MRO Magazine

PTDA members emerge from 2010 optimistic about future

Chicago, IL -- Despite a year of unprecedented economic challenges in 2009, members of the Power Transmission ...


Industry

February 8, 2010
By MRO Magazine
MRO Magazine

Industries

Chicago, IL — Despite a year of unprecedented economic challenges in 2009, members of the Power Transmission Distributors Association (PTDA) are finding cause for optimism as 2010 begins. According to a survey conducted by Cleveland Research on behalf of PTDA in October 2009, 41% of PTDA members are forecasting year-over-year sales growth in 2010, 58% predict flat sales, and only 1% anticipate a decline in sales compared to 2009.

The Cleveland Research survey shows that 2009 was a tougher year than many PTDA members anticipated. When members responded to the Member Forecast Survey in the fourth quarter of 2008, 43% of all firms projected their companies’ sales would increase in 2009, 28% of companies expected a sales decrease and 29% projected flat sales.

By the third quarter in 2009, members had significantly revised their expectations for the year. Only 4% forecasted sales growth, 86% expected sales declines and 10% cited flat sales. On average, 2009 sales were expected to decline by 19% from 2008.

According to Cliff Bannon, national sales manager for Climax Metal Products Co., Wickliffe, OH, the timing of the Member Forecast Survey likely explains the difference.

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“We really thought we were going to have a decent 2009 up until November [2008]. When the bottom fell out, it just fell out. As it did with everybody.”

Nonetheless, Bannon is among the members who anticipate a rebound in 2010.

“I’m very optimistic. We have a lot of irons in the pot; we’ve gotten business from last year that’s just ramping up now for 2010. I think our distributor partners have bottomed out from an inventory perspective and now they’re purchasing inventory. Hopefully, they hit bottom on inventory,” said Bannon.

The Cleveland Research Survey confirms the concern of many PTDA members — inventories may still be too high. Forty-two per cent of survey respondents rated their level of inventory as “too high,” with only 6% rating their level as “too low.”

A net 47% of distributors report inventories are too high, and only a net 17% of distributors have reduced inventories below prior year levels. This is in contrast to a net 30% of manufacturers reporting inventories are too high, and nearly 50% reporting lower inventories versus 2008.

On average, the survey shows that PTDA members anticipate a 5% increase in sales over 2009.

Rob Aveson, president of Adam-Hill Co., San Francisco, CA, echoes Bannon’s optimism.

“We’re anticipating we might be done with the downturn. Things might level and start to turn up in the next two quarters,” he said. “We’re seeing things turning around. The fourth quarter ended up being much stronger than we expected. We’re seeing things that indicate the year will look good.”

According to the Cleveland Research analysis, industrial production is recovering. It predicts MRO demand will rebound first. In addition, many early-cycle machinery markets that peaked years ago are likely to show strong growth in 2010, including automotive, heavy truck, construction equipment and housing.

The Cleveland Research survey was distributed to PTDA member companies and had 75 respondents. Of members who responded to the survey, 60% represent manufacturing companies and 40% represent distribution firms. Survey participants comprise between $8 billion to $9 billion of annual aggregate revenue, with average annual revenue of $120 million and median revenue of $13 million.

PTDA represents 198 power transmission/motion control distribution firms with 3,500 locations in North America and 11 other countries. PTDA members also include 187 manufacturers that supply the PT/MC industry. For more information, visit ptda.org.