Raw Materials, Volatile Demand Hurt Supplier Outlook

The cost of raw materials, weak sales and increasing international competition are among the major concerns of heavy-duty suppliers, according to a quarterly "Supplier Barometer" survey conducted by the Heavy Duty Manufacturers Association.

Respondents to the survey were more pessimistic about the 12-month outlook for their business than in the fourth quarter, but sales and accounts receivable were about the same, and about the same number of companies were hiring, adding production capacity and adding to inventories this quarter as last.

In year-over-year comparisons, The 12-month outlook was down significantly, and company sales were also down somewhat, with lower numbers for hiring, adding production capacity and adding to inventories.

When asked about the relative importance of the top issues facing the company, the cost of raw materials topped the list, as it has for the past year, but it did not score as high as last year. Concerns about weak sales were up from the previous quarter and from last year.

Other top concerns include demand volatility, healthcare costs, OE customer forecast accuracy, regulatory and legal issues, and lack of pricing power. When asked about other significant issues facing their company, a number commented about international competition, especially from low-price sources such as China.