily represented, making up 47 percent of the sample. An additional 32 percent of the companies interviewed come from Printing, Plastics and Rubber, Glass, and Food technology. Year-over-year responses to questions were compared as percentages of totals in each variable category.
Expected Expenditures in the next Two Fiscal Years Based on the survey, 25 percent of companies that are not currently using Italian equipment plan to spend “less than $100,000” on machinery over the next two fiscal years. In the same category of non-users, 35 percent said they plan to spend either “$1 million to $5 million” or “more than 5 million”. In contrast, only 18 percent of companies that are using Italian machines plan to spend “less than $100,000” while 50 percent said they plant to spend either “$1 million to $5 million” or “more than 5 million” through 2011.
Importance of Price
On an ordinal scale of 1 to 5, companies are asked to rate the importance of Price and Financing as attributes when deciding to purchase equipment, with 5 being “extremely important”. Again, users and non-users of Italian products reveal a difference in sentiment. Of the companies not using Italian equipment, 41 percent said that price is “extremely important” in 2009. In contrast, only 27 percent of companies already using Italian equipment consider price to be such a deciding factor. Sensitivity to price has fluctuated over the past year. In 2008, the number of companies deeming price to be “extremely important” was 15 percent fewer than in this year’s sample. Italian machinery buyers have also changed their opinion, but only by 9 percent since 2008.
Importance of Financing
With financing becoming almost as scarce as factory orders across various sectors of manufacturing, there has been a 5 percent average increase in overall year-over-year opinion that financing is “extremely important” to purchasing decisions. Only 2 percent of all responding companies rated “financing offered by the manufacturer or distributor” as crucial in 2008. In contrast, 8 percent of companies not currently using Italian equipment and 5.5 percent of those using Italian products are rating financing as “extremely important” in 2009. Again, companies using Italian equipment show to be more flexible and less frightened by the lack of available financing.
Willingness to Travel
Another intriguing finding stems from a question asking respondents about their willingness to travel abroad. The question is framed as follows: “If all expenses were paid, would you be willing to travel overseas to visit companies that make high performance machinery and equipment?” In the years past, the overwhelming response was “Yes”; in 2008, of all companies asked, 85 percent said they are willing to travel. Today, that number has dropped to 78 percent. In times of downsizing, this can be interpreted as an indicator of demand for more representation of foreign machinery makers in the United States. In some instances in 2009, survey participants are quoted for saying just that. “It depends on the needs and the times – better to have state-side representation”, answered one Project Engineer from an Ohio company that specializes in tire retreading, does not use Italian equipment, and plans to spend less than $100,000 in the coming years.