US buyers aiming to use slowdown to raise profile

9 May 2001
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10 May 2001 | Geraint John

American purchasing managers are increasingly anxious about the impact of the US economic slowdown, but many see it as an opportunity to raise their profile.

The weak economy is the main concern for buyers in both the manufacturing and non-manufacturing sectors, according to the latest biannual economic forecast by the National Association of Purchasing Management (NAPM). The survey, published at its annual conference in Orlando last week, found a sharp drop in confidence over the past six months and a big rise in pessimism about future prospects.

In manufacturing, 38 per cent of purchasers said they were "worried or pessimistic" about the next 12 months af the highest level recorded since 1962. In May and December last year, the figure was just 5 per cent. Those saying they were optimistic fell from 56 per cent a year ago to 33 per cent.

US economists say the chances of the slowdown deteriorating into a full-blown recession have increased, though most expect an upturn in the autumn.

Curt Hunter, director of research at the Federal Reserve Bank of Chicago, told the conference that job losses in high-tech and other manufacturing companies "spilling over into the rest of the economy" was a worrying trend and that consumer confidence was fragile.

The tougher climate has put greater pressure on purchasers to cut costs and inventories, the NAPM report showed. In many industries they have been helped by excess capacity, which has led to falling prices for commodities such as paper and stainless steel.

Bill Northup, director of sourcing for Hubbell Electrical Products, echoed the view of many delegates: "It has given purchasing a step up because management understands that it is critical to take costs out."

But Bradly Davidson, purchasing director for Atlanta-based Blue Circle Materials, told SM the extra profile was unwelcome if the focus was on price alone.

"Many American chief executives still see buying as about getting the lowest price, rather than the lowest total cost of supply. As a profession, we've worked hard in recent years to change that perception. But there's a danger of us going backwards if the US slips into recession."


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