Spending by larger woodworking companies fell for the second year in a row in 2008, according to a recent survey of FDM 300 companies.
We asked FDM 300 companies to share their capital spending plans with us for the current year, and to predict what they would spend on plant and equipment in 2009. We've done this survey for seven years.
Overall spending on both plant and equipment is projected to be smaller for 2009 than it was in 2008. Actual spending on plant projects in 2008 was $7.1 million by responding companies, and equipment spending reached $22.7 million.
Two years ago, we reported that companies were completing large expansions and upgrades and that spending would slow in the near term, which has happened.
There's some optimism among this group, however. Forecast equipment spending for 2009 is expected to be $23.7 million, slightly more than was spent in this category in 2008. For plant items, spending in 2009 was forecast to jump to $17.6 million, more than twice what was spent in 2008.
There were 32 companies that responded to a mail survey sent to all of the FDM 300 companies. This is our annual listing of the 300 largest secondary wood products companies in North America. A complete list of these key firms appeared in the February 2007 issue of FDM.
FDM 300 companies include manufacturers of cabinets, millwork, residential furniture, store fixtures and office furniture.
We asked companies about their capital expenditures for 2008 and their expected spending budget for 2009 for both equipment and plant. Last year, we had 53 companies responding, and 59 provided information the year before that.
This isn't a scientific survey or a random sample. It is a quick look at spending plans for 32 of the largest companies in our industry.
We also looked at the reported data from companies that responded to the survey in both 2007 and 2008. Using information reported by these 21 companies, it is possible to compare projected and actual spending for the same group.
This group of companies planned to spend $16.6 million on equipment in 2008. Actual equipment spending for 2008 was lower for this group, but not by much, at $15.1 million.
On the plant side, this group of companies expected to spend $9.5 million in 2008. Here, the actual plant spending was quite a bit lower, and totaled $5.5 million for the year
October 2008 survey comments
- "The market has been very slow but we are using this downtime to purchase machines and computer systems to prepare ourselves for when the market picks up. We are buying less product and making more in-house product to keep jobs for our own employees."
- "We added a new product platform in 2008 requiring specialized equipment not previously available on our plant floor. Housing downturn has required we become more flexible in existing product offerings and add more new products, finishes and customization."
- "Tranquility in the marketplace due to the downturn in the economy demands a cautious approach in 2009 and we are looking at minimum capital expenditures for the coming year."
- "Adding more automated machinery to improve production flow combining with software programs and automated conveyor line."
- "Expenditures of both equipment and plant renovation will be kept to a minimum because most of our equipment is only three years old, and work load is too small to justify spending money."
- "Reduced capital spending economic driven with new construction portion of the business."
Chart: Equipment and plant spending
Chart: Comparison of spending
Have something to say? Share your thoughts with us in the comments below.