Assembly - December 2008 - (Page 24) Capital Spending Will the South Eclipse the Midwest? 50 45 40 53 48 45 43 44 41 29 26 27 21 17 15 14 17 16 15 23 17 16 17 11 8 9 12 11 23 19 20 18 28 25 26 21 21 22 20 16 14 15 11 10 28 28 42 35 36 39 42 43 41 38 35 30 25 24 20 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 South Northeast West Midwest 2004 2005 2006 2007 2008 2009 Thanks to an influx of investment from Asian carmakers, the South will account for 38 percent of total equipment spending in 2009. That’s the highest share for this region in the history of our survey. of respondents expected to spend less in the coming year. On their face, actual budget figures indicate a significant jump in spending next year. For example, 18 percent of respondents will spend more than Budget Trends 80 75 70 65 60 55 50 75 70 62 58 64 67 70 75 80 75 74 64 Percent of plants 51 45 40 35 30 25 20 15 10 5 26 19 11 22 23 20 15 16 15 23 20 18 16 17 13 8 8 17 18 15 13 14 12 7 11 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Equipment budget less than $250,000. Equipment budget between $250,000 and $1 million Equipment budget more than $1 million For the third straight year, the percentage of plants with equipment budgets over $1 million has increased. 24 ASSEMBLY / December 2008 www.assemblymag.com $1 million on assembly technology in 2008. That compares with 11 percent in 2008 and 8 percent in 2007, and it’s the highest percentage since 1999. However, it should be noted that our response rate from large facilities was higher than usual. Ordinarily, 16 percent of our respondents come from plants with at least 250 employees. This year, 30 percent of our respondents came from plants that large. As a result, our spending projection was adjusted downward to reflect a more typical distribution of plant sizes. That said, there does appear to be a trend upward in spending. Some 28 percent of plants will spend between $100,000 and $500,000 on new equipment next year, which is exactly the same percentage as this year. At the same time, 46 percent of plants have capital budgets under $100,000 for 2009, compared with 54 percent of plants in 2008. In other words, fewer plants are on the lower end of the spending scale, and more plants are on the higher end. The median equipment budget increased 33 percent, from $75,000 in 2008 to $100,000 in 2009. The average budget rose by 29 percent, from $690,361 in 2008 to $890,848 in 2009. Both the median and the average budget figures for 2009 are the highest since 2003. Technology suppliers can take additional encouragement from assemblers’ motives for buying equipment, which indicate that assemblers are revamping their lines. For example, plants have more new products to assemble. Fortyone percent of assemblers will buy equipment next year to assemble a new product. That compares with 33 percent in 2008, and it’s the highest percentage since 2003. Similarly, 28 percent of assemblers are getting equipment to implement lean manufacturing. That’s the highest percentage in 5 years. As usual, the No. 1 reason for buying equipment in 2009 is cost reduction. However, in what may be an indication that manufacturers are getting their costs under control, just 51 percent of respondents are purchasing equipment to reduce costs. In contrast, in 1997, Percent of total spending http://www.assemblymag.com
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