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PTDA Members Forecast Slight Growth in 2007

Chicago, Ill. -- January 26, 2007 -- Most member firms of the Power Transmission Distributors Association (PTDA) aren’t projecting 2007 as a gangbuster year for sales growth, but most believe it still will be a good one. 

More than 80 percent of the 104 firms that responded to PTDA’s 2007 Member Forecast Survey predict sales increases for the coming year.  Among all the survey respondents -- 52 distributors and 52 manufacturers -- only 17 (or 16.3 percent) believe their sales will be flat in 2007.  Just two firms, both distributors, think their sales will slip slightly in the coming 12 months.

Sales growth is expected among both distribution firms and manufacturers, with manufacturers being slightly more optimistic.  Almost four-fifths (78.1 percent) of distribution firms anticipate sales growth, 17.3 expect flat sales and 3.8 expect a dip.  A slightly higher percentage of manufacturers (84.6 percent) are forecasting sales growth, and 15.4 percent believe sales will be flat.

How much growth is expected in 2007?  Overall, the highest percentage (39.4 percent) of power transmission firms are forecasting a growth in the range of 5.0 to 9.9 percent.  Again, manufacturers expect higher sales growth than distribution firms as indicated below.

2007 Sales Growth Forecasted by PTDA Members

PTDA member firms’ sales growth projections tend to correlate with their views of overall economic conditions.

More than two-thirds (69.5 percent) of all respondents believe the general economy remains in a growth period -- 62.5 percent of distributors and 76.6 percent of manufacturers share this view. 

Respondents to the 2007 Forecast Survey are divided as to how long economic growth will continue.  The biggest single groups -- 23 percent of distributors and 31 percent of manufacturers -- think expansion will continue until Autumn 2007.

Marginal Margin Improvement

In general, the industry is not expecting any movement in margins in 2007.  Exactly half of all 2007 survey respondents predict margins will remain constant in the coming year.  In total, almost half of manufacturers (48.9 percent) think their margins will grow, while just over a third (34.8 percent) of distributors believe so. 

Among all companies hoping for margin improvement, predictions are relatively modest.  By far, the single most-projected margin growth rate is from 2 to 4.9 percent.  One-fifth (20.4 percent) of all survey respondents expect this rate, including 18.4 percent of distributors and 22.4 percent of manufacturers.

Only a handful of firms are girding for margin erosions.  Five distribution companies (10 percent of all respondents) and three manufacturers (6.1 percent) think this will impact them in 2007. 

Channel Relationships

Channel relationships continue to grow with just over half (55.1 percent) of the distributors noting added supplier lines in 2006.  Only two distributors (4.1 percent) said they reduced lines in 2006.  The remainder (40.8 percent) kept their number of supplier lines constant. 

On the flip side, 47.8 percent of manufacturer respondents said they had increased the number of distributor partners who carry their products in 2006. 

Looking ahead, more than half (54.3 percent) of responding manufacturing firms hope to increased their percentage of sales through distribution in 2007.  More than a third (37 percent) expect the percentage to remain the same and 8.7 percent said sales through distribution will decrease.

Personnel Levels and Paychecks

On balance, both distributor and manufacturer respondents plan to add jobs in 2007 but not at a significant rate -- 38 percent of distributors and 47.9 percent of manufacturers plan to keep employment levels constant in the coming year.

Among distributors, more than half (52 percent) say they’ll add new jobs in 2007.  An almost even number say their firm’s overall employment levels will grow by more than 5 percent (22 percent of respondents) or between 2 and 4.9 percent (20 percent.)

Some 10 percent of distributors will nudge their employment numbers up by under 2 percent.  The same number of distributor respondents said they would cut jobs.

Among PTDA manufacturer member respondents, just over one third (35.9 percent) said they planned to increase employment levels in 2007 and almost half of manufacturers (47.9 percent) plan to maintain steady employment levels.  A handful (6.3 percent) expects to make cuts.

Most salary increases at both distribution and manufacturing firms will be modest in 2007.  The single largest groups of both distributors (42.9 percent) and manufacturers (63.8 percent) say they’ll boost employee pay an average of 3 to 3.9 percent.   

For 2007, no respondent planned to cut salaries.  However, 10.2 percent of distributors and 6.4 percent of manufactures said average pay at their firms would remain flat.

To access the full results of the PTDA 2007 Member Forecast Survey, visit www.ptda.org/ForecastSurvey.

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 216 power transmission/motion control distributor firms with over 3,500 locations throughout North America and 13 other countries, as well as 200 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.