PTDA Members Emerge from 2009 Optimistic About Future
Chicago, Ill. -- February 2, 2010 -- Despite a year of
unprecedented economic challenges in 2009, members of the Power
Transmission Distributors Association (PTDA) are finding cause for
optimism as 2010 begins. According to a survey conducted by
Cleveland Research on behalf of PTDA in October 2009, 41 percent of PTDA
members are forecasting year-over-year sales growth in 2010, 58 percent
predict flat sales, and only 1 percent anticipate a decline in sales
compared to 2009.
The Cleveland Research survey was distributed to PTDA member
companies and had 75 respondents. Of members who responded to the
survey, 60 percent represent manufacturing companies and 40 percent
represent distribution firms. Survey participants comprise between
$8 - $9 billion of annual aggregate revenue, with average annual revenue
of $120 million and median revenue of $13 million.
The Cleveland Research survey shows that 2009 was a tougher year than
many PTDA members anticipated. When members responded to the
Member Forecast Survey in the fourth quarter of 2008, 43 percent of all
firms projected their companies' sales would increase in 2009, 28
percent of companies expected a sales decrease and 29 percent projected
flat sales.
By the third quarter in 2009, PTDA members had significantly revised
their expectations for the year. Only 4 percent forecasted sales
growth, 86 percent expected sales declines and 10 percent cited flat
sales. On average, 2009 sales were expected to decline by 19
percent from 2008.
According to Cliff Bannon, national sales manager for Climax Metal
Products Company, the timing of the Member Forecast Survey likely
explains the difference.
"We really thought we were going to have a decent 2009 up until
November [2008]. When the bottom fell out, it just fell out. As it did
with everybody."
Nonetheless, Bannon is among the members who anticipate a rebound in
2010.
"I'm very optimistic. We have a lot of irons in the pot; we've
gotten business from last year that's just ramping up now for
2010. I think our distributor partners have bottomed out from an
inventory perspective and now they're purchasing inventory.
Hopefully, they hit bottom on inventory," said Bannon.
Inventory Overhang Persists Despite Reductions
The Cleveland Research Survey confirms the concern of many PTDA
members -- inventories may still be too high. Forty-two
percent of survey respondents rated their level of inventory as "too
high," with only 6 percent rating their level as "too low."
A net 47 percent of distributors report inventories are too high, and
only a net 17 percent of distributors have reduced inventories below
prior year levels. This is in contrast to a net 30 percent of
manufacturers reporting inventories are too high, and nearly 50 percent
reporting lower inventories versus 2008.
2010 Forecast Up 5 Percent
On average, the Cleveland Research Survey shows that PTDA members
anticipate a 5 percent increase in sales over 2009.
Rob Aveson, president of Adam-Hill Co. (a PTDA founding distribution
company), echoes Bannon's optimism.
"We're anticipating we might be done with the downturn. Things might
level and start to turn up in the next two quarters,†said
Aveson. "We're seeing things turning around. The fourth
quarter ended up being much stronger than we expected. We're
seeing things that indicate the year will look good."
Cleveland Research Survey Indicates Bright Spots on Horizon
According to the Cleveland Research analysis, industrial production
is recovering. Cleveland Research predicts MRO demand will rebound
first. In addition, many early cycle machinery markets that peaked
years ago are likely to show strong growth in 2010, including
automotive, heavy truck, construction equipment and housing.
Founded in 1960, the Power Transmission Distributors Association
(PTDA) is the leading association for the industrial power
transmission/motion control (PT/MC) distribution channel. A
U.S.-based trade association, PTDA represents 198 power
transmission/motion control distribution firms that generate more than
$10 billion in sales and span 3,500 locations in North America and 11
other countries. PTDA members also include 187 manufacturers that
supply the PT/MC industry.
PTDA is dedicated to providing exceptional networking, targeted
education, relevant information and leading-edge business tools to help
distributors and manufacturers meet marketplace demands competitively
and profitably. For more information, visit www.ptda.org.
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