Survey: Raw material costs top concerns for execs at small businesses

Survey of purchasing pros and business owners also finds capital spending plans remain healthy

By Dave Hannon -- Purchasing, 2/15/2008 8:42:00 AM

A recent survey of purchasing executives and owners at small and mid-sized manufacturers found that increasing raw material prices are clearly the top concern in 2008.

The survey, conducted by Chicago-based purchasing consortium Prime Advantage, found that 46% of purchasing executives and owners polled listed raw material costs as their top concern, far ahead of energy costs and logistics/supply chain costs, the second and third biggest concerns.

“More than rising energy costs or inflation, the uncertainty around pricing pressures for raw materials continues to be an obstacle to success for many small and mid-sized manufacturers," said Louise O'Sullivan, president of Prime Advantage in a press release.

But despite a clear concern for cost control, 66% of executives polled said their firms plan significant capital improvements in 2008, including spending on equipment upgrades such as press brakes, turret punch presses, plus equipment for laser cutting, robotic welding and stamping. And 11% plan to improve IT systems to increase cost controls, spending on new applications, data visibility and data accuracy.

Only 2% of those polled said they plan to invest in industry certifications or education.

What’s your biggest concern in 2008?

Raw materials costs                  46%

Energy costs                             18%

Logistics/supply chain costs       16%

Inflation                                    8%

Labor                                       4%

Foreign competition                  3%

Overhead costs                        3%

Healthcare costs                       2%

Source: Prime Advantage survey

See also: Nickel-based steel buyers investigate material substitutes