Impact factors for spending
Figure 7
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To dig deeper into reasons for spending gains, the survey asked respondents to assess the impact (high, medium, or low) of
several factors on the level and type of spending on machinery and equipment in 2006 and planned for 2007 (see Figure 7).
As might be expected, compliance to good manufacturing practices ranked highly as a reason for increasing spending. The expansion
of manufacturing facilities also was an important impetus for increasing spending on machinery and equipment in 2006 although
it was less of a factor in 2007. Increasing efficiency and throughput also were key impact factors affecting spending.
Other issues did not seem to influence spending habits on machinery and equipment. The US Food and Drug Administration's process
analytical technology (PAT) initiative was not a strong influence on spending in 2006 and planned for 2007. Approximately
half of the respondents characterized PAT as a low-impact factor (see Figure 7).
Expenditures for radio-frequency identification (RFID) technologies did not rank highly. Sixty percent of respondents characterized
RFID as a low-impact factor in 2006, and slightly more (67.4%) characterize it as low impact for planned spending for 2007
(see Figure 7).
Spending on process control and automation showed two distinct trends. Over half (55.3%) of the respondents characterized
process control and automation as a medium-impact factor in 2006. In 2007, 68.8% characterized it as a low-impact factor.
Looking forward
Figure 8
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The survey asked participants to characterize spending levels in 2005, 2006, and planned for 2007 and 2008 (see Figure 8).
The survey showed that fewer respondents plan to make moderate or substantial increases in spending on equipment and machinery
in 2007 and 2008 compared with spending increases during the past two years.
In 2005 and 2006, 20.4% of respondents said that their companies substantially (defined as more than 5%) increased spending
on plants and equipment, but only 14.9% of respondents said that they plan to increase spending substantially in 2007 and
2008.
Almost a quarter (23.4%) of respondents said that their companies plan to increase spending moderately (defined as 1–5%) in
2007 and 2008, which is down from 30.6% of respondents that said they spent moderately on equipment and machinery purchases
in 2006 and 2005.
In addition, 38.3% of respondents said their companies plan to keep spending relatively the same (no or marginal increase
or decrease) in 2007 and 2008, compared to 28.6% in 2006 and 2005.
Also, in 2007 and 2008, 12.8% of the respondents said their companies plan to decrease spending on machinery and equipment
moderately, up from 8.2% in 2005 and 2006.
Figure 9
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Outsourcing certain manufacturing services or functions, however, will not be a factor in reducing spending on machinery and
equipment in 2007 and 2008 (see Figure 9). Almost half (49.0%) of the respondents said that their companies will not be reducing
spending.Only 16.3% will reduce spending.
Authorization for spending.
Figure 10
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The survey examined how spending for machinery and equipment was typically authorized in a given organization (see Figure
10). Authorization by a divisional or business-unit head was the most frequent route (36.7% of respondents), followed by individual
plant or facility management (30.6%), and a centralized procurement office (28.6%).
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