Despite a dismal 2001, both manufacturers and distributors of power transmission (PT) products forecast an increase in purchasing activity in the months ahead. Then, some say, buyers should watch for a scattering of price hikes.

For 2001, distributor sales of PT products in the U.S. (seasonally adjusted) fell almost 14%, from 2000 levels, says Mary Sue Lyon, executive vice president, Power Transmission Distributors Association (PTDA), Chicago, Ill.

For manufacturers, U.S. seasonally adjusted sales fell 5.6% in 2001, according to the PTDA. The experience for makers of PT products, however, varies dramatically from category to category of product. Sales of clutches and brakes were off 16.6% in 2001. Demand for mounted bearings dropped 8.4%; for unmounted bearings the decline was 10.1%. Gearing products fell 7.8%.

"The MRO/replacement market for PT products, generally reflective of national economic trends, obviously is down," says Jim Lamb, vice president, sales & marketing, Drives Inc., maker of roller chain, conveyor chain and other PT products in Fulton, Ill. "Some industries, such as automotive, are down substantially. Other areas such as food processing and beverage/brewery have been acceptable. Still others, such as waste treatment/recycling, have been stable."

"The market for power transmission products is still flat," says Bill Purser, president and chief operating officer, Applied Industrial Technologies, distributor of PT products in Cleveland. "We don't expect much improvement until the middle of 2002.

PTDAS Lyon says she's hearing from both distributor and manufacturer members that they "are starting to see an uptick in activity and quoting. Their phones are ringing again, so they are encouraged. But this activity has not translated into much of an improvement in orders."

"Flat is my best prediction for the year," says William R. Demmel, corporate sales director, TB Wood's Inc., maker of couplings, inverters, controls, synchronous drives, v-belts and sheaves in Chambersburg, Pa. "We are not predicting any major upswings. We are not predicting any major downswings either. It's going to be tough."

As reported in the latest issue of PTDAS Transmissions magazine, nearly two thirds (64%) of the 53 distribution firms that responded to the Annual Member Forecast Survey project sales increases in 2002. Among distributors, 13% believe 2002 sales will increase more than 10%. Most, however, say sales will grow 2-8%. Fifteen percent of distributors expect sales to stay flat with 2001. Twenty-one percent think sales will fall.

Slightly more than 60% of the 34 manufacturer respondents to the member forecast survey expect sales gains in 2002. More than half of these firms believe the growth will be 5% or less, but nearly 18% project sales to increase more than 10%. Meanwhile some 18% of manufacturer respondents say sales will be flat in 2002. Roughly 20% forecast sales decreases; of this group, three-fourths believe the declines will be less than 5%.

For now, manufacturers and distributors alike say product is plentiful and leadtimes are short. And buyers responding to PURCHASING Magazine's latest monthly Business Survey concur: Thirty percent of respondents are experiencing leadtimes for one PT product, gears, of less than one week. Forty-four percent of buyers of motors and 29% of purchasers of speed reducers also are taking delivery in less than one week.

"Leadtimes are relatively short right now for specialty items," says Purser of Applied Industrial Technologies. "I don't see any areas where we would see any shortages. That's assuming, of course, that the economy doesn't ramp up in a hurry and create high demand."

Other issues surrounding supply availability have to do with a wave of consolidation that many see ahead for the industry. "I'd sum it up by saying there are too many players in too mature of a market," says Lamb of Drives Inc.

Until now, pricing has held steady. In fact, some manufacturers report experiencing some downward competitive pressures in the past few months. Still Purser says, "We'll probably see price increases late in the calendar year driven by wages and benefits."

Of course, any hikes would depend on product. Some manufacturers of products manufactured mainly of steel believe additional increases may be in the works.

"The cost of steel has reached such a low point that the steel industry is going to try to make price increases stick and they may have to make them stick or they may actually for the first time walk from customers," says Lamb of Drives Inc. "Flat sheet commodity steel prices will probably remain relatively stable. But specialty steel prices are going to go up. There's no question about it. We already are having to deal with that."

Looking ahead, buyers should also watch for more smart PT products—products that contain microchips that report on wear and tear. These products offer innovative ways to predict maintenance and eliminate unscheduled downtime.