And the survey says ...

IADD members from the die manufacturing sector continue to see growth, despite today's challenging economy.

While the nation's economy, as a whole, remains unsteady to say the least, diemakers reported a rebound out of the red for the second consecutive year, according to a jointly-developed survey by the International Association of Diecutting and Diemaking (IADD) and packagePRINTING. In fact, in the case of many die manufacturers, business continued to show significant growth in 2002.

All in the family

As this year's surveys were counted, it became quickly and abundantly clear that the majority of the diemaking operations polled are still relatively small, family-owned companies. Seventy-eight percent are family-run shops, with 45 percent of the shops employing 25 or less workers. The shops have been in the business an average of 22 years with an overwhelming majority (73 percent) reporting earnings in the $1 million-$10 million range.

Another constant revealed is that business continues to come in all shapes and sizes from a vast array of sources and end users. Only 18 percent report they have a small number of core accounts, and of that grouping a little less then half have accounts from the same end-use market.

Climate appears controlled

When pP last surveyed diemakers, the business outlook had reached a plateau in the months immediately after the 9/11 attacks. More than half of the respondents were holding steady and taking a "wait-and-see" approach. Twelve months later, 50 percent say that their business climate is growing, and another 32 percent have at least maintained their status quo. That explains why eighty-six percent believed the current economic conditions have no effect on in-house operations, and half report no ill effects on their company's marketing initiatives. Equipment purchases were effected in terms of a 45 percent increase in purchasing, but 45 percent reported no effect and only 10 percent were forced into budget cuts.

Another sign that the economic slowdown may be slowing down is seen in consolidation, or a lack thereof. Nearly sixty percent of the shops surveyed believe that they are not vulnerable to consolidation, and another third believe they are only slightly susceptible.

Despite a majority of diemakers not fearing consolidation personally, 64 percent believe it will continue in the industry. The number one reason they cite for this is that 43 percent foresee that customers will also continue to consolidate. Another 29 percent said rising operating costs will feed integrations, and 14 percent each said either a need for better geographical coverage or overall technology costs will keep consolidation alive.

The proof is in the profits

One trend in the past year that many hope is a sign of a continuing economic reversal was in the area of rapidly declining profit margins. In the three years previous to 2002, 46 percent of the shops saw a decline in profit margins, 38 were holding steady and only 17 reported an increase. This year however, profit margins have grown amongst 41 percent of respondents and only 27 percent reported a decline.

As has annually been the case, the always rising cost of labor had the greatest impact on profit margins at 35 percent, followed by equipment purchases at 19 percent, and health insurance and the cost of materials at 16 percent each. General employee benefits and utilities rounded out the top six costs at 10 and four percent respectively.

Facing the future

As diemakers move forward into 2003, the leading business objective, as it was last year, remains a desire to expand their customer bases—a goal that is shared by 67 percent of the respondents. Twenty-two percent are looking to expand into new untapped markets, and 11 percent would like to enlarge and develop services to existing customers.

In order to obtain these goals for the future, 40 percent said service is the number one trait that will set them apart, with a fifth believing that quality and/or experience are most important in the eyes of the customer. These numbers are consistent with last year's survey, but how diemakers choose to market these specialties has returned back to more time-honored methods.

Half of the respondents from 2001 said they intended to develop marketing via the Internet and a third expected big results from trade shows, whereas this year the number one way

to market business according to a third of those surveyed is with a traditional sales force. Another fifth believe that their own well-earned reputation will help their shop stand out from that

of other manufacturers. Twelve percent said they will continue to look towards the web for marketing and 10 percent cited either trade shows, on-site events/demonstrations or direct mail.